The Wine Collector

With investors looking for alternatives to stocks and bonds given the daily roller coaster being experienced in public markets, Vinfolio now offers a new investment option via its Wine Investment Service (see yesterday's press release). 

Many wine collectors have often been "accidental" wine investors by purchasing more than they plan to drink to finance their consumption.  Vinfolio's new service is aimed at investors, whether wine knowledgeable or not, whose first priority is making money.  Even better, all of the necessary components (expert advice, fine wine selection, professional storage, and multiple selling options) are all provided under one roof.

The political corruption being played out to forestall a September 30th ruling in Michigan Federal District Court to permit interstate wine shipping is almost too blatent to be believed.  Tom Wark at Fermentation chronicles the latest saga in Lawmakers roger wine consumers and retailers in Michigan, where some state politicians tried to ramrod a bill secretly through the Michigan legislature in a 24 hour period to "level down", i.e., remove existing delivery rights of Michigan consumers and businesses to prevent interstate shipping rights from being introduced.

Why you should care

Even if you're not a wine consumer or don't live in Michigan, the complete manipulation of the political process evidenced in this situation is to put it simply, "disgusting."  This behavior could easily be applied to any issue and happen in almost any state.

What you can do

Individual citizens and consumers hold the ultimate power to vote out such miscreants but you'll have to wait until their next election.  Meanwhile, if you want to have some impact, write an email to the legislative ringleaders to express your views (Tom's post above provides the names and email addresses).

Alternatively, if you're a wine consumer anywhere, you might donate to the Specialty Wine Retailers Association (SWRA) to help them fight these shipping battles on your behalf.  The SWRA was monitoring legislative developments in Michigan and jumped on this issue immediately via press outreach and other actions.  For example, see the Chicago Tribune story, "House bill would bar wine deliveries by retailers."  

Make a difference!

Have fine wine prices fallen? 

Yes.  Prices of almost everything have fallen in recent weeks; fine wine is no exception.  See the latest Decanter.com story titled "Fine wine prices hit new low."

By how much? 

The article reports that the Liv-ex 100 Fine Wine Index fell 12.4% in October.  Interestingly, that is almost identical to the median 13% decline discussed in my September 27th post, "Time to invest in fine wine?" and close to the 15% median price decline in sold lots at the October 25th Zachys auction in Hong Kong. The broader Liv-ex 500 fell only 1.8% in the month.

Why is the unsold rate at recent auctions reaching as much as 30%?

Keep in mind that auction estimates and reserves are typically set 8 weeks before the auction date.  Given the sudden change in the financial market environment in mid-September, it's no surprise that the current values people will pay are below what the auction houses estimated prior to the financial market turmoil.

Is the fine wine market collapsing?

No.  The Zachys Hong Kong auction still sold HK$41.3 million of wine (approx. US$5.3 million) and about 25% of the sold lots were above their 2008 auction average through August (pre-decline).

Is fine wine still a good investment?

Yes. I stand by my recent post "Why wine investing beats stock investing."  Moreover, Stephen Browett of Farr Vintners, who claim to sell more Bordeaux than anyone else in the UK, makes a compelling argument in his comments after the Decanter article.  He notes that despite price declines in some wine that Decanter singles out, those wines are still selling for 30%-40% more than 18 months ago.

Vinfolio's new offer to wine investors: 5 years of free storage!

As an incentive to give wine investing a try, we'll give you a total of 5 years of free storage when you do the following:

• Buy at least $5,000 of wine in a single purchase where the average bottle price (750ml equivalent) is $100 or more.  Better yet, speak with one of our wine specialists for recommendations and then the next step is automatic.
  
• Call or email our Customer Service team (service@vinfolio.com, 415-946-1300) or your wine specialist within one week of your purchase to claim your storage credits (which you can use on any wine).
• This offer is effective only with new purchases starting today (November 7, 2008) and is exclusive of other promotions.