Guide to the Art Business: How to Invest through Wine
Price records at auctions are regularly set by not paintings, sculptures, precious stones, and wine. We would like to share with you a little information on how to choose the perfect wine to invest in.

Investing in wine is no secret. Collectible bottles have the fastest financial growth in the short term (More than a 25% profit in 12 months) and are among the leaders of long-term investments (5 and 10 year). However, it is essential to pick out the correct bottles. 


The price is affected by a variety of factors linked both to the drink itself and the bottle, such as grape, variety, purity, age and color for the prior and cork, height of shoulders, level of liquid, condition of the label and box for the latter.


The size of the bottle is also very important. There are standard (0.75L), mangnum (1.5L), double-magnum (3L), jeroboam (4.5L), imperial (6L), nebuchadnezzar (15L) and cupronickel (18L) bottles. The size of the container can significantly affect the taste of the same wine.



What do you need to know in order to start investing in wine?


Before anything else, you need to choose the variety and the wine region in which you want your wine to be produced. Wine from Bordeaux, France remains the undisputed leader for centuries. To this day, the official classification of Bordeaux wines remains the one established in 1855 for the Paris exhibition. Within this classification, there is gradation, and only 5 farms have the status of first class (Premier Cru Grand Cru Classé), which are:



  1. Château Mouton-Rothschild. Manager/owner: the Rothschild family. Production: 300,000 bottles.

  2. Château Lafite-Rothschild. Manager/owner: the Rothschild family. Production: 180,000 bottles.

  3. Château Margaux. Manager/owner: Corinne Mentzelopoulos. Production: 150,000 bottles.

  4. Château Latour. Manager/owner: Francois Pinot. Production: 200,000 bottles.

  5. Château Haut-Brion. Manager/owner: the Dillon family. Production: 140,000 bottles.


In 1954, however, it was decided that the classifications needed updating, and so three wineries on the right bank of Bordeaux were created:



  1. Petrus (Petrus Pomerol). Manager/owner: Jean-François Muex. Production: 30,000 bottles.

  2. Château Cheval Blanc. Manager/owner: LVMH Bernard Arnault. Production: 100,000 bottles.

  3. Château d'Yquem. Manager/owner: LVMH Bernard Arnault. Production: 60,000 bottles.


The grape varieties produced in Bordeaux are, for the most part, Cabernet Sauvignon and Merlot.


The region of Burgundy is geographically broader and is home to 37 of the top 50 wines in the world. Many more varieties are produced here, but its most prevalent one is called a Pinot. There is no classification in Burgundy, and there are many wineries, from those who produce ordinary table wines to those who have received Grand Cru status. Because individual vineyards in Burgundy are small, their production volumes are significantly smaller inferior than those of Bordeaux, causing the prior’s price to be incomparably higher. For example, a box of Romanée-Conti in 1988 from the winery Domaine de la Romanée-Conti went for 198,000 sterling pounds in 2017.


Ratings


Even in French vineyards there are unsuccessful crops, usually due to weather conditions or insect invasions. This makes it necessary to consider which bottle is the choice of the year. It is almost impossible to determine the best years of a bottle, so instead there are generally recognized world ratings compiled by famous sommeliers.


Robert Parker, one of the most authoritative wine critics, updates his ratings every two months.


Parker estimates vintage wines on a stooge scale. Wines that receive 96-100 points  become absolute leaders in the market, causing their prices to grow in a geometric progression. In fact, Bordeaux wines felt a second surge of interest after Parker’s publication on the outstanding harvest of 1982. At the same time, however, many of his quotes also go like this:


"Never give more than 12-15 $ for a bottle in 1984, regardless of the farm in which it is produced."


Here is a short list of Parker's recommendations.


 


What's next?


Now that you know how to select the wine and year, the final step is to carefully read the description of the lot in the catalog. In addition to the standard information (winery, year, volume, label and box state, price), you will find a record of the free space above the product, or the ullage. This correct ullage for each wine is different depending on the year. Most often, the empty space in Burgundy wine should not exceed 4 cm, while Bordeaux has more complicated rules. Young wines should be within the neck, while wines older than 15 years have their borders in the “shoulders” (Low shoulders are characteristic for old wines with more than 40 years of age, and are usually the limit. If the wine in the bottle is less than this, then you cannot drink it, regardless of its age.  


Here’s a small cheat sheet for for choosing your wine at an auction after deciding on the origin and year:



  • Ullage - free space above the product; the amount of wine in a bottle.

  • The presence of the coat of arms or brand name of the winery on the label is the first indicator of authenticity.

  • The bottle must be signed by A.O.C. (Apellation d'Origine Controlle), which is the second guarantee of authenticity.

  • The serial number - all wines of the highest category are original and strictly numbered.

  • The shape and height of the shoulders - Squared for Bordeaux and sloped for Burgundy.

  • The absence of damage to the cork - Make sure the wine was not opened, that it did not breathe. The cork should not crumble when opened and should not fail or crash with pressure changes and transportation.



The label’s condition also affects the cost and presentability of the bottle, but it is not directly related to the quality of the beverage itself, unless there are streaks. Streaks indicate that the wine could have been opened and that has breathed.


An uncovered box or a damaged wooden lid is not a problem if you do not wish to present the wine as a gift, but the sight of a damp bottom or darkened boards is worth considering. The description of the lot informs you on the quality of the goods.


Where the wine is spilled (perhaps not at the winery itself):


BB – Bordeaux bottled 
BE – Belgium bottled 
UK – UK bottled
FB – French bottled 
OB – Oporto bottled
 


The characteristics of the box:


owc / wc – original wooden case / wooden case
iwc – individual wooden case 
oc / cn – original carton / carton


It would be a lie if we said this information is enough. The world of wine is huge, filled with nuances, deep as the colors of Burgundy and diverse like the aromas of Bordeaux. Specialists at BALTZER auction agency have been long immersed in the wine world and would be happy to accompany you to the collection of your seller.


P.S.


We would like to draw your attention to the fact that the norms for bringing alcohol into Russia are strictly regulated. It is forbidden to bring more than 5 liters of alcoholic beverages from abroad. Furthermore, alcohol over 3 liters is subject to declaration: for every liter above the norm, a fee of 10 euros is charged. BALTZER Auction Agency carries out the delivery of alcoholic beverages throughout Europe constantly, so do not hesitate to contact us with questions.


 

18 July 2018
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