If I had some extra cash laying around right now, in addition to plowing it into the stock market, I’d likely be out there buying investment grade wine, as well as wine from my favorite expensive producers.
If you’re a consumer of news about the wine industry, then you understand what is going on in the wine retailing and wine auction world at the moment. On the chance that Vinography might be one of your sole sources of contact with the wine world, let me bring you up to speed: the wine market is doing what the Dow Jones Industrial Average just did for the last three months.
While the wine industry has trailed the general market malaise and the dive has not been as precipitous, things are tough right now in the world of wine. And the more expensive the wine, the tougher things are.
Champagne sales had already dropped by 25% in September and according to some sources, holiday sales are are expected to be half of what they were last year. Retail sales of high end wines are plummeting, and the wine auctions where collectors unload (and snap up) some of the world’s finest wines are seeing record numbers of lots go unsold or sell for far below their estimates.
In short, just like the stock market right now. It is a serious buyer’s market. I don’t know a single wine retailer worth their salt that isn’t in serious sale mode at the moment — with heavy discounting going on from the bottom of their inventory to the top. In hard economic times where it’s sensible to have a good cushion of cash in the bank, the last thing anyone wants to do is have too much capital tied up in inventory.
Just by way of a single example, a friend of mine forwarded me a newsletter from a New York wine store that showed the 1997 Harlan Estate Proprietary Red wine (a 100 pointer from one of CA’s most stellar vintages) being offered at a discount of nearly $800. While not half-off, that’s getting pretty close, and a remarkable steal for a wine that could easily be held for two years and sold for well over the pre-discount price.
And the final bonus: the strengthening dollar. Which means that apart from the sales, the cost of most imported wine has fallen considerably from the heights it was at merely 6 months ago. Direct imports are selling for a 20 to 30 percent discount off of those highs.
So if I had $10,000 laying around, I’d be likely plowing it into top Burgundies, Bordeaux First Growths, Barolos, and Napa cult Cabernets with the idea that I’d drink some in 5 or 10 years, and in 18, the rest would pay for my daughter’s first year of college.
NOTE: It’s a sad, sad thing that I even have to think about it, but I must make clear that the article above doesn’t constitute investment advice in any way, shape, or form. I’m not a professional, and if you buy wine based on what I say and lose your hard earned savings, then you should just open the damn bottles and drown your sorrows because it won’t be my fault.