My thanks to Mark Bevan and Patrick Headlam at Nexus Wine Collections for their help with the cost-of-carry calculations. Nexus Wine Collections is an independent inventory service that manages, stores and distributes fine wine for private collectors, working with a range of storage facilities including Octavian, London City Bond, Coterie and Hillebrand.

A £3,426 case of Lafite 2024 is not just a £3,426 purchase. By the time you sell it or drink it, the real cost is closer to £6,500.

Patience is one of those virtues people are always keen to recommend, especially when someone else is paying the price for it. Sure, sometimes it does pay off to be patient, but when it comes to Bordeaux en primeur, I would argue that patience has not rewarded anyone much over the past two decades.

The mid-March release of Latour always sets the tone for the campaign to come and a few weeks ago, Latour 2019 was released at 8% less than last year’s release of the 2016. On the face of it, that sounds encouraging but the two prices are not directly comparable.

The 2016 was released with nine years of ageing behind it. The 2019 is being released with only seven. The 2016 is already available on the market at around £500 to £585 per bottle. The newly released 2019, with less ageing and arguably a less established reputation, is coming in at £465 per bottle.

So is that attractive? Was £3,426 for a case of Lafite 2024 en primeur actually an attractive price?

You cannot answer that from the release price alone.

And that brings us back to the £6,500 number.

£6,500 includes all the costs a buyer is likely to incur from the moment they commit to the wine to the moment, perhaps ten years later, they either sell it or drink it. In finance, these are called carrying costs. In wine, these costs are often ignored.

There is storage. There is insurance. There may be delivery, commissions, duty and VAT, depending on what you eventually do with the wine. And above all, there is the cost of tying up capital for years.

That last one matters most.

En primeur is often described as a kind of wine futures market. As I argued last week, it is not. Not really. In a futures contract, you do not usually pay the full amount upfront and then wait 2 years for delivery. With en primeur, you do exactly that.

That makes en primeur less like a futures contract than a form of financing to the château. In effect, the buyer is funding the château in return for the promise of future delivery.

(For anyone who insists that en primeur is not a form of financing, try telling the merchant or château that you will pay on delivery and see how that goes...)

And whenever capital is tied up, there is a cost. Even if you have not borrowed the money in any literal sense, that money still had other possible uses. It could have stayed in cash, gone into an ISA, or been invested elsewhere. Choosing wine means giving up those alternatives.

The real question is whether the discount offered en primeur is large enough to compensate the buyer for the wait, the risk and the lost use of capital. Once you look at it that way, the picture changes.

Back to Lafite 2024.

A case bought en primeur at £3,426 does not remain a £3,426 proposition for long. Once you add receipt fees, annual storage and insurance, and the cost of money over time, the total cost of ownership compounds significantly. By Year 10, the cost is around £5,545 before any exit costs.

If the wine is then sold and the seller pays a 15% commission, the break-even sale price rises to roughly £6,524 per case.

If, instead, the wine is taken out of bond for drinking, the final all-in cost still climbs to around £6,281 once delivery, duty and VAT are included.

This is the mistake people make every en primeur season.

They compare a new release with a back vintage already trading on the market and assume the cheaper number must be the better deal. But unless both prices are adjusted onto the same basis, the comparison is meaningless, as you aren’t comparing apples with apples.

None of this gives you a perfect valuation. Wine is still a market shaped by sentiment, scarcity, brand power and broader economic conditions. Risk is part of the picture, and it cannot be reduced to a neat formula.

But cost of carry does give you something extremely useful: a hurdle rate.

It tells you how much room for upside you need before locking your money away for years. It tells you whether the en primeur discount is genuinely compensating you. And it tells you when a release that looks cheap at first glance may not be cheap at all.

Most people skip this calculation entirely. Which is fine, but if we want to support wines that can age, if we want to sustain a culture of ageing fine wine, we need to start being clear, very clear, about what that actually costs.

To those interested in the calculations, I have published them in a post for paid subscribers only.

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Thanks for reading.

The release price is only the part of the cost equation.

By the time a wine has been properly carried for, say, ten years, the total cost can be close to twice the original purchase price.

That is because the purchase price of a wine is not its full cost of ownership. You also need to factor in the cost of “carrying” the wine until you sell it or drink it 5, 10, 20… years later.

What are these costs?

Wine is a physical asset, which means it has to be stored, insured, and financed. Its physicality is part of its essence and good storage and time can improve wine in a way it simply can’t improve a house or a bond.

And that physicality comes with a cost.

In particular:

• delivery from the en primeur source to bonded storage and receipt

• annual storage cost

• annual insurance cost

• annual opportunity cost

And then, if the wine is eventually taken out of bond for drinking:

• final delivery leg

• duty and VAT

Or, if the wine is sold:

• sales commissions

Some of these are ongoing annual costs. Others are one-off charges. Let’s break them down.

Read more

This may be the shortest piece you will ever read in In the Mood for Wine: a warm-up for en primeur season, without overindulging.

Before the season starts, we need to get one thing straight. En primeur is often described as “wine futures”, including by publications that should know better. But the comparison is not exact.

In financial markets, a futures contract is an agreement between two parties to buy or sell an asset, such as gold, at a future date for a price fixed in advance. In most cases, no cash changes hands upfront beyond a small margin, and the asset itself is not delivered when the contract is agreed.

With en primeur, by contrast, you pay now and receive the wine later.

That means your money is locked up for 18 months to two years. And whenever capital is locked up, there is a cost, whether or not you borrowed it. After all, that money could have stayed in an ISA, or been invested elsewhere, or been put to some other use.

In practical terms, this makes en primeur a very different kind of contract from a futures contract.

This is key because the structure is closer to a loan to the château than to a futures contract. And if a bank were lending that money to the château, it would want a fixed, guaranteed rate of interest over two years — say, 6% a year.

In other words, en primeur only makes sense if the buyer is compensated in some way for the risk, the wait and the lost use of capital. If not, the buyer is getting a bad deal!

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Alas, wine isn’t made in an insulated bubble.

Precisely because it’s tied to place (you can’t make Champagne in Minnesota), it’s a heavily traded, export-driven product. And yet it can be both economically marginal and politically useful, a token weapon in trade wars. For example, China’s ban on Australian wine, and more recently President Trump’s threat of 200% tariffs on Champagne. It’s marginal because, in the grand scheme of a nation’s economy, wine isn’t essential to the basic functioning of the state. But it’s also significant: for France, wine and spirits are the country’s third largest export category, which is precisely why wine so often becomes a convenient PR/social media pressure point in disputes.

Which is to say: trade, and consequently, currency moves affect the cost of wine. A lot.

Italy, France and Spain are the world’s three largest wine producers. Together, they account for roughly half of global output — and the picture is even more skewed towards Europe when you look at “fine wine”. (Putting a precise percentage on that is impossible, because there’s no agreed definition of what fine wine actually is.)

When wine is made in Europe, most inputs are priced in euros — labour, electricity, glass, paper and cork — which means wine, and especially fine wine, is largely a EUR-denominated asset. Producers typically quote an ex-cellar price in euros to merchants. Importers then buy in euros and also pay for insurance and shipping, often in euros as well.

Once it reaches the secondary market, fine wine remains, for the most part, a EUR asset — but it tends to also be quoted and traded in GBP. That said, as you can see from the Liv-ex chart below, trading is still largely driven by European players (around 45%) and UK players (around 40%).

That’s why currency moves have a significant impact on the price of wine — and, perhaps even more importantly, on trading activity and volumes.

