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Is fine wine ready to wow potential investors with sweet returns this year? Apparently, yes. From last year’s numbers we can tell that investing in wine is still one of the smartest ways of making good profit. The 2013 vintage had a warm, dry summer, and damp conditions in October that were ideal for developing noble rot. Both red and white grapes had inclement weather during bud burst, which meant only small crops for the 2013 harvest. As a result, the reds during this vintage did not do as well as the sweet white wines. Both the early harvest Sauvignon Blanc and the late harvest Semillon showed great promise.
2013 – Excellent year for vintage whites
Chateau d’Yquem did not make their celebrated sweet white at all during 2012. In contrast, 2013 was described as a good year. Sandrine Garbay, the winemaker there, said 2013 offered the perfect conditions for noble rot wines. The Yquem 2013 leads the ratings for en primeurs in this vintage. James Suckling rated it 98-99, while James Molesworth gave it 94-97.
The Liv-ex Sauternes 50 tracks the prices of top investment class Sauterne wines. This includes Yquem and chateaux such as Climens, Suduiraut, and Rieussec. All of these reported that 2013 was a good vintage, noting the lively aromatic qualities of the Semillon. Climens reported a small harvest with excellent quality. Since this vintage has been highly rated, it is worth examining for investment performance. Most people invest in red wines, but could these sweet whites be a good investment?
Sauternes’s sweet white wines
Looking at historical performance, the Sauternes 50 index has been fairly flat. While it did show positive performance in 2006 and 2007, recent years have wiped out those gains. On average, it seems that the wines in this index are primarily good for diversifying and stabilizing a portfolio, not for providing high rates of return.
However, there are exceptions. During March of this year, some of the largest gains in wine investments were in the Sauternes segment. During this one month, the Rieussec 2002 was up by 13%, and the Suduiraut 2010 was up over 12%. The Rieussec 2007 led the pack with a gain of almost 17% in one month. These monthly returns are not sustainable, but they are impressive.
A closer look at the vintages
Looking back further, it’s possible to see that lesser vintages sometimes outperform the great vintages as investments. 2005 was a very good year, and Robert Parker gave the Sauternes region 96 points overall. It was also a great year across Bordeaux, and that was reflected in the initial release prices. Over the 5 years after that, prices generally declined a bit.
The 2004 vintage was rated only 82 by Robert Parker. Jancis Robinson called it a very difficult year, and said that it required the strictest possible selection. With lower initial expectations, these wines had more room to appreciate, coming closer to the prices of the better 2005 vintage. Some wines delivered a positive return as a result, though others ended up in negative territory.
Chateau d’Yquem rose to meet the challenging conditions of 2004, making 6 passes through the vineyard over a 7-week period, harvesting only the grapes in optimal condition each time. As a result, their 2004 vintage was rated 95-100 by Wine Spectator, even higher than their 2005.
Should you invest in fine wine?
Yes and no. While this industry can bring solid returns, trading wines is just as risky as trading shares. Don’t do it solely for money and prior to investing, check the market. Do your homework, know the wine itself, and check wine blogs for more information. The more you know the better chances you have to make profit.
While the numbers may fluctuate from year to year, the market hasn’t lost its significance in spite of society’s common issues like the recession, for instance. Investing in fine wine can get you the sweetest returns, as long as you have patience. A wine investment guidewill teach aficionados and avid investors everything they need to know about this business. Proper storage conditions, choosing auctions houses, merchants, bonded warehouses and dealing with fake traders are just some aspects you have to consider prior to investing.