Wine Investment: Let’s get physical

29.11.17 – Wine Investment

How not to write a wine investment review

A few weeks ago we talked about how important it is to de-mystify not only the economics side of the fine wine investments world, but also the consumption side. This raised a lot of supportive comment, but left some people wondering where to go for more coherent appraisals. The problem seems to be that the more attractive a review is to those looking to invest in fine wine, the more incomprehensible it becomes.

From an investment perspective, it’s probably fair to say that only the opinions of certain top critics are really relevant. And in truth, investors don’t need to agonise over the fine detail of even their own reviews – but it is a great shame if they feel excluded from so fundamental an aspect of their own market. Reviews should at least seek to add interest to the investment process – if not the final result.

Last week, we received a submission from Vivino which captured the essence of this problem, and offered a pretty good solution. Most fine wine investments people I know have the Vivino app on their phone, and if apps aren’t your thing, the business has a very user-friendly website to which it would be very worthwhile registering.

Vivino members get a regular flow of offers, many of which are a splendid way of stocking a respectable drinking cellar. The range is as wide as anyone might need, and comes with plenty of analysis explaining why they might be worthy of consideration.

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This particular submission I refer to now showcases an excellent Lebanese wine called Château Musar, from the 2003 vintage, with reviews by such luminaries as Mark Squires from Robert Parker’s Wine Advocate, and Jancis Robinson. Let’s take a quick look at a couple.

This is a ripe, sexy, Musar. It retains its elegant mid-palate as well as lovely fruit and fine balance. There is a slightly sweet tinge to the finish, perhaps a touch of a high-toned demeanour. The lush texture and surprising richness make this a rather luscious wine by Musar standard. It is showing little but baby fat right now. Fresh and youthful, it is just a friendly puppy today. I’m not so sure it is in the winery’s preferred style, but is should be a very enjoyable vintage for consumers. Showing not a trace of age, it has a lot of potential and a long life ahead.”

There is some helpful information here, but it is couched in a style which most normal people might find a bit, let’s say, flowery. Happily, all is not lost. There follows a review from an unnamed source (and therefore someone not particularly renowned as a critic) which reveals most of what you might actually be looking for:

“Medium garnet colour, powerful nose of ripe black and dried fruit, with cigar box and a whiff of barnyard; big muscly body with med(+) acidity, alcohol and tannin which is fine and velvety; rich ripe damson, blackberry and figs with tobacco and liquorice and a sprinkling of pepper; med (+) finish. Perfect for drinking now but has a long life in it yet.”

You might take issue with whether a wine smells of ‘cigar box’ or ‘barnyard’, but these are doubtless identifiable, understandable smells which are regularly associated with fine wines. We also all know what the other indicators taste like (must go and pick up a few damsons as a reminder), so all in all, this review is a good example of what buyers might expect to find both on the nose and palate when they open the first bottle. It doesn’t have to be as byzantine as if often appears.

 

The fine wine investments market today

Meanwhile, the wine investment market, as represented by the daily-adjusted Liv-ex 50 continues its ascent, accelerating in recent days. Obviously this index focuses exclusively on wine investment in First Growths, which have underperformed the other constituent sectors of the Liv-ex 1000 this year, so there may well be a late element of catch-up at work.

This is a pretty unsatisfactory explanation really, but we don’t have long to wait because the monthly disaggregation will appear by the end of the week, when the Liv-ex 1000 performance for November is revealed. The fact is that the Left Bank in general and First Growths in particular led the rally off the bottom two years ago. So sectors do ebb and flow – which is one of the more exciting aspects of the fine wine investments market place, and one to which investors must be alert.

This upswing is perhaps not too surprising when you consider what is happening in the contemporary market for collectibles around the world. The fact is that stock markets continue near all-time highs, merrily climbing the wall of worry and causing the investment fraternity to become wealthier.

As it does so, the super-wealthy have more to spend on Salvators Mundi and such like, under which circumstances there would appear to be liquidity aplenty to keep the prices of physical assets rising further from here. Fine wine investments occupy rather a curious spot in this regard: as a physical asset it tends to be a hedge during financial market disequilibrium, but as a luxury good, it’s also a beneficiary of an increase in the affluent wealth.

The Bitcoin factor on wine investment

Incidentally, we’ve also been asked what the meteoric rise of the price of Bitcoin might mean for the prices of other physical assets. At this point, we’d have to say ‘nothing at all’.

We require much more disclosure from the Bitcoin space before we can draw comparisons or conclusions with any of the physical asset markets.

That said, Amphora Portfolio Management was early into its acceptance of Bitcoin as a tradable commodity. And we, with increasing regularity transact purchases of fine wine portfolios for clients whose chosen form of buying currency is Bitcoin.

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London wine investment

Whatever method you choose to invest in fine wine, take advantage of some expert fine wine investments analysis and opinion before you do so. That’s where we come in. Get in touch and start building your wine investment portfolio today.

NB: Amphora expresses no opinion on any aspect of Bitcoin or the Bitcoin market other than to state its acceptance of it as a purchasing currency.