Most wine collectors become investors by accident. When their cellars become too crowded, they sell a few bottles and, in the process, reap sizable and often surprising gains. But as the price of fine wine has risen dramatically in recent years, a new group of wine buyers has begun acquiring cases of first-growth Bordeaux strictly as investments. And, in the latest twist, Wall Street types are putting money into one of the growing number of so-called wine funds—akin to mutual funds.
All these investors love top Bordeaux, Champagne and, to a lesser extent, Burgundy, because of the wines’ “noncorrelation to other asset classes” (to put it in finance-speak), meaning prices do not rise and fall with stocks, bonds—or even mortgage defaults. “Wine investors are seeking bondlike security with stocklike returns,” says David Sokolin, author of Investing in Liquid Assets. “People invest in wine because they think it’s interesting.”
Many investors in wine funds have no desire to actually drink any of the great bottles in their portfolios, preferring that they remain in a professional, temperature-controlled storage facility that can keep them in pristine condition, and thus protect their value. Some of these investors may not even know the difference between Bordeaux and Burgundy. To them, wine isn’t something to be enjoyed; it’s an asset class.