Brexit & the Sterling

The impact of a weaker GBP (as we experienced around Brexit) is a very practical example of the impact currency has on the price of wine.

If UK buyers suddenly have less purchasing power — about 20% less, in that episode — you would expect trading volumes to fall. A wine that previously cost a UK buyer £100 now costs £120, purely because the local currency has weakened.

And yet, during the same period, the Liv-ex indices were pointing to a rally in fine wine prices.

Why?

First, the Liv-ex indices are widely seen as a bellwether for the fine wine market.

And because Liv-ex is based in London, its indices are quoted in GBP. Over the past 20 years, the main Liv-ex index has risen by roughly 3.6x.

However, the currency you look at matters.

The chart above is effectively saying: if you’re a UK-based (GBP-based) merchant or collector holding mostly European wine assets, the value of those assets has increased roughly 3.6x over the past 20 years in GBP terms.

But how much of that is a true increase in the underlying wine price, and how much is simply a currency effect?

A simple way to think about it is:

GBP return ≈ EUR return + change in EUR/GBP

Investors often underestimate the currency component because it’s “baked into” the total return. It becomes painfully obvious during large dislocations — Brexit being a good example. If you take the same index and convert it into EUR (and USD), the picture can look very different, as the chart below shows.

Over the same 20-year period, that very same index returned roughly 3x in EUR and 2.6x in USD. In other words, a meaningful part of the 3.6x headline return in GBP wasn’t “wine performance” at all — it was GBP weakening.

If we zoom in on that period, the mechanics become clearer:

In 2016, the Liv-ex 1000 index was up 22% in GBP, while the same index was up only 5% in EUR. The gap (around 17 percentage points) was largely driven by the sharp move in sterling.

What does it mean?

That means that, in 2016, if you were a GBP earner holding European wine, you were effectively short sterling and long euros. Your asset would have appeared to appreciate by 22% in GBP terms — roughly 5% from the underlying move in wine prices, and about 17% from the depreciation of the currency you were “short”.

If, on the other hand, you were a EUR or USD earner holding European wine, you would have captured the c.5% move in the wine market, but little (or nothing) from that GBP currency effect.

You may, of course, have had other currency exposures depending on where you bought, stored, and sold — but the broader point stands: understanding your currency exposure is crucial, especially in periods of trade instability.

A disclaimer: of course, the interaction between currencies and wine prices isn’t this clean. As the charts above show, it’s not just two currencies at play. The effects are more complex — especially in wine, which trades globally and moves between multiple currency zones.

Ten years on, we can take the lesson from sterling and apply it to the US dollar — the currency currently experiencing the most instability.

Tariffs & the US Dollar

President Trump wants a weak dollar. President Trump wants a strong dollar. President Trump wants tariffs. President Trump wants low interest rates.

A weaker US dollar can help exports, but a stronger dollar helps preserve its status as the world’s reserve currency. Tariffs can, in theory, support the dollar by reducing demand for imports. Lower rates can do the opposite by making dollar assets less attractive.

What matters, though, is what markets are doing. Since Trump first announced the tariffs, the US dollar has weakened by roughly 10%.

In Trump’s America, two developments have already had clear implications for wine: tariffs and a weaker US dollar.

These two phenomena are linked. Standard economic theory suggests that an import tariff should put upward pressure on the tariff-imposing country’s currency (US dollar): tariffs tend to appreciate the home currency, offsetting part of the tariff’s effect on import prices. In other words, if a 15% import tariff is applied to imported wine, a stronger dollar should make that tariff less painful in dollar terms.

But that is not what happened.

Since the tariff announcement, the dollar has weakened by around 10% against a basket of major currencies. One interpretation is that foreign investors reduced exposure to US dollar-denominated assets, selling dollars and rebalancing towards other major currencies.

This means the tariffs (and, arguably, the instability and uncertainty around them) have delivered a double whammy: they have pushed up the sticker price of imported goods by 15%, while the weaker dollar has made those same goods roughly 10% more expensive again for US buyers. Taken together, the effect is not strictly additive, but the direction is clear: US buyers are facing a materially higher all-in cost for imported wine.

Enter VOS Selections:

Victor Owen Schwartz, a small New York City wine importer, and his supporters took on President Trump over tariffs, first at the Court of International Trade, and then at the Supreme Court. Their argument was that Trump’s broad “emergency” tariffs under IEEPA did not extend to taxing imports. The law was designed to enable financial and other sanctions against states such as Iran and North Korea; it never mentions tariffs.

VOS won unanimously at the Court of International Trade, a federal court that hears civil cases linked to customs and trade laws. It then won again on appeal. On Friday 20 February, it sealed its victory with a decisive Supreme Court judgment.

When asked why he decided to take on the President of the United States over tariffs, what came through was a painful reminder of how vulnerable the wine sector is to geopolitical decisions — and what ultimately pushed Victor Owen Schwartz to take a decision that could have cost him everything. As he put it: “what kept me up at night was my business. Running a business kept me up at night more than this case.”

What VOS Selections did is to rein in unchecked discretionary authority — specifically, limiting a president’s ability to impose tariffs on a whim simply by declaring a national emergency.

Who doesn’t love a David-and-Goliath story? This victory, however significant, brings fresh uncertainty back into global trade — and uncertainty is what tends to freeze activity.

That’s why I don’t think it’s a victory for the wine industry just yet. As of today, Monday 2nd March, Trump is imposing new tariffs of 15%.

A 15% tariff, coupled with a roughly 10% devaluation of the US dollar against the euro and sterling, plus the renewed uncertainty, suggests we could see demand for fine wine weaken again.

That may well act as a headwind to the “green shoots” many industry outlets have been reporting.

Final Thought

That is why, precisely because wine is so exposed to trade policy and geopolitical risk, I would caution against arguments that present it as a scarce store of value or a hedge against political shocks, based solely on the historical performance of Liv-ex indices.

Because of their structure, an euro asset quoted in sterling can look as though it is rallying during periods of particular sterling weakness against the euro. Taken at face value, that can be mistaken for “wine going up”, when in reality much of the move is simply currency translation.

Anyone who imports or exports wine knows this instinctively. In periods of political instability and currency stress, wine does not behave like a safe haven. It is a highly illiquid, risky asset traded in a largely unregulated environment, with wide bid-offer spreads — the exact opposite of what most investors want to be holding when markets turn frantic.

You should also read this article from one year ago:

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Disingenuous claims like this make me angry—especially when published by a respectable financial newspaper such as the FT. Even though it’s labeled as Partner Content, you’d still expect some evidence to back the claim that fine wine is a good inflation hedge.

Spoiler alert: it doesn’t.

So, is fine wine really an inflation hedge?

TL;DR answer: No, it is not.

Here’s why.

An inflation hedge is an asset or investment strategy that maintains or increases its real purchasing power as prices rise. In high inflation periods (above 5%), we seek assets that appreciate faster than inflation. Fine wine, despite the claims, doesn’t fit the bill. Let’s break it down.

Fine Wine Returns in Different Inflation Regimes

Since the creation of the Liv-ex indices, UK CPI inflation1 has averaged 2.8% over the past 20 years, with a median of 2.4%. During this time, inflation remained within the 0–5% range for 87% of the period, representing a relatively stable monetary environment.

Similar to a CFA paper2 that challenges the widely held belief among 27% of professional investors that equities hedge against inflation, I analysed fine wine’s performance across four inflation regimes from 2004 to 2024:

• Deflation: inflation < 0%

• Stable Inflation: between 0% and 5%

• High Inflation: between 5% and 10%

• Very High Inflation and Hyperinflation: above 10%

Using inflation data from the Office for National Statistics and wine market data from Liv-ex, I based my analysis on the Liv-ex 1000 index, the broadest fine wine benchmark available.

