For some of us, our hobbies can be more than just a way to pass the time-- they can also end up earning a pretty penny. In a four-part series, we take a look at how to cash in on your rare collections.
An overwhelming number of wines in the market can make it difficult to decipher what differentiates a wine with a $10,000 price tag from one that costs $4.99.
“The history of the brand and how long they have been making what is considered world-class quality, scarcity, historical data, and critical positive reviews all contribute to making a wine collectible,” says John Kapon, CEO of Acker Merrall and Condit Companies, a wine auction house and shop.
Scarcity is driven by low production in regions that are geographically unable to produce more. “When we say rare, we mean rare. There are some Burgundies that make only one barrel; that means 25 cases for the whole world,” says Maureen Downey, founder of Chai Consulting.
“Very rare wines keep going up in value,” says Wayne Kompare, founder of Kompare Appraisals, “The financial crisis hit the wine auction market causing prices to drop 20 to 30%.”
A demand shift from the U.S. to Asia, however, kept sales strong, according to Kompare. Last year, a case of Romanee-Conti 1990 Domaine de la Romanee-Conti Burgundy sold for $297,400 in Hong Kong through Acker, Merrall & Condit.
Downey of Chai Consulting notes that in Asia, collectors are primarily buying to build their cellars. “They are not a consumption society,” she added. This is unlike the U.S. where collectors are consistently replenishing their inventories
“Keep drinking and see for yourself what you like and what your tastes are,” advises Kapon of Acker, Merrall & Condit, “From an investment stand point, buy wines from a reputable merchant that are in good condition and in the original case.”
When Downey of Chai Consulting advises clients she prices the wine line-by-line based on what type of wine it is, the vintage and quantity produced. Then she takes into account its story.
“Story brings more intrinsic value to the market.” She wants to know how it was stored and if it was every moved. “If a wine was bought on release and it was put in storage, with no issues, for 20 years, it will be worth twice as much as one which was moved around,” Downey added.
Those looking to make pricey wine investments may want to check out the Liv-ex Fine Wine 100 Index, which represents the pricing of 100 of the most sought-after fine wines available in the UK market, wines like the Haut Brion and Mouton Rothschild. Bordeaux makes up 95% of the index, with wines from Burgundy, Champagne, Italy and the Rhone rounding out the lot. The index was created by the Liv-ex Fine Wine Exchange, which provides wine pricing, research and a platform for fine wine trading.
From antique silver spoons to license plates and toy train sets, collections that start as a hobby can quickly grow to become a valuable asset.