Terroir and Producer Reputation
Producers and terroirs that have excellent reputations among collectors will often fetch a premium price. In Burgundy, Grand Cru wines sell for as much as four times the price of Premier Cru wines; in turn, Premier Crus sell for three times the price of village wines. The specific terroir and vineyard matter as well. Romanee-Conti usually costs five times as much as La Tache, while Richebourg often costs hundreds of dollars less than La Tache. This is why 2009 DRC La Tache sells on the secondary market for about $3,000 per bottle, whereas 2009 DRC Richebourg sells for about $2,700. If you’re not sure what to charge for your wine, first compare it to producers in the same classification, and then adjust that price based on the terroir. You can also see a full list of producers ranked by collectability on Vinfolio’s producer index.
A producer’s overall ranking will usually get you within $100 of the actual market value of the wine, but if you want to find out exactly how much your wine is worth, you’ll need to read critic scores for the vintage. Wines that receive near-perfect scores almost always jump up in price. For instance, a bottle of 2012 Schrader Cabernet Sauvignon T6 sells for about $300 on the secondary market. The 2013 vintage of that same wine sells for more than $50 more, even though it is younger. Why? Because Robert Parker gave the 2012 a score of 92-95, whereas he gave the 2013 a score of 98. To determine the best price to charge for your wine, research its tasting notes and the scores given to it by well-known critics and publications; the higher the score, the more you can charge.
Let’s say you buy a case of wine from the winery’s mailing list, have it shipped directly to a professional storage warehouse, and leave it under these conditions for 10 years. How much is your wine worth today? In this case, your wine has a clear line of provenance–a record of ownership that proves your bottle is authentic. Wine fraud is such a common problem among collectors that many are willing to pay a higher price for bottles that have proof of provenance. The list below shows which types of investments have the most provenance, and are therefore worth the most.
- Direct purchase from the winery and stored in-bond
- Direct purchase from the winery and stored professionally, out-of-bond
- Direct purchase from the winery and stored in a home cellar
- Purchased from a trusted retailer/distributor
- Purchased from an auction, with receipt of ownership history
- Purchased from a private seller, with receipt of ownership history
- Purchased from a private seller, with no receipt of ownership history
As you can see, your storage history matters just as much as your provenance. Buyers want to see that your wine is authentic, and that it was stored under the best conditions possible, which is why professional storage costs are worth the initial investment.
Market Timing Matters
Like the stock market, the secondary wine market experiences dips and spikes throughout the year. To make sure you’re getting the most value out of your bottles, start by estimating the bottle’s base price using the three factors above, then compare that price to average market prices. You can use Liv-ex or WinePrices to find average auction and retail sales prices for specific wines. Is the average auction price higher or lower than your estimated price? If it’s higher, consider selling your bottle now, while the market is favorable. If it’s lower, hold onto the wine until the market peaks again, if possible. For your most valuable bottles, I recommend tracking market prices once per month for a year or two to find patterns. For instance, Champagne often increases in price around the holiday season, which means you’ll get a higher price if you sell that bottle of Krug in the late fall.
Fine wine usually has two moments in its lifetime when it is worth the most: upon first release, and when it reaches peak maturity. If you buy allocations or futures, you might sell your wine immediately after you receive it, because the wine will be in high demand. Alternatively, you can wait until the wine is just one or two years away from maturity to sell it. Although this takes longer, you will get the best price possible for the wine, making it well worth the extra effort if you’re interested in a high return on investment.
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 best wine.
Image by Augustas Didžgalvis (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons