How to invest in fine wine: everything you need to know from an actual expert

You can invest in just about anything these days. From regular stocks to idiotic cryptocurrencies. From fine art to ridiculous digital JPGs someone told you were special. But did you know that you can build a portfolio around fine wines and top drops? This is everything you need to know about how to invest in fine wine, from an actual expert.

Luke Hopewell is a renowned drinker. If it mixes, pours or pairs, Luke has tried it and has his thoughts. If you’ve got a question for Redaktor’s mixologist-in-chief, send me an email.

To some, wine is more than just an accompaniment for a garden party or a gift you bring over to dinner. Fine wine in particular is serious business indeed. While you were down at Dan Murphy’s browsing the shelves, the ultra-rich were buying fine wines at auction for their portfolios. In fact, the most expensive bottle of wine ever to go under the hammer fetched $558,000.

In case you’re wondering, the bottle was a 1945 Domaine de la Romanée-Conti. Only 600 were ever produced and for that sort of money, you’d hope it was bottled with grapes grown by the fountain of youth. You’d think a bottle like that would never be opened, but the editor of Fine Wine Magazine was actually there at a birthday of all venues to taste a rare glass of half-a-million-dollar wine for themselves.

So how can you get in on the action?

It should go without saying, but I’ll say it anyway.

This is not financial advice. It’s a general guide only, and you should consider your personal circumstances before making any decisions.

How to get started investing in wine

Even as a journeyman in the world of finer things, I knew I needed some backup on this one. So, to get an expert’s perspective, I went to the top of the game.

Michael Anderson is Head of Auctions and Secondary Market at LANGTONS. But more than that, he’s the wine whisperer. He cut his teeth in trendy Sydney wine bars before advancing his craft as a sommelier, an industry judge and a qualified expert with honours to boot. Most recently, he made headlines with LANGTONS for partnering with a wine writer to auction off an Indiana Jones-style trove of wartime wines to the world.

I chatted with him recently about what those looking to get into the grape game for themselves need to know.

The first thing you need to know? Not every wine belongs in a portfolio.

Luke at Redaktor: What actually makes a wine “investment-grade”? Is it just about prestige, or are there specific qualities that separate a fine wine from a bottle that’s best enjoyed now?

Michael Anderson, LANGTONS: A fine wine is at the pinnacle of its style in its region and across the world and will offer its owner a level of quality unsurpassed for that style. They are crafted using the most cutting-edge and refined techniques from vineyards that have been carefully looked after for many generations to produce wines of personality, typicity and longevity.

The care and technique, along with the history and scarcity in production see these wines demand prices far beyond their average  Fine wine can be young or old and a wine or winery that was known for producing fine wines do not necessarily have reservations on continuity in the space. Things can, and often do, change.

Luke at Redaktor: How does investing in wine compare to traditional investments like stocks or real estate? Are the returns worth the patience?

Michael Anderson, LANGTONS: The most important thing to consider with fine wine investment is that wine is, for the most part, a perishable product unlike bags or watches! Storage is important as wine can spoil and become worthless to you – minus a few exceptions such as extremely old Bordeaux and wines like the famed Penfolds Bin 1 1951 which is largely undrinkable, but still heavily invested in for future profit.

It’s also vital to understand the two approaches to fine wine investment. Firstly, the speculation side where you can predict a wine or winery to increase in value and invest early. Secondly, you can invest in new-release wines from cult producers such as Rockford or Wendouree to purchase at humble-release pricing only to sell later on for a much higher price. These wines are always invested in as they are the pinnacle of the fine wine sector in Australia and sell out.

The basics of wine investment

So you’re interested? Well, you’ll need somewhere to begin:

Luke at Redaktor: For someone new to wine investment, where’s the best place to start? Should they look at auctions, specialist funds, or personal cellaring?

Michael Anderson, LANGTONS: The best place to start is wine auctions like we offer as part of our services here at LANGTONS! Folks like us here at LANGTONS love talking about wine, the market and where the market is going so we’re always open to answering any burning questions you may have. Auctions also have great ranges of well-stored wines to browse and bid on. At LANGTONS, bidding is easy and you can clearly see how much you’re bidding (along with the vendor commission) so you don’t get in over your head.

Luke at Redaktor: How much money do you realistically need to start investing in fine wine? Can beginners make a solid start with a few hundred dollars, or is it strictly for high-net-worth individuals?

Michael Anderson, LANGTONS: It depends on your goals, but a few hundred dollars should be enough to get you started. It is certainly not just for high-net-worth-worth individuals.

