From the FT: "Your wine collection may be worth less than you think"
Alan Livsey talks about three main factors when it comes to valuing fine wine in his excellent FT piece.
I was quoted in this weekend’s Financial Times piece on fine wine valuations, “Your wine collection may be worth less than you think.”
In this piece, Alan Livsey explores his personal journey of discovering the difference between the price and value of his wine collection. While much of the wine trade thinks about wine in nominal terms — buy at £100, sell at £120, make £20 — collectors (especially those reading this publication!) instinctively know there is more to it than that.
As Alan highlights, three factors matter when valuing a wine collection:
• Net transaction prices, not just quoted market values
• Storage and insurance costs
• The opportunity cost of capital
My contribution focussed on the concept of cost of carry.
As I told the FT:
This is the framework I have applied throughout my analysis of Bordeaux 2025 en primeur (Part 1 & Part 2). In many cases, mature back vintages offer better value than the latest releases once carrying costs are taken into account.
The broader lesson extends beyond Bordeaux. Fine wine should not be valued solely on its latest quoted price. Like any asset, its true value depends on the costs, risks and alternatives facing the buyer.
***
Thank you to everyone who reads and supports ITMFW.
My goal has always been to shed light on what I believe is the most fascinating passion asset in the world — and the only one that improves with age.
Understanding concepts such as cost of carry doesn’t diminish the romance of wine. It helps ensure that great wines are valued appropriately, so they can continue to be produced, cellared, aged and enjoyed by future generations.
After all, wine is one of the only asset that becomes more valuable because of time, not despite it.