The results are clear (see the below chart): fine wine performs best in a stable inflationary environment, while any deviation—whether high inflation or deflation—tends to weaken returns.

However, if we look only at this chart, we might conclude that fine wine is an inflation hedge, as it at least preserves its value even in high-inflation regimes.

Real vs. Nominal Returns

However, a common mistake in return analysis is ignoring inflation.

A 2% interest rate on a savings account may seem attractive when inflation is 0%, but if inflation rises to 3%, the real return becomes negative, meaning your money loses purchasing power.

To properly assess performance, we need to adjust nominal returns (raw, unadjusted returns) for inflation. These inflation-adjusted figures are called real returns, as they reflect what an investor actually gains (or loses) once inflation erodes purchasing power.

Real Rate of Return = Nominal Rate of Return (%) - Inflation (%)

In the second chart (see below), returns have been adjusted for inflation using the formula above. Since fine wine data became available, fine wine has not protected investors from inflation. While a longer time series would be ideal, the available data shows that fine wine is not a reliable inflation hedge.

A Second Look: ChatGPT’s Analysis

For an additional perspective, I asked ChatGPT to assess whether the Liv-ex 1000 serves as an inflation hedge, using a different methodology—comparing low vs. high inflation regimes relative to the median inflation over the past 20 years.

The results? Exactly the same.

Fine wine does not reliably hedge against inflation, and its real returns are higher in low-inflation periods, suggesting that it thrives in a stable monetary environment rather than during inflationary spikes.

(If you want to see the results, just send me a note.)

Additionally, Liv-ex returns do not account for storage and insurance costs, which further eat into profits, making fine wine an even weaker inflation hedge than the raw numbers suggest.

Why Is Wine A Poor Inflation Hedge?

Despite the narratives we've been fed, fine wine has proven to be an unreliable inflation hedge. But rather than asking why that is, perhaps the better question is: why has it been believed to be one in the first place?

The misconception likely stems from the fact that wine is a commodity, and commodities are traditionally seen as strong inflation hedges. However, this assumption overlooks key differences that set fine wine apart.

First, fine wine isn’t a raw material. While inflation raises production costs—grapes, labor, barrels, and packaging—the value of a bottle doesn’t necessarily rise in tandem. Inflation also impacts the cost of maintaining wine as an asset. Unlike financial instruments, fine wine requires storage, insurance, and transportation, all of which become more expensive in inflationary environments. These costs erode returns, making wine a weaker hedge than many assume.

Second, fine wine is highly illiquid. It can’t be quickly bought or sold like stocks or commodities, and its wide bid-ask spreads, high transaction costs, and limited trading volumes make price adjustments slower and less responsive to macroeconomic shifts, including inflation.

Finally, fine wine is a luxury good, not an essential asset. Traditional inflation hedges—gold, real estate, and raw commodities—hold intrinsic value or serve a fundamental need. Gold is a reserve asset, commodities are raw materials, and real estate provides shelter. Fine wine, however, is discretionary, meaning demand fluctuates more in economic downturns. Unlike essentials, wine consumption can be postponed or scaled back when inflation squeezes disposable income.

Ultimately, while fine wine has proven to be a long-term store of wealth, it is not a reliable hedge against inflation.

Thanks as always for being here! Everything is free and packed with valuable insights, but today paid subscribers get exclusive access to the Google Sheet with the full calculations behind this analysis.

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When in 1990 Prof. Orley Ashendfelder, a Princeton economist, published what is known as the “Bordeux Equation”, it caused quite the stirr.

Robert Parker called it ludicrous.

William Sokolin (of Sokolin LLC) thought it was hysterical.

The New York Times published an op-ed titled “Keep Those Economists Out of the Vineyards.”

Why such an outrage?

The equation promised to tell a great vintage and a bad one apart, with three simple inputs: winter rainfall (ideally, 200-300 mm to prepare the soil), growing season temperature (19-20°C for ideal ripening) and harvest rainfall (less than 30 mm to avoid dilution and rot). A great vintage is simply one where nature aligns perfectly with these parameters. In such years, wines are not only of outstanding quality but also offer immense potential for price appreciation.

There's no need to elaborate on why those who profit from consumer ignorance were outraged by this. Sophocles said it best, “profit is sweet, even if it comes from deception.”

This newsletter started two years ago to answer the question: “Can wines from bad vintages be good investments?” The question of vintage, whether we like it or not, is central to the appreciation of wine prices over time.

That is to say, the question of vintage is central to fine wine investing.

And that’s why, whenever you try to find out which vintages were good and which weren’t, you’ll find a sea of politically corrected language—rose-tinted-glasses-kind-of-reviews—that guarantee the amenability (and access) of wine critics to producers.

So, I will try to be as straightforward as possible here by sharing four key facts about what we know for certain when it comes to vintage and prices.

Fact 1: Vintage Matters More in Europe than the New World

Weather variability is the single greatest factor influencing vintage quality. In Europe—Bordeaux, Burgundy, Champagne and Northern Italy—the weather varies dramatically year to year. A summer of ideal warmth and a dry harvest can create exceptional wines; a rainy harvest can destroy them.

By contrast, the New World—regions like Napa Valley, Australia, and South Africa—benefits from far more consistent climates. Bad vintages are rare because the weather doesn’t swing as wildly.

For investors, this means:

• European wines experience significant vintage variation. Good vintages become standouts and appreciate dramatically in value.

• In the New World, vintage variation is minor, resulting in stable, less volatile price movements.

Bordeaux is the prime example: a good vintage with ideal weather parameters—winter rain to store water, a warm summer for ripening, and little rain at harvest—creates wines that can age for decades. A poor vintage? Lower demand and prices.

Fact 2: Bordeaux’s Market Structure Rewards Age

Because Bordeaux wines improve with age, there’s a built-in incentive to store young wines until they mature. This creates two distinct markets:

1. The Primary Market – Young wines sold “en primeur,” much like new issues in the securities markets.

2. The Secondary Market – Older, mature wines that command higher prices, similar to trading in the secondary financial markets.

For investors, the opportunity lies in buying the right vintage early—one with excellent weather conditions that will improve over time. When released wines are still young and relatively undervalued, those who understand the weather-vintage relationship can profit handsomely when the wines mature.

And this is what separates Europe from the New World. In Bordeaux, vintage quality swings like a pendulum: a year of perfect weather produces wines that become iconic, investable assets. A rainy harvest? The wines struggle to find buyers. The New World offers consistency but lacks these highs and lows.

Fact 3: Weather Predicts Quality, But Not Release Prices

Here’s where it gets interesting: while weather is highly predictive of how well a wine will age, it has surprisingly little influence on release prices.

Why?

1. Production Costs: In poor vintages, the cost of making wine can be higher—grapes need more care, sorting is labour-intensive, and yields are often lower. Release prices reflect these higher costs, not the quality.

2. Brand Over Weather: Producers price wines based on their reputation and long-term positioning. A bad vintage rarely sees a massive discount because admitting lower quality would damage the brand.

3. Short-Term Focus: The market for release wines tends to ignore the long-term potential of a vintage. Weather doesn’t dictate price until the wine has aged and proven itself in the secondary market.

For investors, this means understanding that vintage quality often “catches up” with prices over time. The release price of a wine from an exceptional vintage may look modest initially, but its value can surge as its quality becomes evident.

