Psst... We're working on the next generation of Chowhound! View >
HOME > Chowhound > Wine >
Oct 14, 2008 02:34 PM

"Wine collectors eye cellars for liquidity"

It seems the huge inflation in wine auction prices that has been rampant in the last 5 years or so, obscene increases of 50% year after year, is somehow subsiding. The Reuters article below might point to the root of it:

"People need money. Even richer people need money sometimes,"

  1. Click to Upload a photo (10 MB limit)
  1. The problem with selling wines in one's cellar is that, in many cases, one is then denied the joy of drinking them.

    2 Replies
    1. re: zin1953

      Most of the inflation in recent years'auction markets has been fueled by, guess what ... yet another bubble.
      You could find many lots cross-referenced to same lot in an auction from the previous 12 months or so. These people couldn't care less about the joy of drinking, all they did was buy it, flip it, make a killing. Wine, paintings, or Washington memorabilia, for that matter.

      1. re: zin1953

        Actually I suspect that if wine speculators getting hurt by the economic crunch are liquidating their cellars, it makes it more likely that those wines will be drunk by someone who will appreciate them, rather than just held for investment by someone who may not even care what's in the bottle, only what they hoped to sell it for.

      2. Earlier this year I suggested to a wine sales person that I thougth the 2005 Bordeaux would be the same price or cheaper in 20 years. He looked at me like I was crazy. I still might be crazy but I stand by it.

        It has looked to me like a classic bubble for a while now. As a youth I collected comic books and knew some people who "invested" in them. It all came to tears in the early '90s and taught me everything I needed to know about "investing" in wine.

        The problem with collectables is they have no intrinsic value beyond the end user who wants to enjoy them. If people start buying them speculatively eventually it bids up the price where even avid fans with money walk away and there is no end user. At that point there are mostly speculators in the market and a crash is only a matter of time.

        Like comic books and baseball cards wine does not pay dividends and does not represent ownership of any kind of economic production. If it is never drunk then it isn't really worth anything.

        1 Reply
        1. re: Somnifor

          I'm not saying it's impossible that the 2005 Bordeaux (or any vintage) could be worth less or the same in 20 years, but your analogy to comic books or baseball cards is flawed. The latter are "investments" where supply can (and did) very easily outstrip demand. Wine OTOH is a consumer product with often finite supplies that collectors/restauranteurs worldwide can place a premium on (depending on the producer, vintage, etc.). And while baseball cards/comic books/etc. suffer some attrition in overall supply due to use, fire, etc., wine certainly is far more likely to see reductions in overall supply just by the very nature of the fact that people can and will consume it.

          At least with wine that is highly collectible, you know that DRC, Petrus, Screaming Eagle, etc. are not jacking up production vintage after vintage to satiate the worldwide demand for their products. Time and again, the manufacturers of baseball cards, comic books, etc. have killed the golden goose by overestimating demand for their products.

          Also, don't underestimate the effects of the growing ranks of ultrawealthy that have exploded in areas like China, India & Russia. China especially has a seeming insatiable appetite for expensive wines from the Old & New Worlds, and the recent elimination of punitive duties on wine imports into Hong Kong & Macau are only going to increase demand for premium labels.

          Will Bordeaux in off years be worth more in the future? Even now we're seeing wine from lesser houses/vintages (and not just Bordeaux) oftentimes auctioning for less than their release price. But while there probably isn't as high of a ceiling for upward appreciation of the 2005 Bordeaux, I doubt that you'll see prices remaining the same or going downwards if the vintage cellars and evolves as well as the industry experts are forecasting.