Wine Investment from a Latin American Perspective


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In today’s market, despite these times of crisis, there is a lot of money looking for a safe home. Given low global interest rates, depressed stock markets, and collapsing property values, fine wine is undoubtedly an interesting investment, and as the top “New World” (Chile, Argentina, Australia, South Africa, New Zealand) wines continue to improve and compete with the previously dominant Bordeaux and Burgundy wines, there are an ever-increasing range of options. As with any investment, one needs to be aware of the risks and possible traps and take qualified counsel. So here are some basic guidelines to wine investing, some rules that anyone thinking of investing in fine wine should pay close attention to: 

Serious investors might be interested in subscribing to www.liv-ex.com, the London International Vintners Exchange, which tracks the value of the top internationally traded wines, and through which a large amount vintage wine is traded. A disproportionate amount is vintage Bordeaux – of the top 10 traded wines on Liv-ex in 2008, nine were Bordeaux (of which the top 5 were the ever present Bordeaux West Bank 1st Growths, Latour, Lafite-Rothschild, Latour, Margaux, and Haut-Brion, followed by Petrus, Cheval Blanc, La Mision Haut-Brion, and Carruades de Lafite. In tenth place came the sole Burgundy, the super-exclusive and massively limited production Domaine de la Romanee Conti.  



  • Don’t invest more than you can afford to lose – prices do go down as well as up, so wine should represent only a small part of a balanced investment portfolio. “Irrational Exuberance” is not confined to stock, currency, bond, and property markets. For instance, following the exceptional Bordeaux vintage of 2005, there followed an ordinary 2006, and a downright mediocre 2007. However, carried away with the ´05´s success and rocketing yields, plenty of amateur investors got their fingers burnt paying over-the-odds for both the ´05´s and the mediocre later vintages.
     
  • Shop around for the best prices. Sounds obvious, but plenty of investors fail to heed this advice and lose out as a result.
     
  • If you are buying through a specialist investment company, take a good look at their historical returns, and be clear about commissions (fixed or percentage) charged. Also be aware that the best prices are generally offered “en primeur”, basically the wine is sold in advance about 2 years before being bottled – however, a wine that scores top points en primeur, may flatter only to deceive as it later evolves in barrel and bottle, so there .....




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