Fact 4: Vintage Quality Drives Long-Term Price Appreciation

In a recent paper called “The Price of Wine”, Dimson (Cambridge Judge Business School & London Business School) Rousseau (Vanderbilt University) and Spaenjers (HEC Paris) published one of the most convincing investigations into the returns of fine wine.

Among other variables, that of the relationship between vintage quality and wine price takes center stage.

1. Great Vintages Appreciate Faster: Wines from vintages with ideal weather parameters consistently outperform in the secondary market. They age gracefully, developing complexity and increasing in value.

2. Poor Vintages Offer Shorter Windows: Wines from challenging vintages often mature earlier, meaning they have less long-term upside for investors. While they can be good drinking wines, their ability to appreciate in price is limited.

In short, vintage is the compass guiding long-term price appreciation. Exceptional weather produces wines that not only taste better but also perform better as financial assets.

So, Can Wines From Bad Vintages Be Good Investments?

Yes—but with caveats. While good vintages dominate the conversation, savvy investors can still find value in “bad” vintages:

1. Top Producers: The best winemakers mitigate bad weather with exceptional vineyard management.

2. Discounted Prices: Wines from less favourable years often enter the market at lower prices, offering upside if they perform above expectations.

3. Historical Reassessment: Sometimes, wines from “bad vintages” surprise the market as they mature and gain complexity.

But let’s be clear: great vintages are where the real opportunity lies1.

They combine high quality with strong long-term demand, leading to the kind of price appreciation that fine wine investors dream about.

Thanks, as always, for being here.

👋 Sara Danese

This article was originally published in Italian - L’Equazione delle Annate, on WineWins, a wine investment company founded by sommelier Matteo Gavioli and entrepreneur Andrea Calzoni. Gavioli honed his craft in Italy's top restaurants and on the stages of prestigious wine events. Calzoni, a seasoned businessman and collector of vintage cars and art, brought his entrepreneurial flair. Together, they launched one of Italy's first companies to position wine as a true passion asset.   

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Hello Fine Wine Lovers,

We talked about budget.

We talked about wine merchants.

Now, we’ve reached the most exciting part: choosing your wines.

Selecting the right bottles is where strategy meets passion. This is where your investing style, regional focus, and personal goals all come together. Today, we’ll guide you through the best time to buy, whether that’s during the initial release or on the secondary market. Understanding how the release cycles work and what makes certain vintages worth the wait is critical in making smart investment choices.

Alongside the free course, I’ve also created a Google Sheet, available behind a paywall (scroll to the end of the article). It’s an optional tool that organises all the essential data, metrics, and models to simplify your investment decisions. If you’d like to make things easier, or if you’d like to support my work, this is a way to do so.

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Let’s dive in!

Eight Steps To Invest In Fine Wine

To access the full course, head to the homepage and click on “Fine Wine Investing Course” in the top bar.

Part 1: Released on 19th Sep 2024

• Step 1: Set Clear Investment Goals

• Step 2: Determine How Much You Can Afford to Invest

• Step 3: Determine Your Tolerance for Risk

Part 2: Released on 3rd Oct 2024

• Step 4: Determine Your Investment Style

• Step 5: Choose an Investment Platform

• Step 6: Fund Your Investment Account

Part 3: Today’s Session

Now, let’s get to the heart of the matter: choosing your wines and managing your collection. This part will dive deep into understanding release lifecycles, identifying key buying windows, and ensuring your collection aligns with your overall strategy.

• Step 7: Pick Your Wines & Understand the Release Lifecycle. Deciding when and where to buy your wines—at release or on the secondary market—can make a huge difference. We’ll explore release cycles for key regions like Bordeaux, Burgundy, and Champagne, and help you identify strategic buying opportunities.

• Step 8: Learn, Monitor, Review. Successful investors continually review their portfolios, learn from past decisions, and adjust their strategies accordingly. We’ll guide you through tools to monitor your collection and tips on recognising when to hold, sell, or buy more.

Step 7: Pick Your Wines & Understand the Release Lifecycle

By now, you have your budget and have selected your merchant(s). The next step is to decide when and where to buy your wines, which can either be at release or on the secondary market.

The process differs by region. In some areas, like Italy and Champagne, wines are sold after bottling. In regions like Bordeaux, however, you can buy wines En Primeur (EP), or as wine futures—before they’re bottled.

What is En Primeur (EP)?

En Primeur is the practice of purchasing wine before it’s bottled and released. Typically offered at a lower price than when bottled, En Primeur is most common in Bordeaux, where spring campaigns allow buyers to taste young wines and secure allocations. La Place de Bordeaux, a historic distribution network, handles broader global distribution once these wines are bottled, though it’s not directly responsible for En Primeur sales.

What is La Place de Bordeaux?

La Place de Bordeaux is a centuries-old platform that evolved to handle prestigious non-Bordeaux labels, like Super Tuscans and Napa Valley icons. Releases through La Place happen mainly in May and September, and it’s a crucial system for collectors worldwide.

Fine Wine Release Calendar

This calendar outlines the typical release timings for key regions and producers throughout the year. Use it as a guide to plan your purchases.

January:

• Burgundy En Primeur: Offering the previous year’s vintage (2023 in Jan 2025).

February - March:

• Rhône En Primeur (2023 vintage).

• Brunello di Montalcino (2020 vintage).

April:

• Barolo & Barbaresco New Vintage Releases (2021 vintage).

• Bordeaux Primeur Week: Prestigious Bordeaux estates debut their newest vintages.

May - June:

• Bordeaux En Primeur Campaign: Release of 2024 vintage.

• Champagne New Releases from Dom Pérignon, Bollinger R.D., and others.

July - August:

• Bolgheri (Super Tuscans) Releases: Names like Ornellaia, Sassicaia, and Grattamacco release their new vintages.

September:

• La Place de Bordeaux Releases: Masseto, Opus One, Cheval des Andes, and more.

October:

• Grower Champagne Releases: Smaller producers offer unique cuvées.

November - December:

• Champagne Holiday Releases from Louis Roederer and Salon.

You Don’t Have to Buy at Release

It’s essential to remember that you don’t need to buy wines at release if it doesn’t align with your strategy or if the pricing seems inflated.

During down markets, it can be more beneficial to buy on the secondary market. Prices may be lower, and you can sometimes find better deals on sought-after wines.

Buying on the secondary market also means you don’t have to necessarily wait for the wines to mature, as you would with En Primeur purchases. However, you need to ensure provenance and proper storage when purchasing through the secondary market and using well-reputable wine merchants is key.

How to establish if a price is “fair”

Understanding what drives fine wine prices is key to identifying whether a wine is fairly priced or overpriced.

• Macroeconomic Environment. Wine prices often rise during strong economic periods, especially when low interest rates reduce the appeal of bonds and other low-risk assets.

  • Where to find this information: Use resources like the New York Fed or financial publications such as Bloomberg, FT, or WSJ to track interest rates.

    

• Storage Costs. Proper storage and insurance can reduce net returns by around 1-2% annually, making this a crucial factor in your cost calculations.

  • Higher interest rates impact the relative value of older vintages: the higher the interest rates, the cheaper the back vintages look. You can read in this article why: Brief Finance Lesson.

• Vintage Quality. Wines from top vintages tend to appreciate more over time compared to off-vintages.

  • Where to find this information: This is a tricky one. Opinions vary, so consult sites like Jancis Robinson, Robert Parker, or Vinous. Remember that it’s not an absolute metric, it’s a subjective one.

