Managing your portfolio is never as fun for the rest of us as it is for the wine collector. In the wine market, “sell” is replaced with “drink” and that’s usually done over cheese and good company rather than an antacid and a phone call. Buying replenishes your mealtime supply and diversifying is as easy adding white to red and new to old.
Historically, well-stored, age-worthy wine appreciates in value by about 15 percent a year—a perfectly admirable ROI—but it’s not quite that simple. As a global commodity that experiences the same ups and downs as any economy, wine is subject to its own host of market risks. It can be dropped, stolen, overheated, or otherwise mistreated. A 100-point score can double a wine’s price overnight. The buying habits of the Chinese (who pay no tax on wine sales and imports) significantly impact the price and availability of wine’s marquee names. And a case of fraud, like Rudy Kurniawan, who was arrested this spring for counterfeiting and selling millions of dollars of fraudulent Burgundy, can devalue an entire region’s reputation.
Add this atop a skittish economy and you’ve got the makings of a drowned market. Market Street Wineshop’s Robert Harllee has seen his number of collectors dwindle from 25 or 30 to five or six over the past three years. “Tastes and habits are changing. We’re no longer producing new generations of collectors,” he said.
Others see the uncertain market as incentive to collect. “Amongst the top echelon of people, the business of collecting has actually been heightened in this unstable economy,” said Bill Curtis, who opened Tastings of Charlottesville 22 years ago. Curtis has counted eight to 10 customers as collectors for 10 to 15 years. They spend $30,000-50,000 a year with him.
But because no Virginia retailers are in the futures (see Winespeak 101) game, it’s not Bordeaux that Harllee and Curtis are selling. Nor is it at the four-digit bottle price for which many Bordeauxs go. Instead, their collectors are buying wines from Burgundy, Châteauneuf-du-Pape, and Napa, depending on what style of wine they dig the most. Typically, a Burgundy collector isn’t also a Napa Cab collector, and because Curtis’ and Harllee’s high-end bottle prices range from $65 to $135, these are wines to drink more than they are to collect.
Of course, it’s the drinkers who make the best collectors, because they keep coming back for more. Curtis’ wealthiest customer refuses any $200 bottles, because he’s drinking them straightaway. Still, having a customer who routinely fills a $1,200 case is better than one who spends big but lays them all down for a very stormy day. Curtis says it’s finance people who collect in this true sense. “They abide by the pork belly theory that it’ll all be worth three times as much next year,” said Curtis.
Many collectors go straight to the source for cellar advice and refills. Luca Paschina, winemaker at Barboursville Vineyards, has about 20 serious collectors who spend $5,000-10,000 a year on his “library” wines. One collector even came to him with a spreadsheet of his cellar contents asking for advice on what to drink, what to sell, what to keep, and, best of all, what to buy. The collector walked away with five cases.
A request that Harllee’s getting a lot more are for birth year wines. Depending on the recipient’s age, Harllee’s often limited to a Port or Madeira (two fortified wines that can outlast Gram or Pops), but he guesses he still makes 30 to 35 of these sales each year. “It’s not a bad little business,” he said.
Serious wine collecting is definitely a rarefied market for the 1 percent-ers, but that doesn’t mean the rest of us can’t dabble in it. If you’ve got some room in your sock drawer, stow away a few bottles that have some life in them. There’s nothing at stake when you can drink your losses.
Three time’s a charm
Speaking of collectibles, the 2010 vintage of 3, the collaborative effort of King Family’s Matthieu Finot, Veritas’ Emily Pelton, and Grace Estate’s Jake Busching, will be released at King Family Vineyards on Tuesday, July 3, at 3:33pm. This will be your only chance to taste the wine, but you can buy the wine from the wineries’ tasting rooms. 2010 was a hot, magnificent year for red grape growing, so this one’s going to go fast.
Futures (n.): The early purchase of wines still in a barrel, often a year or 18 months prior to the official release of a vintage.