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Despite the global finance crisis, one of the world's top experts in wine investment says premium wine is a lucrative alternative investing option - and quality New Zealand wines offer good buying opportunities.
Andrew Caillard, auctioneer, Master of Wine and a partner of Langton's Wine Auctions and Wine Exchange in Australia, says wine has out-performed many blue-chip shares during the last two decades.
While other investment markets are in freefall, fine wine, like gold, is a finite commodity. "Production of fine wine is limited, and every year, more bottles are drunk, increasing the supply-demand gap."
But there is a hierarchy, says Caillard - investors need to buy the right wine from the right vintage and store it in the right way to make money.
And as with other investments, speculative wine investments are more exposed to downward pressure.
Look for top-tier wines with past value increases - investment wines such as those from the Bordeaux region appreciate over time. A bottle of Latour, bought for $700 to $800 in 2005, will now cost about $2000.
New Zealand is beginning to make wines that "speak of place and are so utterly amazing it's only a matter of time before they're discovered by the rest of the world," Caillard says.
Local wine falls into an emerging wine investment category.
"You've got a vital industry with some smart people. New Zealand has huge potential."
New Zealand wines have made significant inroads into secondary Australian markets, he says - particularly for top-notch pinot noir - from Martinborough and central Otago.
Caillard rates Atarangi pinots from Martinborough as probably the country's best. "Escarpment is the other making fantastic wine."
Larry McKenna, director of Escarpment, says high-end Kiwi wines are cheap by world standards. "We aren't demanding the prices prestige labels from the Old World demand.
"So there's a very good [investing] opportunity."
McKenna says that wine prices will definitely increase as the perceived value and the quality continues to increase.
And the Martinborough wine industry is very young - producing the most fashionable varietals.
The importance of understanding shifts in sentiment and fashion means people shouldn't invest in wine unless they love it, says Caillard.
Escarpment has just released its Insight series which McKenna says reflect the region, and are expected to be popular with collectors.
"We haven't got the track record of Burgundy or Bordeaux," he says, "but what the commentators are recognising is that the quality is there."