    

• Supply & Demand. As supply diminishes due to consumption, scarcity can drive prices up, even for lesser vintages.

  • Where to find this information: Liv-ex. While Liv-ex doesn’t always provide detailed supply and demand data for specific wines, they do release monthly reports on the fine wine market and the performance of their indices. This is invaluable for understanding the broader power dynamics. For example, we know that the market is currently under pressure, with buyers holding the upper hand as many wine merchants look to offload significant quantities.

    

• Release Price. High release prices can lead to increased volatility. Compare with similar vintages to judge if it’s overpriced.

  • Where to find this information: The best resource is Wine-Searcher. Compare the release price provided by the merchant to previous vintages and consider whether it makes sense to buy at release or if older vintages are more fairly priced—especially when factoring in the cost of carry (refer to the Brief Finance Lesson for more on this).

To Do Now:

1. Revisit Step 4. Identify your top priority regions and allocate a portion of your budget accordingly.

2. Allocate Your Budget. Decide how much to invest in each region based on your priorities and market outlook.

3. Set a Buying Plan. Determine which releases to target and whether to buy at release or wait for secondary market opportunities.

Step 8: Learn, Monitor, Review

Successful investors continually learn and adapt their strategies. Staying informed and regularly reviewing your portfolio is key.

To Do Now:

1. Read widely and taste regularly. Keep up with market trends, industry news, and price movements. Of course, it goes without saying it, is the best place for just that. Also, join wine investment communities like this Discord group and attend regular tastings. Many merchants host tasting events (refer to the links in the Google Sheet at the end of the article for the UK’s major merchants). If you’re based in London, explore tasting venues like The Sampler or St. Swithin's Wine Shippers, where you can sample a variety of wines by the glass. Wine clubs such as 67 Pall Mall also offer tasting events for a deeper exploration of fine wines.

2. Review your collection. Regularly assess the performance of your wines and adjust your strategy as needed. Track your collection using tools like CellarTracker or a simple spreadsheet. Use Wine-Searcher to check the current lowest price of each wine, which serves as a benchmark for its market value. This will help you identify which wines are performing well and which might need to be reallocated.

3. Reflect and Learn. The best way to improve as an investor is by reviewing mistakes and recognising internal biases. Research shows that understanding your own psychological patterns and correcting mental biases is more impactful than just learning market theories. Simulated trading can help you test strategies, but it doesn’t replicate the emotional pressure of real money investing.

   The key is to focus on mental discipline and strategic thinking.

Congratulations!

This concludes the Practical Fine Wine Investing Course. By now, you should have all the tools and knowledge you need to confidently start your fine wine investing journey.

In case you missed any parts, here’s a quick recap:

• Part 1: Understand how much you can invest in fine wine each year.

• Part 2: Find your trusted wine merchants and investment platforms.

• Part 3: Choose the right wines, and decide when to buy based on the release calendar and market conditions.

Good luck, and enjoy building your fine wine collection!

Optional Tools

Alongside this free course, I’ve also created a Google Sheet, available behind a paywall. This optional tool organises all the essential data, metrics, and models to simplify your investment decisions. It’s not a necessity, but if you’d like to make things easier, or if you’d like to support my work, this is a way to do so.

Upgrade to Paid

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Exciting news: You can now listen to this week’s edition by becoming a paid subscriber. Unlock the voiceover feature and enjoy fine wine insights on the go!

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Hello Fine Wine Lovers,

Now that you know how much you can invest in fine wine each year, it’s time to start looking at how to invest.

Today, we’ll explore the how and, in two weeks, we’ll tackle the what.

The key question for today is:
Do I have to pick the wines myself?

The answer can be yes, no, or somewhere in between.

Alongside this free course, I’ve also created a Google Sheet, available behind a paywall (scroll to the end of the article). It’s an optional tool that organises all the essential data, metrics, and models to simplify your investment decisions. It’s not necessary, but if you’d like to make things easier, or if you’d like to support my work, this is a way to do so.

Upgrade to Paid

Let’s dive in!

Eight Steps To Invest In Fine Wine

To access the full course (for now, the first 6 steps), head to the homepage and click on “Fine Wine Investing Course” in the top bar.

Part 1: Released on 19th Oct 2024

• Step 1: Set Clear Investment Goals

• Step 2: Determine How Much You Can Afford to Invest

• Step 3: Determine Your Tolerance for Risk

Part 2: Today’s Session

Today, we’ll look at the practicalities of investing in fine wine—exploring wine merchants and other platforms, storage options, and your level of involvement in decision-making.

• Step 4: Determine Your Investment Style

• Step 5: Choose an Investment Platform

• Step 6: Fund Your Investment Account

Part 3: Coming Up in Two Weeks

• Step 7: Pick Your Wines & Understand the Release Lifecycle

• Step 8: Learn, Monitor, Review

Step 4: Determine Your Investing Style

Some people approach fine wine investing from a passion for wine. Others may see it as a means to diversify their portfolio or get a tax break. I doubt anyone reading this newsletter is here purely to make money.

Depending on where you start, it’s important to outline your path to investing.

Your investing style is crucial in shaping how you approach fine wine investments. Whether you prefer a hands-on approach or a more passive strategy, understanding your style helps you choose the right investment methods and tools.

Before diving in, remember there is often an information asymmetry and a conflict of interest between you and the person selling you the wine.

• Information asymmetry means that the person selling you the wine has more information than you do about a certain wine. For example, how well the wine is selling, its quality, future potential, and more. This asymmetry can be reduced by educating yourself as much as possible.

• What’s more, a wine merchant’s interests may not always align with yours. They may prioritise their commercial needs above your financial interests. For example, during market downturns, merchants sometimes use novice buyers on starter cellar plans to offload excess stock at inflated prices.

Like any other investment, you shouldn’t go in with your eyes closed.

Trust, but verify.

To Do Now:

1. Determine your level of knowledge & personal interest in the main investment wine regions. Start your investment journey with no more than one or two sub-regions and build from there. Attending wine events can be a great way to spark your interest—wine merchants are always keen to showcase their wines. 67 Pall Mall, for example, frequently hosts tastings.

   • France: Bordeaux, Burgundy, Champagne, Rhône

   • Italy: Barolo & other Nebbiolo-based wines, Tuscany

   • Spain: Rioja

   • New World: Napa Valley, Argentina, South Africa

   • Others (that may interest you): English Sparkling Wine (my long-time favourite), Sherry (my new passion), Madeira, Port, New Zealand, and more.

2. Determine your investment style for each region. Decide whether you enjoy researching and analysing fine wines, or if you prefer a more detached approach. If discovering new producers, following market trends, and tracking performance excites you, that suggests a more hands-on investing style.

   • DIY Investing: You don’t need to be highly knowledgeable to start investing. Just start. If you don’t feel confident, begin with 1 or 2 sub-regions based on what you’d like to drink or explore. Revisit your goals—what wines are on your list?

   • Professional Guidance: If you prefer expert advice and someone to manage your portfolio, there are solutions. For example, BBR offers a “Cellar Plan,” and Cru World Wine offers “Expert-Assisted Portfolios” or fully “Managed Portfolios,” to name a few.

   • Review your interest region by region and decide your approach—DIY, Assisted, or Fully Managed.

3. Compile a list of wine merchants in your area. There’s a common belief that investing in fine wine requires going through auction houses. If you also thought this, let’s dispel that myth. Auction houses like Sotheby’s and Christie’s specialise in rare, aged, or unique bottles, selling to the highest bidder in live and online settings. While there can be great deals, competitive bidding can drive prices up. Buyers should also be wary of authenticity issues and added fees, such as buyer’s premiums.

