A Quick Guide to Fine Wine Collecting
February 2, 2021
There are many reasons people decide to build a great wine collection. You want that perfect bottle on hand to complement celebratory meals. You strive to develop a deeper appreciation of wine. Or, you may want to create something of value, anticipating that it will appreciate over time and can be sold for a profit. If you fall into the latter category, we believe you should approach it as you would any other investment—through careful due diligence and rigorous research. And while each collection is a reflection of one’s personal taste, there are some simple guidelines that can be practiced universally.
First, decide how much to spend. Once you determine your budget, do not be tempted to create your collection overnight. Allow the collection to grow naturally over time as you discover what you like most. A diverse collection is key in our view because not all wines will increase in value. Consider including not only age-worthy wines but also those that you are able to drink immediately.
Now that you have decided how much to spend, how do you know what to buy? Wine collecting demands long-term decision making, rigorous research and expert advice. Subscribing to magazines, joining clubs and identifying local merchants that are trustworthy and host tasting events will all help guide you. Compare wines from different regions and producers and try different vintages to understand the nuances of the same wine.
Once you are ready to make that first purchase, it is best practice to confirm the authenticity of any expensive wine before you buy. Make sure you know the person who is selling the wine, or you’ve checked their sales track record as a reputable dealer. Unfortunately, you will need to understand how to avoid purchasing a counterfeit bottle to avoid a costly mistake. Some common factors to examine include printing techniques, corks, sediment and labels, all of which can reveal a lot if you are versed in what to look for.
As you are building your collection, make sure to have it stored properly either at home or offsite in a temperature-controlled facility specifically designed for this purpose. We encourage discussing your budding collection with your insurance agent to ensure that you have proper coverage specifically for wine. Don’t forget to provide updates to your agent as you acquire additional bottles over time. Once your collection has been created, be sure to occasionally reappraise it. Create a method for keeping track of your wines including dates for when to drink. As the prime drinking window approaches, you will have an option whether to drink or sell the wine. An organized catalogue will also be essential should you need to submit an insurance claim. And keep in mind, it is not unusual that your personal taste will evolve as you master the art of collecting and as a result, you may lose interest in earlier purchases. Those bottles may be candidates for donation to a charity wine auction where you may be able to receive a tax deduction for the gift.
If you are buying wine as an investment, it is important to understand how wine is valued. Current price, historical trends, and scores from critics are commonly researched but factors such as scarcity and novelty may also influence price. And keeping receipts is critical to the sales process as it documents not only your cost basis for tax purposes, but if the intention is to ultimately sell, it provides a critical link in determining the provenance of the wine. Potential buyers will also likely want to see proof of where the wine was shipped from and how it was stored.
Lastly, it is important to understand marketability and selling platforms when wine reaches its peak. Take some time to become well-versed in the process, timeline and all associated costs before you embark on your new endeavor. Selling wine through an auction house provides you with a global audience but there will be associated commission costs. You may want to check local laws for specific restrictions to see if you can sell to local restaurants. And, of course, there are also online platforms available which may be worthy of exploration. In addition to all these considerations, don’t forget to enjoy the process! Salut!
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