From Vine to Vintage: Top Tips for Collecting Fine Wines
Fine wine expert, Renee Kuo likes to say that finance drove her to drink. During her time at Banc of America Securities, she was encouraged to “learn something about wine” so that she would order the right bottle when entertaining clients. Little did she know this would one-day lead her to give up a successful and lucrative career in finance to pick grapes and drag hoses as one of Napa Valley’s oldest interns. As she puts it, “life is not only too short, it’s too long not to do something you love.” But before too long her business experience, plus an MBA from MIT and a Winemaking Certificate from UC Davis, helped her to cross over to the business side of wine, first with a wine retailer and then as the General Manager of a winery.
When we asked this financier-turned-oenophile to outline for us what is involved in collecting fine wines, Renee’s first piece of advice, especially for those who find the world of wine elitist and difficult to penetrate, is “just go out there and drink”. Don’t let the terminology throw you off and trust your palate. You should go to tastings and become familiar with the regions, producers and vintages. Watch out for names that can be confusingly similar such as Chateau Lafite and Chateau Smith Haut Lafitte. It’s also important to become familiar with the wine critic, Robert Parker, and his scoring system. Read up on wine in such publications as Decanter magazine and Jancis Robinson’s column in the Financial Times. And try some wine apps such as Delectable and Vivino where you can scan the wine label of what you are drinking to see the recent ratings and reviews.
If you are thinking about investing in fine wine, Renee recommends a cautious approach to a volatile market. She points out that although wine has been a well performing alternative asset in the past, with low correlations to stocks and bonds, recent speculation has increased the correlation as we saw in China when the fall in the stock market there saw a similar fall in the price of wine. Similarly, while the Liv-Ex 100 – the index that tracks the price movements of the top 100 traded wines – shows a 139% return over the past 10 years compared to 41% for the FTSE 100 according to the FT, over the past 5 years, it has seen a -20.4% return. And if we track a vintage such as Lafite 2008, we also see the volatility. Released in London for £1,850/case, it reached its peak at £14,000/case and is now trading at just under £5,000/case.
Anyone interested in building a private cellar for consumption, investment or both will need to be concerned about such issues as storage and insurance, whether at home or in a bonded warehouse. The benefit of holding wine in bond is that you defer paying duty and VAT until you take delivery from the warehouse and the environment is controlled. If you take the wine home, Renee advises keeping the collection away from heat, extreme cold and wet.
When asked to name her own favorite wines, Renee immediately responded with ‘Burgundy’ where production, compared to Bordeaux, is tiny while the global caché is high. And finally, Renee reminds us that that the greatest pleasure in collecting fine wines is in the drinking and the sharing.