For example, Wynns ‘Black Label’ Coonawarra Cabaret Sauvignon retails around $30-35 a bottle. So a $200 six-pack is a fine entry-level investment and a popular one, too. Wynns ‘Black Label’ Cabaret sits in the LANGTONS Classificationof Australian Wine, which lists the best-performing wine at auction. These wines from the 1970s can achieve hundreds of dollars at auction. Along with Penfolds and Wendouree, the wines from Wynns have been trusted to perform well in the cellar for decades. Fine Australian Riesling is also a good way to start collecting. It ages well, and $50 a bottle will give you some of the top wines in the country.

Luke at Redaktor: What are the biggest mistakes new wine investors make? Is it about choosing the wrong wines, poor storage, or selling too soon?

Michael Anderson, LANGTONS:

• Going all in. Unless you are exceedingly confident, spread your risk by buying a range of different wines. Vintage variation is real, as is reputation variation. A darling of the wine scene might turn out to be a one vintage wonder and you don’t want to be left sitting on a pile of a wine that was.
• Not checking if the wines they buy under cork offer recorking – so important as they can perish!
• Thinking of wine like bonds or crypto and not setting up the proper space to store it or transport it. Bottles can break easily and wine can spoil if not stored properly which means your investment is worthless.
• Forgetting to factor in additional costs… aspects such as buyer’s premiums, storage, insurance, transport and so forth.
• Not checking the provenance of a wine and buying from unreliable sources – wine fraud is a thing!

How to know if a wine is worth investing in

Like all things, wine follows trends. So how should you let these trends influence your potential investments?

Luke at Redaktor: What’s hot right now? Are there any emerging wine regions or under-the-radar varietals that investors should be paying attention to?

Michael Anderson, LANGTONS: Burgundy, Burgundy, Burgundy! It’s the word of the day in the investing world at the moment. Prices on the top wines from the region have gone beyond the reach of 99.9% of buyers, and even the entry point wines have risen sharply. There is still some value to be found but the producer should be the first thing you look at when choosing where to buy.

Other in-demand wines in the investing space right now include top vintages from Old Bordeaux such as Petrus. The top examples out of Rhône – think Château Rayas from Châteauneuf-du-Pape – are also on-trend again and demanding huge prices in the secondary market.

Here at home in Australia, the wines in our LANGTONS Classification of Australian Wine increase in value and are always great wines to invest in. Think wines from cult producers such as Wendrouee, Rockford, Bindi, Giaconda, Penfolds and Henschke.

Luke at Redaktor: Which producers consistently perform well in the secondary market? Are certain houses or châteaux a safer bet than others?

Michael Anderson, LANGTONS: The LANGTONS Classification of Australian Wine is the most comprehensive answer to this question regarding Australian wine. We update the list every four or five years, so it is also relevant to today’s market. There are other international indices that look at market value, though their relevance in the Australian market has to be considered—1885 Classified Bordeaux, Premier and especially Grand Cru Burgundy, Prestige Cuvee Champagne and increasingly Cru Barolo. High-end German Rieslings (GGs and Goldkapsel) have a small but strong following, and the sheer lack of volume in the Australian market drives the market.

Beyond that, look to individual houses that stand outside those Classifications, like Chateau Petrus, Clos Rougeard, Masseto, Sassicaia, the Sicilian wines of Frank Cornelissen or the Central Otago darling Felton Road.

Luke at Redaktor: How do wine investment trends shift over time? For example, has Bordeaux lost its crown to Burgundy? Are Australian wines on the rise?

Michael Anderson, LANGTONS: Has Bordeaux lost its crown to Burgundy? It depends on how you define the crown. If it is eye-wateringly high prices, then yes, Burgundy dominates. But these iconic Burgundians like Domaine de la Romanee Conti and Leroy (two of the best performers at auction) are rare as hen teeth. Bordeaux typically produces more wine (because they have more extensive vineyard holdings), so the overall market for Bordeaux can be more significant. Burgundy tends to follow broader market trends. So when the bankers make money, they tend to celebrate by buying Burgundy and Champagne. When market conditions tighten up, Bordeaux becomes more popular because it is a safer bet.

How to store your wine and safeguard your investment

Don’t tell any criminals this, but right now I’ve got a 2008 Penfolds Grange sitting in my Vintec wine cabinet that is (hopefully) appreciating in value. Here’s hoping I’m storing that right?

Luke at Redaktor: What’s the best way to store investment wine? Can people store bottles at home, or is professional cellaring a must?

Michael Anderson, LANGTONS: Temperature control, insulation, decent bottle capacity and overall size, plus security are all important elements for a wine cellar. It’s ideal if you have the room and the finances to fit out a cellar that’s deep within your residence, is climate-controlled, stays dark, hosts the right moisture level and can fit 1000+ bottles.

