As anyone devoted to the rituals of swirl, sniff and sip can attest, 2009 was a very good year for bargain hunters – whether they’re newbie collectors who rarely pay more than $50 for a bottle, or seasoned wine geeks who write six-figure checks for pristine cases of the rarest old first-growth Bordeaux and Burgundy.
Collectors report being barraged with e-mails from retail wine merchants trumpeting discounts as high as 50 percent on backed-up inventory, while auction houses like Sotheby’s, Christie’s, Zachys and Hart Davis Hart, which generally trade in higher priced, investment-grade stuff, say they dropped their sales estimates between 20 and 40 percent in the year after the crash.
Indeed, the WinePrices.com Fine Wine 100 index, which tracks price movement for 100 of the most frequently traded bottles, dropped 20 percent between October 2008 and October 2009. "There was a lot of discretionary cash driving up the market," says Jerome Zech, chief executive of WineBid.com. "A lot of that has gone away."
To be sure, as with the real estate and retail sectors, there are already signs that the best deals on these potent potables may be waning, at least at the high end. Many market watchers, in fact, say today’s buyers may well be in for some good times down the road (though don’t expect the 400 percent jump some bottles experienced during the last boom) – if only because of wine’s simple rules of supply and demand.
After all, at some point the world’s leading producers run out of acreage to plant grapes, while the number of collectors keeps growing. And unlike a Picasso painting or a Mickey Mantle card, valuable wine gets drunk, shrinking the world’s supply of older, investment-grade juice.
Still, for rookie collectors there are endless buying opportunities, whether the goal is to upgrade the quality of one’s dinner beverages, "lay down" the stuff for 10 years (wine lingo for letting it age to achieve greater subtlety and quality) or even hold well-heeled bottles long enough to help with the kids’ college fund. According to Julia Gilbert, assistant auction director at New York-based Zachys, the number of new, more modestly spending collectors coming to its auctions has been impressive, doubling in this year alone.
So how do you get into the game?If you’re thinking about going to the liquor store, grabbing a case of something with a cute marsupial on the label and storing it in your cellar as a "collectible," you’re probably off to an inauspicious start. Such so-called assembly-line wines are the opposite of collectible: industrially produced (versus craft blended) and so widely available, there’s no rarity factor.
And qualitywise, they’re a far cry from the storied wines of Bordeaux and Burgundy that have bewitched collectors for centuries and are still the barometer for valuing the stuff. Some high-end aficionados will stock their cellars only with trophy wines made by a few dozen classified French producers, with names like Chateau Margaux and Haut-Brion and prices beginning around $300 for a single bottle.
But there are cheaper ways to start up an investment-grade collection, especially with second- or third-tier Bordeaux wines that right now have dropped to as low as $100 a bottle but are still receiving high scores from critics. (A good starting point is a 90 or above from big names like Robert Parker or Stephen Tanzer.) In boom times, bottles like these, which collectors usually prefer to buy by the case, could double in value over two or three years. One such liquid lottery ticket: a 2000 bottle of Carruades de Lafite-Rothschild that sold at auction for $27 in 2004 – and $161 four years later.
Professionals tell newbie Bordeaux collectors to stick to vintages that got the best reviews, like 1982, 1990 or 2000, when weather and environmental conditions were ideal. (The wines from 2005 were great too but initially quite overpriced.) One value strategy, say experts, is to go for strong, less celebrated years, like 1989, 2001 and 2004. They may not have the cachet or steep price appreciation of the revered vintages, but they’re far more affordable – and ready to drink sooner.
According to some studies, indexes of collectible wine have actually done better over the past few decades than their Wall Street counterparts, increasing about 15 percent annually. But the wine market’s collapse at the end of 2008 is just one reminder that, like with other collectibles, stockpiling fancy grape juice has its risks. Hopeful hoarders of some expensive but hardly pedigreed California cabernets, for example, drove up prices not unlike dot-com bubble stocks – only to see them suffer a similar fate.
And as with foreclosed homes, some collectors are potentially underwater now after betting heavily on wine futures, a way to lock in prices before the stuff gets out of the barrel. New collectors can find strong values in other regions, including the U.S., Germany, Italy and Australia, but those markets tend to be spottier and more volatile than the French classics.
And a word of warning: No matter where the bottle comes from, pay close attention to proper wine storage, which along with the provenance, or history of ownership, can have a surprising impact on value. Something as seemingly minor as "cork shrinkage" can be a calamity – it lets air into the bottle, spoils the wine and can tank the value by as much as a third. It also has another fallout: You can’t even enjoy drinking your losses.
2009 Copyright The New York Times Syndicate