Money where your mouth is

Stone Paddock Hawkes Bay Scarlet, The Black Chook Shiraz Viognier, Whalebone Bay Marlborough Gewurztraminer. Photo / Babiche Martens

The property market may have gone to the wall and people who have invested in shares may be shaking in their bourses, but reports suggest that those who've channelled their liquid assets into fine wine are finding their glasses overfloweth in contrast to the performance of other investments in these recessionary times.

Take the recently released 2008 vintage from the legendary Bordeaux First Growth Chateau Lafite-Rothschild. While its first release was €110 (approx. $230) a bottle in April, a quick look at www.wine-searcher.com reveals that most bottles now retail between $600 and $700.

Those sitting on older wines have been enjoying returns of around 12 per cent a year, according to research released by Liv-Ex, whose index tracks the price movements of the world's top wines. Wine investment works when labels with limited supplies and large reputations converge with a hungry pool of buyers.

However, while the most recent figures for the Liv-ex 100 Fine Wine Index show that it's up 5.2 per cent in the year to date, it's still down 17.9 per cent year on year, indicating the economic crisis has taken some toll.

"There is a degree of risk associated with wine collecting, as there is with any investment," warns Luke Batchelar of Batchelar Fine & Rare Wine. "However, this risk is reduced through knowledge, research and proper cellaring, plus making sure you buy at the right price to begin with. You also need to deal with established and reputable merchants and traders as, unlike some other asset classes and markets, the industry is largely unregulated."

Those who paid the highly inflated prices for Bordeaux's hyped 2005 vintage a year or so ago, have had to watch their prices fall. However, now looks like a good time to buy. "With the market the lowest it's been in 20 years, there's an opportunity to buy on a low and sell on a high," remarks Daniel Kemp of Kemp Rare Wines. "I haven't personally bought Bordeaux for years but have put a few away recently. When the market does come back it'll come back really hard."

People are still buying, with Kemp recently experiencing his best-ever month for private sales, while Webb's auction house sold a bottle of 1990 Domaine de la Romanee-Conti for over $10,000 a few months back. "There is still serious interest in good quality wines from good vintages," observes Simon Ward, director of the Fine Wine Department at Webb's, "and the market still seems to be relatively solid."

It's no good popping down to the supermarket to stock up with wines to sit on, you have to pick the right labels to be in with a chance of reaping returns. "Certain regions and particular chateaux, domains and estates are generally regarded as investment grade wines," explains Batchelar. "Classified Bordeaux, Grand Cru Burgundy, vintage and prestige Champagne and vintage port have been the traditional markets and there are a few 'new world cult wines' generally from Australia and the US that have become hugely sought after and therefore their prices have jumped considerably."

New Zealand wines are regarded as riskier investments. "The majority of New Zealand wines don't have a history of appreciation as they get older," notes Ward. "However, we are seeing more interest in certain New Zealand producers, such as older vintages of wines such as Te Mata's Coleraine, Felton Road's Block Pinots, Ata Rangi, Neudorf and Craggy Range wines such as Le Sol." The best bets are wines from respected players that have some track record.

Advice that's often given to anyone thinking about investing in wine is that they should have a passion for it to begin with and secondly not buy more of it than they can afford to drink!


Instant Returns
Wines to drink now for pleasure rather than profit

Swimmingly good

Whalebone Bay Marlborough Gewurztraminer 2007 $12.99
A sweeter style gewurz oozing rich, honeyed tropical fruit notes over musky spice and ginger. Delicious and dangerously affordable. (From
www.blackmarket.co.nz)

Scarlet fever

Stone Paddock Hawkes Bay Scarlet 2007 $22-$24
From the Paritua stable, this seductively smooth and supple blend of merlot, cabernet sauvignon, cabernet franc and malbec is full of plump
blackcurrant and dark berry fruit, with a dark chocolate undertone and pinch of spice and dried herbs. (From Blend, Branos, Milford Cellars, Don Johnson's.)

No chicken

The Black Chook Shiraz Viognier, South Australia 2008 $22-$23
A full-bodied and feisty wine bursting with sweet and juicy blackcurrants, kirsch and spice set off by a fragrant floral element from the 6 per cent viognier in the mix. (From Liquorland, The Merchant of Taupo, La Barrique Remuera & Mt Eden, Bacchus , Miller & Co, Point Wines, Kumeu Cellars, Wine Loft, Mairangi Bay Fine Wines.)