But if not, some other things to consider in building the best possible cellar include:

• Wine cabinets are great as they let you control the temperature and most also offer safety with locks built in. If you can only manage a wine cabinet that’s fine, but also be sure to leave extra room in your kitchen, garage or cabinet space for anything extra.
• An important factor in storing wine is keeping the temperature at a constant low. While many will argue about the perfect temperature, one thing is for certain, lows and highs in the same space will ruin your wine quickly.
• Keep whatever space you use as your cellar dark if you can. The colour of wine bottles prevents high amounts of light affecting the wine, but keeping wine in direct sunlight for too long will be a problem, so make sure your cellar or storage area has a door and no windows.
• Avoid places prone to vibrations for your cellar such as under the stairs or below high-foot traffic areas of the house.
• Be sure to lay your wines on their side if they have corks, and if under cap you can also store them on their bases.

When to hold and when to fold: how to know when it’s time to sell your wine investments

Luke at Redaktor: When is the right time to sell? What factors influence whether a bottle will increase in value?

Michael Anderson, LANGTONS: If the wine is right, it will find its market. Clos Rougeard from Saumur Champigny in the Loire Valley or Giaconda Chardonnay from Beechworth in Victoria tend to ignore the market and sell. For everything else, selling when the market is hot makes a lot of sense. However, when the market cools, so does the supply from sellers. If you don’t see much of the wine you want to sell, it might be the time to test the waters and coax the market out of its shell.

Investing in fine wine: is the risk worth the reward?

It all sounds like a lot of trouble if you’re not already a fan of wine. So is it even worth it?

Luke at Redaktor: What are the biggest risks in wine investment? How can investors avoid getting burned by market fluctuations, counterfeit wines, or poor storage?

Michael Anderson, LANGTONS:

• Change is a risk. Changing market conditions or consumer tastes. Wine is a long-term investment, and much can change in that time. Segments such as Bordeaux, Burgundy and Classified Australian wines tend to perform well because they have a strong track record over decades or generations.
• Don’t wait too long. It is better to sell earlier than late.
• Corks can perish so check if the wine you’re buying offer recorking
• Wine isn’t like bonds or crypto – it’s rigid and takes up a huge amount of space. Bottles can break easily and that means your investment is then worthless.

Luke at Redaktor: Is there a wine investment bubble? Some say prices for certain wines are inflated—what’s your take?

Michael Anderson, LANGTONS: I don’t think so. There is too much data and knowledge in and around the industry that investors and collectors can make sound decisions. The word ‘bubble’ implies that it might burst, and while that is highly unlikely, it doesn’t mean there won’t be a market correction. Global economic or geopolitical circumstances might change, impacting the wine market. This is an exogenous influence to which all markets are susceptible.

One example is the suite of current trade stoushes happening with the USA. The advent of the tariffs could impact the USA market for Bordeaux. That’s a large market, and if it dips,  that might affect prices in the broader market. For investors, it could mean choppy waters ahead. However, a drop in the cost of Bordeaux could spark a resurgence in interest for all those people priced out of that market. Speculation is all good, but if you want the truth, you can have it when the hammer falls at auction and the lots sell.

Luke at Redaktor: What’s one piece of advice you wish every wine investor knew before getting started?

Michael Anderson, LANGTONS: Do your research and know your stuff, or at least plan to up-skill during your wine investment period. You can see a lot of wines out there that pretend to be a “fine wine” with a flashy label, big bottle and high price tag – but in reality are not! When you start investing, start off small and with reputable producers so you know their stance in the fine market. Keep an eye out for birth-year wines, too as they can become valuable later on down the track like we saw with the 1974 Penfolds Grange last year!

Luke at Redaktor: If you had to pick one bottle to invest in today, what would it be and why?

Michael Anderson, LANGTONS: Giaconda Chardonnay. The reputation of this wine is such that it will be able to be sustained for many years to come. The limited production volumes mean that as demand grows, so will the price. It is also Chardonnay, not Cabernet, so its peak drinking window will arrive sooner, so it will achieve its highest price much sooner, i.e. 5-10 years. The first challenge is finding the wine on release. The second challenge is that Chardonnay is less robust than Cabernet or Shiraz. Proper storage is required, and upwards of a decade of cool storage can be expensive. Most importantly, if the bottom fell out of the market and I was left with a mountain of Giaconda Chardonnay, I would hardly have a reason to complain.

Read more

Wine collecting not for you? We’ve also spoken to an expert on how to start your own whiskey collection.