   In contrast, wine merchants offer fine wine through direct retail, focusing on provenance, condition, and personalised service. They often build long-term relationships, provide storage solutions, and may offer en primeur options (we’ll cover this in Part 3).

   Buyers can benefit from stock in bond, which means purchasing wine that hasn’t yet been subject to duty or VAT, making it more cost-efficient for investment purposes. That’s because you can defer paying VAT until the wine is withdrawn for drinking.

   Now it’s time to compile a list of wine merchants in your area or those that ship to your region.

   If I had a penny for every time a wine merchant said, “I can tailor the offers to your needs, but unless you spend $$$ per year, we won’t send you the top wines”…!

   Do not let wine merchants pressure you into buying wines just to access better offers. If they won’t send you top offers, don’t buy from them. Full stop. And if no merchant is offering the wines you want, just wait for a market downturn (like now) and buy them on the secondary market (meaning: not at release). FOMO (fear of missing out) is very real sometimes, but the idea that you can only make money by purchasing wine X from merchant Y is simply not true. Especially in a market like the current one, with two consecutive double-digit down years.

   During the first call with a wine merchant, they will likely want to know your level of knowledge, your expected spending, and the regions you’re interested in. I suggest using this as an opportunity to learn as much as possible about them.

   For the first screening, make sure you know which merchants offer:

   • Delivery to your location

   • Ex-VAT pricing

   • Bonded storage

   • Managed portfolio services

   • Marketplaces or selling facilitation

   To help with this, I’ve created a starter list of the main UK wine merchants in the Google Sheet (scroll to the end).

Step 5: Choose an Investment Platform

Now that you know your goals, risk tolerance, and investing style, it’s time to choose your wine merchant. The platform you choose will influence how you buy, store, and sell fine wines. You may use multiple platforms for different services, but be mindful—having too many accounts can complicate tracking and management.

To Do Now:

1. Evaluate Each Wine Merchant. Consider fees, features, and reputation. Merchants vary widely in what they offer, so identify the services most critical to you, such as market analysis tools & marketplace, same-day delivery, and secure storage solutions. Before committing, use the questionnaire below to ask crucial questions and identify any hidden costs or limitations.

   1. Wine Purchase: Upfront Costs & Logistics
   -------------------------------------------
   
   Purchase Price & Fees	
   - Do you offer ex-VAT and in-bond prices for the wine?
   - Are there additional charges, such as import duties or local taxes, I should be aware of?
   - What payment terms do you offer? Is there a discount for early payment?
   
   Shipping & Handling	
   - What are your shipping and handling charges (both domestic and international)?
   - Are there options for consolidated shipping, and how does this affect cost?
   - How long does it typically take to receive delivery after purchase?
   
   2. Wine Storage & Cellaring: Ongoing Costs
   ------------------------------------------		
   
   Bonded Storage Fees	
   - Do you offer bonded storage? If so, what are the annual fees per case of 6? Are there any discounts?
   - Are there additional fees for storing wines that require specific conditions (e.g., temperature and humidity control)?
   
   Insurance & Provenance	
   - Are insurance costs included in the storage fees, or are they separate? If separate, what are the rates?
   - How is the insured value determined—market price, replacement value, or purchase price?
   - Do you provide condition reports and provenance documentation, and what are the associated costs?
   
   Long-Term Management	
   - Do you offer portfolio management services? What are the credentials & past performance of your Portfolio Managers?
   - Is there an additional fee for managing the portfolio or for accessing portfolio valuation updates?
   - Do you offer re-labelling, re-corking, or other maintenance services, and if so, what are the costs?
   
   Hidden Costs	
   - Are there any administration or account management fees?
   - What are your policies and costs if I want to move my collection to a different storage facility?
   - Is there an early exit penalty if I withdraw wines from bond or move them to a personal cellar?
   
   3. Wine Selling: Transaction & Liquidation Costs
   ------------------------------------------------		
   
   Commission & Fees	
   - If I sell the wine through your platform, what is the commission structure?
   - Are there marketing, listing, or documentation fees for selling wine?
   
   Transfer & Auction Costs	
   - What are the fees for transferring wine between bonded warehouses or to a potential buyer?
   - Do you charge different rates for selling via auctions versus direct sales or consignment?
   
   Currency & Proceeds	
   - Can I receive proceeds in different currencies, and if so, is there a currency conversion fee?
   - How long does it take to receive the proceeds once a transaction is completed?
   
   4. Wine Consumption: Withdrawal & Delivery Fees
   -----------------------------------------------	
   
   Bonded to Private Transfer	
   - What are the withdrawal fees for taking wine out of bond?
   - Are there additional costs to ship the wine from bond to a private address (e.g., customs, delivery)?
   
   Condition & Presentation	
   - Do you offer services such as professional re-corking, re-labelling, or cellar inspections? If so, what are the costs?
   - Are there options for personalised or luxury packaging if I want to gift or display my collection?
   
   Unforeseen Expenses	
   - Are there any other costs I should anticipate if I decide to withdraw the wine for drinking instead of selling?

Step 6: Fund Your Wine Investment Account

Now that you’ve selected a platform that aligns with your goals and preferences, it’s time to fund your account and start building your fine wine portfolio.

Exciting!

To Do Now:

1. Set Up Automatic Contributions or Create a Separate Fund. Consider setting up automatic contributions to steadily grow your portfolio. For example, BBR’s Cellar Plan accepts monthly contributions starting at £250. Alternatively, you can set aside an annual amount in a separate account or fund your portfolio on a need-to-invest basis.

2. Track All Contributions. Keep a log of every £ (or $!) that goes into your wine portfolio. Fine wine isn’t as transparent as other asset classes, so it’s easy to lose track of your total investment over time.

3. Start Investing. Once your account is funded, begin selecting wines that fit your strategy. However, don’t rush to buy just because your account is funded—wait for the right market opportunities! Remember: patience is key in wine investing.

Conclusion: Understanding The Unique Network of Wine Merchants

Congratulations!

This concludes Part 2 of the fine wine investing course, where we’ve focused on understanding how to buy (and potentially, sell!) your wine through the unique network of wine merchants. It’s never a waste of time to get to know the wine merchants in your area, understand how they operate, and learn their strengths and weaknesses.

You’ve now established a solid foundation by determining your investing style, choosing the right platform, and funding your account.

What to Expect Next

In two weeks, we’ll take a closer look at choosing wines, which wines to buy, when they’re released onto the market, and what drives their prices.

For some optional “homework” (for lack of a better word), I recommend reading (or re-reading) the Price of Wine article, which delves into the key components driving wine prices. I’ve recently recorded an audio version, so if you prefer to listen, that might be an easier way to review it!

→ Yes, we’re almost at the paywall.

What’s Behind the Paywall?

While this course is free and packed with valuable information, I’ve added a couple of optional features for paid subscribers to enhance the experience. In addition to the Google Sheet that simplifies your fine wine investment calculations, paid subscribers will gain access to a Voiceover of the article, where I personally read through the content — ideal for those who prefer listening or want to absorb the information while multitasking.

The Voiceover and Google Sheet will help you:

• Understand the material in a more engaging format

• Gain additional insights as I elaborate on key points

• Track your investments using the Google Sheet

The reason these tools are behind a paywall is simple: creating and maintaining these resources takes considerable time and effort. Beyond that, they provide a streamlined, efficient way to make sound financial decisions about fine wine. Plus, choosing to access the sheet and the Voiceover is also a way to support my work and ensure I can continue offering high-quality, free content to everyone.

