I am often asked what is the life cycle of a wine investment.
The Spaniards have long used the principle of the solera, a unique sherry wine aging method. Barrels are staggered in rows on top of each other. The lower row called the solera contains the oldest vintage. When time is deemed appropriate for bottling, the wine is partially drained out of the lower barrels and replaced by the younger content from the row of barrels above, and so forth.
Blending vintages allows winemakers to obtain a more consistent taste, from one year to another, and also helps them manage stocks levels, as they are not dependent on the crop size of a single vintage. More poetically, the Spaniards believe that the older wines educate the younger, the vigor of the latter balancing the maturity of the elder. It is even said that portions of the initial batch last for decades, if not a century, in the barrels of the lower solera, twisting the latest release with a taste of eternity.
The practice has since spread to other prestigious wine making regions. The well-known perpetual reserve in Champagne being perhaps the most emblematic example. Without totally replicating the solera system, winemakers are ageing multi vintage blends in large vats, ensuring the sustainability of a timeless fermented juice by replacing the racked wine with the wine of the year. Here again wisdom and vigor find coherence and harmony. The results are complex and multidimensional champagne – ever tasted Jacques Selosse ?
Investing in wine is no different. A fine wine collection is like a family treasure requiring lifelong devotion and care. You may be tempted to leave the game too soon, best case after cashing in on a jackpot, worst case by lack of patience. The result would be the same. You would miss out on the opportunity to build heritage.
A well-designed fine wine portfolio, meaningful and diversified, will offer different exit points in time, and with time, as you know, wines get better while supply decreases. Mature wines will find buyers, happier than ever to put their hands on bottles that have been professionally stored. With the revenue from sales, you will replace the bottles that you sold with the opportunities of the moment – and just like the Spanish solera, the younger wines will infuse lifespan and value to a collection for which your initial investment was just the seed for perpetual growth.
I always wondered what Warren Buffet would say about investing in wine. I think he said something about never investing in a product that could not withstand a 10-year market closer. Fine wine could comfortably fit this prophecy. After all, we are looking at product than has captured attention for close to 10’000 years. From the Georgian precursors, throughout the Roman Empire, up to the 1855 Bordeaux classification, and now to its establishment as an alternative asset, fine wine has never lost its appeal, delivering value and joy across centuries.
In today’s volatile environment, fine wine offers a rare opportunity for long-term rewards. Market conditions may be adverse. Demand may occasionally slow down. But while the world scratches its head, fine wine’s historical and cultural foundations prevail. And ultimately, at the other end of the tunnel, remember, wines will have matured and improved regardless of market headwinds.
By capitalizing on past vintages while embracing the present, the Spanish solera was designed to mitigate risk and ensure consistency of quality and supply year after year. Over time, by the interplay of selling and reinvesting, your fine wine portfolio will gain diversity, depth and value until it becomes a heritage that can be bequeathed to the next generation.
Of course, along the journey, you will also enjoy a few of those bottles with your family and friends. Your curiosity may take you to the most mesmerizing wine regions. You will listen to tasteful anecdotes in the cellars of prestigious Châteaux. You will gain a wealth of knowledge. Your life will be enriched far beyond its financial aspect because investing in wine is an adventure, the adventure of a lifetime.
Marc Lafleur
