Investing in top drops(2)
The American says 90 percent of his clients are private collectors, people he knows from the various wine events he hosts.
He describes them as late 20s to early 40s who are starting a "passion." "They've bought their first Mercedes," he says, "they can afford a wine cabinet to store good wines. They want to get into something new."
He says serious collectors or investors purchase by the case because individual bottles are not worth as much as an unopened case.
He also recommends buying as early as possible.
"The sooner you know it's a great vintage the better," Isacs says. "That requires tasting out of the barrel."
En primeur buying, or purchasing wine before it is bottled, is the best chance to get a wine before it hits the retail market. Companies like WIC can help clients secure highly sought vintages through en primeur purchasing.
With production limited - most Bordeaux chateaux produce about 120,000 bottles a year although Chateau Petrus produces only 30,000 bottles and Chateau Le Pin even less - and supply dwindling as it is consumed, it's easy to see why investors may go gaga for wine investments.
According to Isacs, it is still safer and more conventional to invest in the "eight great Bordeaux." These are the five first growths - Chateau Lafite Rothschild, Chateau Latour, Chateau Margaux, Chateau Haut Brion and Chateau Mouton Rothschild - along with Chateau Petrus, Chateau Ausone and Chateau Cheval Blanc.
Isacs says sometimes the up and comers are better wines than the "great eight" but that they don't have the recognition yet, making them riskier investments.
Looking beyond Bordeaux and Burgundy, Isacs says Brunello di Montalcino from the Tuscany region of Italy, the "Super Tuscans" like Sassicaia and Tignanello and Barolo and Barberesco from the Piedmont Region of Italy are worth considering as investment wines.
He also says the cult wines coming out of California like Screaming Eagle and Harlan Estate and some top Australian wines may outperform Bordeaux vintages because starting prices are lower. Still, be aware that these vineyards do not have a long track record compared with Old World wines and therefore may be riskier investments.
As with equities, property, gold and other assets, there are risks involved.
Any downturn in the economy can have an adverse impact on fine wine prices. Prices dropped during the Asian financial crisis in 1997, the dotcom crash and the 2008 global financial crisis.
Isacs also says hoarding can be a problem. This occurs when one person holds a significant amount of any one wine. If the person decides to sell all at once, prices can drop.
There is also fake wine on the market in China. A December 5 report in Shanghai Daily said the sales volume of Chateau Lafite Rothschild on the mainland greatly outstrips the import volume.
Another factor to consider, especially with the wineries that don't have such long histories, is the power of Robert Parker. If he gives a poor score - he rates wines from 50 to 100 points - or re-scores a wine and gives a lower rating than he originally did, the price is likely to drop. Investment-grade wines generally have a minimum score of 95 points from Parker.
Even Yao Ming has jumped on the fine wines bandwagon, albeit as a winemaker. The former NBA all-star with the Houston Rockets has invested in a Californian winery that he named Yao Family Wines.
His first 5,000-case run is made from Cabernet Sauvignon grapes grown in the Napa Valley, a region known for producing excellent wines. Targeting the high end of the market, each bottle is priced at 1,775 yuan.
With enthusiasm for fine wine in China bubbling over like Champagne, it's little surprise that the wine critic Parker recently was quoted as saying: "The quantity of these great (Bordeaux) wines is finite and the demand for them will become at least 10 times greater."
Still, perhaps the best thing about buying into fine wines is that if the investment does go sour, at the very least you can throw one great party.
(Marc Tessier is a copy editor at Shanghai Daily.)
Investment tips
? Deal with reputable merchants.
? Ensure wines are stored properly to avoid damage.
? Purchase wine by the case.
? Buy as close to opening price as possible.
? Keep wines "in bond" to avoid duties.
? Don't invest for the short term.
? Buy insurance for all wines.
? Do some research, don't just blindly follow the crowd.
