For many, the upside of investing in fine wine is that you get to drink the returns. But people are increasingly coming to see wine as an asset with remarkable financial qualities as well. Historical analysis shows that returns from fine wine have been more stable than those from stocks, both in the short and long term, which means that replacing some of the equities in a traditional portfolio with wine investments can help to lower volatility. This defensive quality is helping to shift the perception of wine from that of a pure passion play to a serious alternative asset class.
But it still helps to approach the market as a collector, because the best returns come from knowing the market inside out. Johnny Hon, founder of Global Group and a connoisseur himself, has a few rules as a professional collector.
STICK TO THE VERY BEST
The most collectible wines hold their value best and are easiest to sell. This generally means buying Bordeaux such as Lafite Rothschild, Pétrus or Le Pin; or Burgundy wines such as Domaine de la Romanée-Conti. Outside France, there is a market for some of Italy’s Super Tuscans, such as Ornellaia, and the best Napa Valley wines from California, including Screaming Eagle and Opus One.
“Everybody wants the top Burgundies, the top Bordeaux, so it’s silly not to treat them as the cornerstone of your collection,” says Hon.
BUY AS CLOSE TO THE SOURCE AS POSSIBLE