Wine investment, while potentially profitable, is a complex market driven by specific factors like brand, vintage, and critical opinion, and it carries significant risks including counterfeiting and storage costs.
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hi i'm konstantin baum master of wine
and i know it sounds almost too good to
be true but yes you can make money from
investing in wine but it's obviously not
as easy as it sounds so today i'm going
to tell you everything you need to know
about wine investment so
let's go [Music]
full disclosure i'm not a certified one
investment expert and i don't think
there is such a thing but i know the
market pretty well as i've worked for
one of the leading one investment
institutions for years the term one
investment describes the acquisition of
wine for financial gain you don't buy
the wine to drink and enjoy it you buy
it in order to sell it at a profit it
has been common practice among wine
collectors to buy two cases of a wine
they liked and then sell one at a later
stage in order to finance their next
purchase over the last decades one
investment has become a bigger and
bigger thing but it also has a long
history the region most associated with
wine investment is probably bordeaux
where one was sold for centuries on
primer months or even years before it's
been bottled in the hope that the wine
will appreciate in value wine
investments by collectors became more
and more popular in the 1960s and 1970s
and the auction houses christie's and
sotheby's established their wine
departments in 1966 and 1970. auctions
are to this day still very popular and
really useful for determining where the
market is going i was at the osbis de
bone option a few months ago and all of
the burgundies on sale were 50
up on the previous year and the most
[Applause]
800 000 euros for 300 bottles of wine
needless to say it wasn't me who
purchased that barrel the ascent of
robert parker in his 100 point rating
system encouraged wine investment in the
1980s as he provided an independent and
easy to understand way of assessing
quality in the early 2000s wine
investment really boomed especially
driven by the chinese market that was
growing rapidly and the establishment of
hong kong as a tax-free trading hub for
fine wine live-x the company i was
working for was established during that
period as the first online fine wine
exchange similar to the stock exchange
other companies like far vintners and
the uno group really focused on the fine
wine investment sector while established
wine merchants like barry brothers and
rut for example created their own fine
wine departments today the estimated
value of the fine wine market is above 4
billion us dollars which is actually
tiny if you compare it to the 94
trillion us dollar stock market but
anyways let's talk about the factors
that actually influence the price of a
wine so first of all the global economic
conditions do have an impact on the fine
wine market as well but maybe less so
than in other investment markets and
that is mainly because the market is
really driven by the rich and as we all
know the rich just keep getting richer
second vintage quality does have an
impact on the quality of the wine and
therefore wines from a great vintage
trade at a premium third critical
opinion robert parker was by far the
most important wine critic and his
influence was significant you can see
here what happened to the price of the
2008 la lafitte on livex when robert
parker released his 98 to 100 potential
perfect score the prices jumped like
crazy parker has retired and sold his
publication and there are many more
critics today than there were in the
past i would however argue that no one
has the influence on the market that
robert parker had the most important
factor however is the brand the ability
of the winery to produce high quality
wines on a consistent basis is key for
it to become an investment grade wine
producer this even means that wines from
famous chateaus that come from poor
vintages and were rated poorly can trade
much higher than wines that are not so
famous the 2007 le petit mouton the
second wine of mutton rosh side
currently retails for 329 dollars per
bottle excluding taxes even though it
only got 88 points from robert parker
while this nice but completely unknown
ayaniko got 89 paka points and sells for
12 euros you really have to focus on the
creme de la creme in order to make a
profit the best wines from bordeaux
burgundy champagne the roan piedmont
tuscany napa and some other wines
oftentimes people make the point that
investment grade wines are rare but this
is not always the case usually their
production is limited but chateau margot
for example produces 160 thousand
bottles shuttle two or two hundred
thousand bottles and mutton three
hundred thousand bottles of their first
wine this is a lot of wine production
volumes are not that important when it
comes to investment grade wines it is
important however that no matter how big
the supply of a wine is it needs to be
outstripped by the demand the principles
of wine investment are simple some ones
have a very high demand but a naturally
restricted supply as these wines age
they get better and better so the demand
for a 1982 bordeaux is higher than for
the same wine from the 2020 vintage at
the same time the supply decreases as
more and more of the wine is being
consumed and the market regulates this
decrease in supply and the increase in
demand by increasing the price and boom
a 12-pack of lafitte 1982 was first
released to the market for 450 pounds
and last traded for 46 000 pounds an
increase of 100 times this is like
having purchased amazon shares in the
early 2000s there is an index that shows
the performance of fine wine the live x
100 and if you compare it to other major
indices like the dow jones and the ftse
100 fine wine comes out on top at least
if you look at the last year but it was
outperformed by the s p 500. so should
we all start buying fine wine for
investment purposes
not really wine investment also comes
with quite a few risks the first big
problem is provernos in order to make
sure that you're able to sell your fine
wine at a premium you need to make sure
that your drc is not a crd and there
were quite a few counterfeit scandals in
the recent past the biggest and most
well-known one involved a fellow named
rudy cornyawan rudy was sentenced to 10
years in federal prison for fraud as he
manufactured counterfeit wines he
refilled empty expensive bottles of
wines or re-labeled old cheap bottles of
wines and then sold them at a very high
price he got away with this for a long
time as it's quite difficult to tell a
counterfeit bottle of wine from a real
one it is therefore crucial that you
work with reputable merchants and keep
the receipts in order to be able to
track the wines back to the source
another important factor is storage
where you rarely take receipt of a
printed out share of a company fine wine
exists and needs to be stored properly
if you don't have a great seller you
need to pay for storage at a
professional facility and this will add
up over the years a poorly stored bottle
of wine with stained labels and low
levels will not produce the same returns
as a bottle in perfect condition you
should also keep the original wooden
case as wines trade at a premium if they
are in their original packaging the cost
of buying and selling fine wine is much
higher if you compare it to other assets
if you want to sell your tesla shares
you just go on your online trading
platform and after a few clicks the
trade has gone through if you want to
sell your wine collection it gets really
complicated and it usually costs you
much more money than if you would sell a
few shares however if you make the right
course and invest in the right wines you
can make a lot of money i have to say
that investing in wine is much more fun
to me than investing in stocks but i
have invested more money into stocks
than into wine the good thing about wine
investment as they always say is that
you can at least drink it but you cannot
survive on wine alone believe me i have
tried so you should make sure that wine
only represents a share of your
portfolio so thank you for watching i
hope you enjoyed this video if you liked
it then please like it down here
subscribe to my channel if you haven't
done so already my question of the day
is what do you think about wine
investment are you doing it are you not
doing it comment down below i hope i see
you guys again soon until then stay thirsty
good [Music]
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