wine as an investment

Jan. 1, 2025 /Mpelembe Media/ — The Wine Market Journal released its annual list of top-appreciating wines for 2024, highlighting eleven wines that significantly outperformed the stock market. Analysis considered auction data from 2023 and 2024, focusing on wines with sufficient trade volume and minimum average prices. The list showcased various wines, including several from the 1970s, reflecting trends in collector preferences for older vintages and specific regions. Appreciation rates ranged from 57% to 108%, with factors such as vintage, producer reputation, and celebratory anniversaries influencing value increases. The Journal also notes that the wine market is inherently volatile, with considerable variation year to year.

Several factors influence rare wine appreciation and value, according to the Wine Market Journal’s analysis of the top appreciating wines of 2024. These include:

Scarcity and Rarity: Wines with limited availability, such as the Rayas Chateauneuf du Pape Reserve 1979, which had only the minimum four trades in both 2023 and 2024, tend to command higher prices due to their exclusivity. The Sterling Vineyards Cabernet Sauvignon Reserve Napa Valley 1974 is also noted for being rare, with only four trades at auction in 2024.

Critical Acclaim and Scores: High scores from reputable wine critics, such as the 100-point scores given to the J.L. Chave Hermitage Blanc 2018 by both The Wine Advocate and Jeb Dunnick, and the Vietti Barolo Ravera 2013 by Vinous magazine, can significantly increase a wine’s desirability and value. Similarly, the Chapoutier Ermitage Le Pavillon 1990 received a 100-point score from Wine Advocate. Wines with perfect scores are often darlings of collectors.

Vintage and Age: The age of a wine can play a crucial role, particularly for wines from highly regarded vintages. For example, the 1974 Napa Valley Cabernet Sauvignons from Clos du Val, Beaulieu Vineyards, and Sterling Vineyards all experienced significant appreciation. The 50th anniversary of the 1974 vintage also contributed to their increased popularity. Additionally, the analysis notes a resurgence in popularity of wines from the 1970s, with six of the top ten wines coming from that decade. The age of a wine also contributes to its appeal to those who want to drink wines that have already reached their peak.

Producer Reputation: Wines from renowned producers, such as the Inglenook Cabernet Sauvignon Limited Cask 1978, also tend to attract more interest from investors and connoisseurs.

Market Trends: Shifting consumer preferences and emerging trends can impact a wine’s value. The increasing popularity of white wines as collectibles, as seen with the J.L. Chave Hermitage Blanc 2018, and the trend towards lighter, lower-alcohol reds, which boosted wines such as the Cos d’Estournel 1978 and Rayas Chateauneuf du Pape Reserve 1979, are examples of this. The resurgence of interest in second growth Bordeaux also contributed to the rise of Cos d’Estournel. Additionally, the renewed interest in Vintage Ports as wines that last after opening has helped the Sandeman Vintage Port 1963 to achieve the highest appreciation on the list.

Regional Demand: The demand for wines from specific regions can influence appreciation. For instance, Italian wines experienced high demand in the US, and Italian wines were the best appreciating market segment tracked by The Wine Market Journal. Similarly, the resurgence of interest in Burgundy wines following a correction since the spring of 2022 contributed to the appreciation of the Faiveley Corton Clos des Cortons 1996.

Economic Factors: The possibility of tariffs on imported wines may contribute to the appreciation of certain wines, as with the Rayas Chateauneuf du Pape Reserve 1979 and the Chapoutier Ermitage Le Pavillon 1990.

Social and Celebratory Factors: Anniversary years, such as the 50th anniversary of the 1974 vintage, drive demand as people want to drink these wines for major celebrations. The Beaulieu Vineyards Cabernet Sauvignon Georges de Latour Private Reserve 1974, for example, was noted as “the wine to drink” at 50th birthday parties and anniversaries during the year.

Number of Trades: To be considered for the list, wines less than 25 years old must have at least six trades in each of 2023 and 2024 and an average price of at least $50. Wines more than 25 years old must have at least four trades in each of 2023 and 2024 and an average value of at least $75.

Investment potential: Collectors see wines as both investments and something that brings pleasure.

It’s also worth noting that the wine market is variable, and wines that performed poorly one year might perform well the next.

The Wine Market Journal used specific criteria to select the top appreciating wines of 2024. These criteria ensured that the wines included had a consistent trading history and a certain level of market value.

The selection process involved several key factors:

Minimum Trade Volume: For wines less than 25 years old, the journal required at least six trades in both 2023 and 2024. For wines more than 25 years old, they needed at least four trades in both 2023 and 2024. This requirement ensured that the wines had sufficient market activity to establish reliable average prices.

Minimum Average Price: Wines less than 25 years old needed to have an average price of at least $50. For wines older than 25 years, the average value had to be at least $75. This criterion ensured that the list focused on wines with a certain level of value and collector interest.

Appreciation Rate: The top 11 wines that made the list all appreciated at more than twice the rate of the stock market.

Data Analysis: The journal tracked the values of wines at the world’s auction houses since 1997. They analysed this data to identify the wines that showed the most significant appreciation between 2023 and 2024. The data analysis took substantial thought and ensured consistent averages.

It is important to note that while the top 11 wines were highlighted, the Wine Market Journal also found that 85 wines that met their criteria appreciated more than the stock market’s 25% rise and nearly 800 beat the year’s 2.7% inflation rate. This indicates that the criteria were applied to a large set of data, with the top 11 representing the most significant appreciations. The market for wine is variable and one year’s poor performers might be the next year’s stars.

Based on the information provided by the Wine Market Journal, the Italian wine region had the highest-appreciating wine outside of California. The Vietti Barolo Ravera 2013, which is from Italy, demonstrated the overall demand that Italian wine has enjoyed in the US this year. The article specifically mentions that Italian wines were the best appreciating market segment tracked by the Wine Market Journal’s exclusive regional indices.

While the article does not explicitly state that Italy was the only region to have a top-appreciating wine outside of California, the statement that Italian wines were the best appreciating market segment suggests it was the leading region in terms of appreciation. There are also other regions represented on the list that had wines with high appreciation but the Italian wines are specifically mentioned as a high-appreciating market segment.

In summary, wine as an investment offers the potential for high returns, comparable to or exceeding those of the stock market in some cases, but it comes with unique risks and requires specialist knowledge. It is subject to market variability, influenced by a range of factors specific to the wine world, and typically has a longer investment horizon than many other asset classes. While wine can be a valuable part of a diverse investment portfolio, it is not a simple substitute for other investments.