Collecting Wine for Profit -- and Fun
By Thane Peterson
Ever since I talked to Steven Grover, I've been getting more intrigued by the idea of collecting wine. Grover, now 69, was a San Francisco real estate developer and builder when he got interested in wine back in 1970. He studied up by tasting different wines every evening for 18 months, comparing his own reactions with the opinions of wine writers.
Then he started collecting. By 1980, his wine collection had expanded to 20,000 bottles worth $1.5 million. The real estate market was in a slump, so he turned his collection into a company called Fine Wine International (www.vinrare.com) and has been selling wine professionally ever since. "I realized wine would give me a great deal more pleasure than real estate," he told me recently.
To a lot of people, the whole idea of collecting wine seems odd. The snobbery of wine culture is off-putting, and setting aside bottles of wine to age for 10 or 15 years goes against our consume-it-as-you-go culture. But to me, the concept of collecting as a way to augment your investments is alluring. Collectors get to enjoy something beautiful (as with art), historically interesting (coins or documents), or tasty (wine) that may well go up in value.
Grover claims that many of the wines he and his clients have bought over the years have appreciated in price by around 15% annually. Such high returns are probably a pipe dream for most people. But I've kept a few dozen bottles of wine on hand for years and talking to Grover made me think about taking it more seriously.
Collecting wine actually makes a lot of sense, even if you just like to have a glass with dinner. Contrary to what most people think, you don't have to invest thousands in fine French Bordeaux or classy Italian Barolos. "Almost any red wine will become smoother, subtler, and more complex with time," says Jeff Morgan, author of Dean & Deluca: The Food and Wine Cookbook (Chronicle Books, $35), which came out on Apr. 1.
For instance, Morgan recently realized that he had inadvertently left a bottle of Fetzer Zinfandel, a California wine on sale in many supermarkets, sitting in his cellar for years. He opened it -- and found that it "had aged beautifully," he says. A few white wines and champagnes also get better with age.
The big stumbling block for most people is storage. A serious collector -- i.e., one who wants to eventually resell -- needs to consider investing in an expensive home storage unit that will keep the wine humid (so the corks don't dry out) and at the ideal 55 degrees or so. That's because auction houses like Christie's, Sotheby's, and Butterfields won't sell collections unless they're certain the wine has been properly stored.
However, companies in most metropolitan areas that store wines for restaurants usually will store wine for collectors, too, for $12 or $14 per case annually (that's only about a 3% annual fee for wine that costs $35 per bottle). For everyday drinking, you can always keep a few dozen bottles in one of those little refrigerator-like units that cost $500 or so. A dark corner of the basement can work fine, too, as long as the temperature stays between 45 and 70 degrees, says Morgan. "Wine is a lot sturdier than most people think."
Expert advice -- the other daunting thing for most people -- is easy to come by. By far the most influential wine critic in the world is Robert Parker. He has a subscription Web site (www.erobertparker.com, $99 a year), or you can subscribe to his bimonthly newsletter, The Wine Advocate, for $55 annually. And ratings of individual wines by magazines such as Wine Spectator are now widely available. They're posted on Internet wine sites like www.wine.com, and many stores display them next to wines they sell.
AVOID THE HYPE.
Another good source of information is the auction houses. You can actually call up an expert like Richard Brierley, head wine specialist at Christie's in New York, or Bruce Kaiser, vice-president of the wine department at Butterfields in San Francisco, and ask for advice on upcoming sales.
A lot of the wine at Christie's and Sotheby's ends up selling for $500 to $700 per 12-bottle case, and sometimes a lot less (Butterfields has sold cases for as little as $50, Kaiser says). And Brierley says about three-quarters of the wine sold at Christie's auctions goes to absentee bidders. Shipping can be a problem if you live in a state with restrictive liquor laws, but most states make exceptions for occasional small shipments.
However, simply buying the highest-rated wines is a sure way to overpay, because prices soar almost as soon as the ratings come out. During the dot-com craze, wild bidding drove up the auction price of California cult cabernets favored by Parker -- from boutique wineries like Harlan Estates, Screaming Eagle, Bryant Family, and Colgin Cellars -- to $1,000 or more per bottle. That's because, unless you happened to sign on as a customer with one of these wineries early on, you had no other way to get their wine. Ann Colgin, owner of Colgin Cellars, says her winery (which produced only 650 cases of wine in 1999) has a 4,000-person waiting list of potential new buyers.
The better approach is to avoid the really hot-sellers. For instance, when Kaiser's neighbors recently asked him for advice on which French wines to buy, he steered them away from 2000 Bordeaux because raves from Parker have driven prices into the stratosphere. Instead, he had them stock up on 1996s and 1997s, which he calls "dead bargains right now." So, they nabbed some 1997 Chateau Grandes Murailles for $15 per bottle, well under the typical $25 retail price.
Want a good California wine? Napa Valley wine-industry consultant Vic Motto says when people ask him how to get some impossible-to-find Bryant Family wine, he tries to steer them to the Chappellet Winery (www.chappellet.com). Its Cabernets go for $35 to $125, a fraction of what you would have to fork out for a comparable Bryant Family vintage.
Author Jeff Morgan suggests trying something from the Pride Mountain winery, and Colgin notes that her winemaker, Mark Aubert, is about to come out with his own Chardonnay under the "Aubert" label. Grover has even started his own winery, Vineyard 7&8. Anyway, you get the idea: You'll find more possibilities than any one person would have time to explore.
Now, here's why I think collecting is a lot more fun than stock-picking. Once you start getting into wine, the experts say, by far the most important thing is develop your own palate by doing a lot of tasting. "Have fun," advises Brierley. "The more you taste the better." With all due deference to investment gurus like my colleague Robert Barker, you can hardly say the same thing about stock certificates and mutual-fund prospectuses.
Peterson is a contributing editor at BusinessWeek Online. Follow his weekly Moveable Feast column, only on BusinessWeek Online
Edited by Beth Belton