What are the key factors that influence the value of fine wine investments? How was a single bottle of Domaine de la Romanee-Conti sold at auction for US$558,000? Find out what drives fine wine prices and what you should look out for when investing in wine.
Top Ten Factors influencing Value of Wine:
- Brand power – wine from high profile and iconic chateaux, vineyards and estates recognised for their excellent quality and collectible status command the highest prices
- Critics scores – higher quality scores from key critics such as Neal Martin, Lisa Perrotti-Brown MW, Antonio Galloni, James Suckling and Jancis Robinson can stimulate higher prices
- Vintage – Prime vintages with an average overall higher score will add a premium to a wine. However, wines with very high critical scores from Mid and Off vintages can offer excellent value
- Rarity / Age – A finite amount of wine is created each vintage and as a wine matures and becomes rarer its price generally rises
- Provenance – A clear audit trail of ownership which records the optimum storage condition of the wine will help protect value. Ex-cellar sales from the producer offers the highest form of provenance and a premium may be charged
- Fine wine market strength – stable growth is the key asset characteristic, but as with all markets there can be cycles which may affect values. Geo-political and economic factors, for example Trump’s US Tariffs impacted demand for top Burgundy and Bordeaux negatively in 2020 and extraordinary events such as the pandemic saw price rises continue in 2021.
- Regional trends – changes in demand for wine from key regions can influence price performance and certain appellations can command a premium. Champagne has been the strongest regional performer in 2021.
- Classification – The regional ranking of a wine will indicate its quality and value – the higher the awarded classification; the higher the prices, eg 1855 Classification of Medoc & Graves – First Growths
- Condition and storage – Fine wine stored in its Original Wooden Case (OWC) with bottles and labels in pristine condition will command the highest prices. Discounts are applied where labels are damaged. Condition reports are useful prior to purchase. Ideally store investment wines in bond to enjoy Tax benefits and ensure correct temperature and humidity to protect value.
- Special release labels – special bottles or unique labels creating collectors items add value. Outstanding examples include First Growth Mouton Rothschild’s 2000 vintage commemorating the new millennium with a golden ram label, Angelus had a gold label for its 2012 vintage to celebrate gaining St Emilion Grand Cru Classe A status. Lafite Rothschild adds a small engraving on its bottle in notable years, most recently the 2018 bottle celebrated the 150th year of ownership by the Rothschild family.