Wine Speculation or a Wine Gamble?

There is an increasing group of speculators who have turned their attention to purchasing wine as an investment, to the detriment of wine lovers who actually enjoy drinking the stuff. Do the investors have the right to do so, absolutely – no argument there, but they deserve all they get, or don’t get as the case may be.

The preoccupation with having to make a buck out of everything to me is sick! Let me give you one example. About two years ago I went and picked up a bottle of 86 John Riddoch purchased via sold.com from the vendor in Mosman. The house was worth about a million, possibly more. The guy I bought the wine from was a business professional whose income would have been over $150,000 a year. He proudly told me he had purchased a few dozen 96 Bin 389 for $23 a bottle and selling it via the web for $180 a six-pack. That net him $40 profit per six-pack. Remember, this guy earns about $75 an hour at his full time job but still felt the need/greed to make a few extra bucks by buying and selling wine.

Stock and shares were designed as investments to be traded for profit. Real estate has a virtually unlimited life, and whilst used as an investment is providing a useful purpose for tenants. Antique furniture was originally designed to be used, it’s only when they become old they become antiques and their value increases. Most painting and artwork are produced for enjoyment. Only a tiny percentage is valuable, but they still have a functional use for their entire existence. Wine was made to be drunk!

It’s only in today’s society of instant gratification that we have now normal sane rational beings that are driven by greed to buy fairly ordinary wine with the intention of making a profit. These “investors” should remember a few things. All investments are a gamble, the more risk involved and the higher the possible rewards, the higher the risk of failure.

Investing in wine for profit is far from a sure thing. The profits that may have been available when people were buying Grange at $80 a bottle ten years ago are long gone. Sure there are a few “cult status” wines around, but many of those have been fuelled by the hype of a well known American wine reviewer and these wines are at best “fashion statements.” As fashions change, so will the demand and hence the price for these wines.

Short-term profits are possible for people on restricted mailing lists like Wendouree, Noon’s and Rockford’s. These producers and others like them, sell their wine for prices that are much lower than the secondary market, because they want genuine wine lovers to enjoy the fruits of their labours. They know full well they could make more money but elect to give genuine wine loves a break. However there are some parasites on these restricted wine lists that purchase the wine and then immediately flip the wine for a profit.

Don’t get me wrong; I have nothing against the secondary market. There is nothing wrong with buying wine, holding it for years, then deciding that you don’t like it, have excess inventory etc. It’s the motivation for the original purchase that dictates if you are purchasing for investment or for the joy of drinking. My feelings on this subject are personal moral feelings; we are all different and have different values, but I am not going to apologise for having strong feelings on this subject even if it will p**s some people off. Many people think there is nothing wrong with investing in wine, good luck to them, but like all investments, there is a risk. Whilst some people may be able to make a quick buck now, sooner or later, many of these wine investments may turn to vinegar, metaphorically speaking.

Cheers

Ric

Copyright © Ric Einstein 2003