You don’t need the Google Sheet or the Voiceover to follow this course—everything essential is available for free. But if you’d like a little extra support and a more interactive experience, these resources are here for you.

Upgrade to Paid

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Exciting news: you can now listen to this week’s edition by becoming a paid subscriber. Unlock the voiceover feature and enjoy fine wine insights on the go!

Upgrade to Paid

Hello Fine Wine Lovers,

September: let’s get back to work with a fresh start!

If you’re reading this, chances are you're passionate about more than just wine or investments—you’re interested in the intersection of both. Whether you're a wine expert without much financial background or someone well-versed in investing but new to fine wine, this is for you.

As our community grows, it’s important that we all stay on the same page when it comes to understanding fine wine as an investment. To help with that, I’d love for you to identify where you are on your personal investing journey. This will ensure we cater to everyone's needs and experience levels.

In this article, you’ll find a comprehensive guide on fine wine investing, designed for both beginners and experienced investors alike. The guide is as practical as possible, offering actionable steps to help you either start or refine your fine wine investment journey. It covers everything from understanding the basics to incorporating fine wine into a diversified investment portfolio.

All the information you need to start investing in fine wine is freely available in this article. The guide includes the key steps, strategies, and insights to get you going on the right foot.

Alongside this free course, I’ve also created a Google Sheet, available behind a paywall (scroll to the end of the article). It is an optional tool that simplifies the process by organising all the essential data, metrics, and models you’ll need to streamline your investment decisions. It’s not a necessity, but if you’d like to make things easier, or if you’d like to support my work, this is a way to do so.

The main goal is to keep my content free and accessible to all, while offering something extra for those who want it.

Upgrade to Paid

Now, while some steps of this course may seem obvious to the more experienced among you, it’s crucial not to overlook fine wine within the context of your broader investment portfolio.

In fact, one of the most common behavioural biases in personal finance is mental accounting. This occurs when we assign different values or levels of importance to money based on its source or intended use. For instance, we may treat a salary differently from a bonus or inheritance, even though the financial principles governing both should be the same. When it comes to investing, this bias can lead to suboptimal decisions by isolating pots of money rather than considering the full picture.

The key takeaway?

Fine wine investments should be viewed holistically as part of your overall portfolio strategy. It’s not just about owning a few prized bottles; it’s about understanding where wine fits in terms of risk and return, alongside your other assets.

This course helps you with that.

Let’s dive in!

Eight Steps To Invest In Fine Wine

I’ve broken this course into three parts, to be delivered over the next month.

Today, we’ll look at the first three steps. After completing these, you’ll have a clear understanding of how much you can or should invest in fine wine (if you choose to), without compromising your financial well-being.

In two weeks, we’ll focus on the practicalities of investing in fine wine—exploring wine merchants and other platforms, storage options, and your level of involvement in decision-making.

The final session will centre on selecting wines you enjoy, at the right price, while also giving you insights into the lifecycle of fine wine releases.

To access the full course, head to the homepage and click on “Fine Wine Investing Course” in the top bar.

Today’s Session:

• Step 1: Set Clear Investment Goals
  What are your goals in fine wine investing? Without a clear goal, you may end up buying wines without direction. While this could be fun for some, it’s not ideal if you want to treat fine wine as part of your investment portfolio. Define your objectives—whether you’re looking for long-term returns, portfolio diversification, or the enjoyment of owning valuable bottles.

• Step 2: Determine How Much You Can Afford To Invest
  Before you dive in, it’s essential to assess your income and wealth to understand how much you can safely allocate to fine wine. You may need to start small or, alternatively, have the means to invest a significant sum. In either case, it’s important to know how this amount fits into your overall portfolio and financial strategy.

• Step 3: Determine Your Tolerance for Risk
  Risk tolerance goes beyond just how much you’re willing to lose. It also involves considering your time horizon, experience, and overall financial situation. Some fine wines may take years to appreciate in value, so you’ll need to be comfortable with the level of risk and the potential for illiquidity over the short term.

Coming Up in Two Weeks:

• Step 4: Determine Your Investment Style
  Explore whether you prefer a hands-on approach or a more passive strategy in your wine investments.

• Step 5: Choose an Investment Platform
  From traditional wine merchants to online platforms, this step will guide you through the selection of the best platform for your needs.

• Step 6: Fund Your Investment Account
  Once you’ve chosen your platform, we’ll cover how to fund your account and manage your initial investment.

In One Month:

• Step 7: Pick Your Wines & Understand the Release Lifecycle
  We’ll dive into the art of choosing wines, how to select wines that not only align with your personal tastes but are also priced right from an investment perspective. Knowing where to find reliable pricing information, and navigating the lifecycle of fine wine releases are key aspects of fine wine investing.

• Step 8: Learn, Monitor, Review
  The final step will focus on continuously monitoring market trends, and reviewing your investment decisions to refine your investment strategy over time.

Step 1: Set Clear Investment Goals

You need to write your goals.

I repeat: you need to write your goals.

This step is more important—and harder—than you might think. Many people assume they can simply go with the flow, but unless you have vast resources, that’s not a sound strategy. (To be honest, it’s not a sound strategy even if you are rich.) Clear goals will guide your investment decisions and help you stay focused on what matters most to you.

(I’m starting to sound like my accountant here!)

To do now:

1. Specify your goals, financial and non-financial. Fine wine is a passion asset, so it’s crucial to think about both monetary and non-monetary objectives. Take a “stream of consciousness” approach and write down whatever comes to mind, whether it’s financial success or personal enjoyment.

   E.g.: "I want to taste Le Pin 1989 before I die.", "I want a collection of every vintage Dom Pérignon going back to 1921.", "I want to buy cases of 12 of wines I like and make enough profit on 6 to cover me drinking the other 6."

2. Determine your investment horizon. Think about both short-term and long-term goals, as these will affect your strategy. For example, longer time horizons can allow for a more aggressive approach, whereas shorter-term objectives may require a more conservative stance. Now that you’ve got a list of your goals, divide them into:

   • Short-term (1 to 3 years)

   • Medium-term (5 years)

   • Long-term (10+ years)

   When doing this, take your age and time to retirement into account.

   For instance, a short-term goal might be to buy a diverse collection of 10 Nebbiolo-based wines, while a long-term goal could involve building a legacy collection of all vintages of G. Conterno.

3. Rank your goals. Now that you’ve written your goals, it’s time to prioritise. Which ones are the most urgent? Which ones are the most important? Consider whether building a significant collection is a higher priority than making smaller acquisitions or focusing on wines that bring personal joy versus potential financial return.

4. Adapt as life changes. Your goals will likely evolve over time, so it’s essential to review them regularly—annually, at least. Life circumstances change, and so should your investment plan. By doing a yearly review, you can ensure your strategy stays relevant to your current situation.

Step 2: Determine How Much You Can Afford To Invest

One of the most common questions I get when I tell people I write about fine wine investing is: “How much do I need to start?” While it’s possible to begin with something like a case of 6 bottles of Vajra’s Barolo Coste di Rose for under £300, that’s not the main point.

The more relevant question to ask is: “How much can I afford to invest based on my wealth and income?”

Pinpointing how much you can afford to invest in fine wine requires a clear-eyed assessment of your financial situation. Investing in fine wine can be a valuable part of a diversified portfolio, but only if done responsibly.

