Advanced Guide to Investing in Fine Wine: The Next Steps

A smart investor has used what he learned from this guide to investing in fine wine to build a truly impressive portfolio.

As a serious wine investor, you know the investment process is more nuanced than simply collecting popular wines and reselling them for a profit. Your wine investing journey involves a myriad of considerations, and it can accommodate an assortment of paths leading to a portfolio that will satisfy both your ambitions and your buyers’ tastes.

If you’ve only recently embarked on this journey, you may want to learn more about the basics of how to start investing in wine. If you’re ready to dive deeper and refine your process, though, this advanced guide to investing in fine wine is designed for you.

An Advanced Guide to Investing in Fine Wine

True connoisseurs already know that wine isn’t just “wine.” A full-bodied Californian Cabernet Sauvignon, for example, is nothing like an effervescent Chablis from France. Likewise, different variables must be accounted for when investing in wine futures versus, say, pre-arrivals. Below, we’ll cover those and a few other unique situations that may require extra care and consideration. 

Futures, Pre-Arrivals, and Ex-Château Wines

Wine futures and pre-arrivals often represent some of the best deals on the market in terms of upfront cost, making them an attractive option for investors. Additionally, those wine futures and pre-arrival wines that are ex-château offer an even greater advantage. 

Wine futures, or en-primeur wines, are sold prior to bottling and offer the greatest advantage in terms of availability. Vintages in high demand tend to be produced in low quantities that sell out quickly, and futures offer the earliest (and often least expensive) opportunity to invest. However, futures also carry the greatest level of uncertainty, as professional tasting notes and ratings will be unavailable when you make your purchase. Futures also require the most time to mature.

Wine pre-arrivals, which are sold after bottling, offer a similar advantage in terms of availability and cost (though they may carry a slightly higher price tag than futures). Pre-arrivals are also less risky than futures, as some early professional reviews will likely be published prior to your purchase. However, while early reviews are usually a good indication of a future rise in value, this is not always guaranteed.

Ex-château wines are pre-arrivals that are stored in producers’ cellars and not sold until they are at, or close to, peak maturity. For this reason, ex-château wines often cost more upfront than other options. However, their quality is established at the point of purchase, making ex-château wines one of the safest investment options. They also require the least time in the cellar—a major advantage for those investors looking to collect long-lived wines without having to store them for decades.

Single-Varietals vs. Blends

There’s an ongoing debate over whether single-varietal wines or blends are more collectible. Ultimately, the choice rests with your personal preferences—and the differences between regions. Burgundy and Bordeaux, for example, may be considered equally collectible. Burgundy is almost always a single-varietal Pinot Noir, and Bordeaux is almost always a blend of some combination of Cabernet Sauvignon, Merlot, Cabernet Franc, Petit Verdot, and similar grapes. Both single-varietals and blends can offer strong investment opportunities with an equal potential for appreciation.

Single-varietal wines are celebrated as better representations of terroir, as 75 percent or more of their makeup consists of one specific grape harvested from a single region. One point of view holds that these wines offer a purer experience since blended components cannot mask potential flaws or alter the original grape’s flavor profile—even though some “single-varietal” wines do include small quantities of other grapes. With a single-varietal Burgundy, for example, what you’re really investing in is the enchanting expression of a specific terroir.

Blended wines, in contrast, may contain any number of different grapes. For some collectors, this is an advantageous characteristic, as blended wines may offer more well-rounded and unique flavor profiles. Additionally, blended wines often offer greater aging potential. But what makes a great blended wine, like a classic Bordeaux, truly magical is its uniqueness—a proprietary blend cannot be exactly replicated by another other producer, and may even vary from one vintage year to the next. Great blended wines showcase the best of what a vintage has to offer.

Off-Vintage vs. Iconic Years

Whether you should collect off-vintage wines or only highly-praised years depends on your goals as an investor.

Off-vintage wines are often sold for lower upfront costs because weather conditions or other variables make collectors hesitant to buy these wines. This allows for greater future profitability should your off-vintage wine appreciate, as many do. (Some early 2000s vintages, for example, tripled in value over time—after having sold for close to half as much as vintage bottles.)

Iconic vintages, on the other hand, can be expensive up-front and more difficult to acquire. However, they represent a safer investment and will likely increase in value as the wine matures and bottles become difficult to find on the market. Iconic vintages can also be more suitable for investors who plan to partake of their own collection.

Keep in mind, however, that prediction is not always reality. Sometimes, those wines that are expected to become the most iconic may be humbled by age and, ultimately, eclipsed by other wines that were initially all but overlooked by investors. Region, however, can be a good predictor—consistent winemakers harvesting from excellent terroirs rarely have a truly “bad” year.

Determining the Resale Value of Your Wine

While choosing the right wine is essential to successful investing, knowing how to price your wine at its optimal value when it’s time to sell is equally important.

The main determining factors of a wine’s resale value include the following:

• The reputation of the producer and the terroir
• The specific vintage year and its rating
• The wine’s provenance at the point of resale

Put simply, the more praise and accolades the wine and its origins receive—and the higher the degree of collector care—the greater the resale value. Assuring the former is simply a matter of doing your due diligence before making a purchase. Ensuring the latter, however, will require making smart choices when shipping and storing your wine prior to resale.

Preserving Perfect Wine Provenance

To help you maximize your return on investment, we’ve collected a summary of our most important tips for ensuring your wine’s provenance—without which, no guide to investing in fine wine would be complete.

When shipping your wine, shipping under bond is the surest way to protect your investment from mishaps and mishandling. Whenever possible, having your wine shipped directly from producers also minimizes risk, as this alleviates the need for the wine to pass through wholesaler or distributor channels.

Should you ever need to relocate your wine collection, keep in mind that slow and steady really does win the race. Gradually moving small quantities of wine can prevent a major catastrophe since only a small portion of your collection would be exposed to risk. This relocation method also allows you to test multiple storage options before making a final decision. 

When storing your wine—whether over the short or long term—professional storage options are strongly recommended. Doing so will protect your investment from major disasters as well as often overlooked everyday risks, including vibrations, temperature fluctuations, and more. Likewise, you can more easily expand your collection in a professional storage space than you might in a home-based cellar with limited space.

Perhaps the most important reason for choosing professional shipping and storage options to preserve your wine’s provenance is your buyers’ peace of mind. Having the paperwork on hand to prove that your wine has remained in prime condition from the moment it left the producer’s cellar to the moment you deliver it into your buyers’ hands will put to rest concerns around authenticity as well as quality. Wines with a proven record of attentive care also provide the highest ROI, as buyers are willing to pay more for perfect, and provable, provenance.

Whether you are starting your high-end wine collection or adding to an established portfolio, Vinfolio is your partner in buying, selling, and professional storage. Contact us today to get access to the world’s finest wine.