It’s no secret that investing in fine wine can yield substantial revenue under the right circumstances. In 2019, for example, a private collection of over 17,000 bottles sold for $29.8 million at auction, setting a new world record—and sparking the imagination of many aspiring investors.
Like wine cultivation, though, there is an art to fine wine investing. Wine valuation is a critical component of the investment process. You need to know precisely how much your wine is worth and when it will be most valuable on the market to optimize profits when it’s time to sell.
In this guide, we’ll explore the factors that determine the value of your wine, the available valuation options, and how you can employ wine valuation technology to ensure the highest returns on your investments.
Factors That Affect Wine Valuation
Wine valuation is determined by much more than the producer’s popularity or prestige. Several factors combine to influence a wine’s potential value, including:
- Aging Potential
Here’s a closer look at the role each of these plays in determining the value of your wine.
Terroir plays a crucial role in determining the flavor and quality of wine, and certain regions have become all but synonymous with sublime wines. Grand cru Burgundy vineyards, for instance, situated on the southeast-facing slopes of the Côte d’Or have been lauded for centuries. Wines sourced from highly-esteemed vineyards like these that embody the perfect combination of moderating forces, like their proximity to rivers and breezes, typically sell for more than wines from lesser-known regions or poorer-quality terroirs.
The processes for growing, harvesting, and vinifying wine can affect its market value as well. Often, more labor-intensive processes—such as hand-picking grapes or manual sorting—result in higher-value wines. Reserve wines also tend to merit a higher price tag than non-reserves.
Consistency is essential in the world of wine. Consider a First-Growth estate like Château Margaux, for instance, which can claim Thomas Jefferson among its admirers. A wine from such a prestigious winery with a well-regarded history of blending powerful, age-worthy wines is almost always going to be valued more highly than a wine from an unknown producer.
The reputation of the specific wine in question also matters, but it is not necessarily the most important factor. High ratings from reviewers can positively influence the value of a wine. Of course, the opposite is also true.
For optimal return on investment (ROI), always keep your wine in its original packaging. A changed or damaged label or case can sow seeds of doubt regarding the quality and authenticity of your wine, and you may experience difficulty in selling the wine at its optimum price. Even something as minor as a small tear in the label may negatively impact resale value.
A wine with higher aging potential will almost always provide a better ROI—provided you sell at the right time. Yes, cellaring some of the longest-lived wines, such as a Cabernet Sauvignon or a Bordeaux, for twenty years or more will require more money upfront. However, buying these wines young and selling them at peak maturity, after they’ve had decades to appreciate and develop, will often yield much more profit than a wine that needs to be resold within just a few years of its release.
The scarcity principle of economics dictates that when production is low and demand is high, prices rise to meet that demand. In other words, while rarity alone is not necessarily enough to make a wine valuable, the more people that want to buy it—and the fewer bottles there are to buy—the higher its price will climb. Screaming Eagle is a classic example of high value and low production. One of the most expensive wines in the world to date is a $500,000 bottle of 1992 Screaming Eagle Cabernet Sauvignon, of which only 175 cases were produced.
It should be obvious that your wine will need to be well-tended and safeguarded to sell well—but for the best results, you’ll also need to be able to prove its provenance has been protected. Buying ex-chateau wines direct from producers can help minimize the number of miles and hands your wine will need to cross to get to your door. And, of course, even if you’re only planning to cellar your wine for a short time, taking advantage of professional storage services will ensure your wine remains in prime condition—even in the event of a natural disaster.
While you can certainly arrive at a rough estimate of the worth of your wine by weighing the impact of each of these factors, guidance from professionals, such as Vinfolio’s cellar acquisition team, can make a world of difference in the ROI you will ultimately realize from your investment.
Options for Finding Out How Much Your Wine Is Worth
When it comes to obtaining a wine valuation, you have options.
If you are considering managing or liquidating an entire collection, a service like Vinfolio will send a team member to value your collection and discuss your best options.
Auction houses often offer in-person wine valuation services. These services can be helpful if you would like a live consultation. However, your options may be limited to local services and may require scheduling one or more appointments to discuss and review your collection. If you are considering managing or liquidating an entire collection, a service like Vinfolio will send a team member to value your collection and discuss your best options.
For many people, an intuitive online platform—one designed by industry experts with wine investors in mind—can streamline evaluations and help you obtain accurate estimates quickly. An online tool well-suited to the needs of many investors is Vinfolio’s VinCellar app that enables investors to access their collection and the online marketplace from any Internet-connected device, even on the go.
How to Use an Online Wine Valuation Tool to Maximize Your ROI
Online wine valuation tools can help ensure your collection catalog stays up-to-date and you stay abreast of market fluctuations and projections. VinCellar, for example, provides a user-friendly cellar management system that offers a bird’s-eye view of your entire collection—even across multiple storage sites. The platform also allows investors to filter collections by varietal, quality, country of origin, and more.
These types of applications are designed to make managing your collection as simple as possible. You can add new wines at any time by scanning the label with a smartphone. Or, you can upload a file on the desktop application and input purchase and cellar information, as well as any notes you would like to add, such as tasting notes. For even greater convenience, VinCellar will also automatically add any wines purchased through Vinfolio (or sent to our professional storage facilities) to your online catalog.
Apps like VinCellar make it easier to determine when your wine will reach its full potential as an investment and how much it will be worth. Knowledge is power, and in this case, the more you know about the value of your wine, the more profit you can expect from your 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 finest wine.