To help with this, I’ve created a Google Sheet (scroll till the end) that will allow you to calculate your net worth, income, and determine your target allocation for fine wine investments. It’s behind a paywall for a simple reason: creating and maintaining this tool takes significant time and resources, but its purpose is to simplify your decision-making process and ensure you’re investing responsibly.

The Google Sheet helps you:

• Calculate your current net worth and income

• Assess what the best target allocation range for fine wine should be, considering your other investments (property, pension, stocks, bonds, and cash reserves)

However, you don’t need the Google Sheet to get started! You can follow the steps below and work it out yourself manually:

To do now:

1. Calculate Your Total Net Worth. Your total net worth is calculated by subtracting your liabilities (like mortgages or loans) from your assets (cash, real estate, stocks, bonds, pensions, etc.).

   Total Assets (Cash, Real Estate, Stocks, Bonds, Pension ...) - Total Liabilities (Mortgage, Car Loan, ...)

2. Calculate Your Income And Assess Its Stability. Determine your total income, which can include: Salary, Dividends, Coupons from Bonds, Rental income, Other income sources. Also, consider how stable these sources of income are. Is your salary consistent, or are dividends and rental income variable?

   Total Income = Main Salary, Dividends, Coupons on Bonds, Rental Income, Other ... 

3. Ensure Financial Stability Before Investing. Before diving into any investments (not just fine wine), ensure that you:

   • Have paid off high-interest debt

   • Have an emergency cash fund in place

4. Break Down Your Current Investments. Categorise your investments into: Cash, Equity, Bonds, Real estate, Alternative assets, including fine wine.

   This breakdown will help you create a target allocation range for each asset class in your portfolio. The allocations should align with your risk tolerance and time horizon.

   For instance, if you’re younger, you may be more comfortable with higher-risk assets like equities and alternatives.

   For example, if you have a conservative approach, you might allocate only 1-3% of your total net worth to fine wine. If your income is less stable, you may want to stick to the lower end of that range.

5. Formula for Fine Wine Investment. The amount that you can invest in fine wine is calculated as below:

   Amount to Invest in Fine Wine = 
   (Total Net Worth × Target Allocation Percentage +
   Annual Income × Income Allocation Percentage)
   × Risk Adjustment Factor

Now that you’ve determined a range, in Step 3 we’ll assess your risk tolerance so you can fine-tune exactly how much you’ll be comfortable investing in fine wine each year.

Step 3: Determine Your Tolerance for Risk

Understanding your risk tolerance is a cornerstone of investing. It helps align your comfort level with the inherent uncertainties of the fine wine market and your financial goals.

Your risk tolerance is partly influenced by your personality, but that’s not the whole picture. You might have a thrill-seeking personality, but if your finances are unstable, your tolerance for risk may be lower. Other factors that shape your risk tolerance include your investment experience, time horizon, and the quality of your net worth and income.

Your risk tolerance increases ↑ if =

• Personality: thrill-seeking personality

• Investment experience ↑

• Time horizon ↑

• Income security / stability ↑

• Debt level ↓

• Short-term liquidity needs ↓

To do now:

1. Answer These Questions. This simple quiz is designed to calculate your propensity to risk.

   - How do you react to market fluctuations?
   1: I worry a lot when the market drops | 2: I am somewhat concerned | 3: I am comfortable holding through volatility
   
   - What is your investment experience?
   1: I am new to investing | 2: I have some experience | 3: I am very experienced
   
   - How important is portfolio stability to you?
   1: Avoiding losses is very important | 2: I prefer a balance | 3: I am focused on long-term gains
   
   - What are your financial goals?
   1: I am focused on preserving wealth | 2: I am focused on moderate growth | 3: I am focused on maximum growth
   
   - What is your time horizon for your investments?
   1: Less than 5 years | 2: 5-10 years | 3: More than 10 years
   
   - How stable is your income?
   1: My income is unstable | 2: My income is stable | 3: My income is very stable
   
   - What is your current debt level?
   1: I have high levels of debt | 2: I have manageable debt | 3: I have little to no debt
   
   - How much liquidity do you need in the short term? 
   1: I need a lot of liquidity | 2: I need some liquidity | 3: I don't need much liquidity

2. Scoring.

   • Below 16 points: Consider yourself "Conservative"

   • 16 to 22 points: You have a "Moderate" risk tolerance

   • Above 22 points: You have an "Aggressive" risk tolerance

3. Risk Tolerance Profiles and Fine Wine Allocation. Now that you know where you sit in terms of risk tolerance, you can calculate your target allocation percentages.

   1. Low Risk Tolerance (Conservative)
      Focus more on safer, income-generating assets like bonds and cash equivalents.

      • Net Worth Allocation Percentage: 1-3%

      • Income Allocation Percentage: 2-5%

      This approach is for risk-averse investors or those with a shorter investment horizon, recognising the illiquidity and potential market fluctuations of fine wine.

   2. Moderate Risk Tolerance (Moderate)
      A balanced allocation across equities, fixed income, and alternative assets.

      • Net Worth Allocation Percentage: 3-5%

      • Income Allocation Percentage: 5-7%

      This approach is for investors with a balanced risk tolerance, willing to commit a larger portion of their wealth and income, understanding the potential for higher returns but also accepting the risks.

   3. High Risk Tolerance (Aggressive)
      Allocate a higher percentage of your net worth to growth-oriented, higher-risk assets like equities and alternative investments, including fine wine.

      • Net Worth Allocation Percentage: 5-10%

      • Income Allocation Percentage: 7-10%

      This is for experienced investors or those with a high risk tolerance, who see fine wine as a significant part of their strategy, despite its illiquidity.

4. Adjust over time. Your risk tolerance may change as your finances and goals evolve. Regularly reassess your risk tolerance and adjust your investment strategy accordingly.

Conclusion: Laying the Foundations for Fine Wine Investing

Congratulations!

You’ve completed the first part of the fine wine investing course, where we’ve focused on setting clear goals, assessing your financial health, and understanding your risk tolerance. These foundational steps are critical, as they guide your future decisions and ensure you’re investing in fine wine in a way that aligns with your personal and financial goals.

Fine wine investing is a journey, not a one-off transaction.

With your goals in place, a better understanding of your finances, and clarity on your risk tolerance, you’re well on your way to making informed, confident decisions. Remember, this isn’t just about accumulating bottles; it’s about building a meaningful, diversified portfolio.

What to Expect Next

In two weeks, we’ll dive deeper into the practicalities of fine wine investing. We’ll cover how to choose an investment platform, understand storage requirements, and assess how hands-on you want to be with your fine wine investments.

→ Yes, we’re almost at the paywall.

What’s Behind the Paywall?

While this course is free and packed with valuable information, I’ve also added a couple of optional features for paid subscribers to enhance the experience. In addition to the Google Sheet that simplifies your fine wine investment calculations, paid subscribers will also gain access to a Voiceover of the article, where I personally read through the content, ideal for those who prefer listening to the content or want to absorb the information while multitasking.

The Voiceover and Google Sheet will help you:

• Understand the material in a more engaging format

• Gain additional insights as I elaborate on key points

• Track your investments with the help of the Google Sheet

The reason these tools are behind a paywall is simple: creating and maintaining these resources takes considerable time and effort. But beyond that, they provide a streamlined, efficient way for you to make sound financial decisions about fine wine. Plus, if you choose to access the sheet and the Voiceover, it’s also a way to support my work and ensure I can continue offering high-quality, free content to everyone.

You don’t need the Google Sheet or the Voiceover to follow this course—everything essential is available for free. But if you’d like a little extra support and a more interactive experience, these resources are available to you.

Upgrade to Paid

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