One thing is to analyse Bordeaux release prices through a purely clinical lens. I have spent much of the past few months doing exactly that throughout the Bordeaux En Primeur campaign. The other is to explore the many reasons people buy wine that have nothing to do with financial returns.
Whenever I publish an article arguing that a release is expensive relative to comparable vintages, I inevitably receive comments along the lines of:
“Wine lovers don’t buy wine for financial gain.”
I couldn’t agree more.
In fact, I don’t believe wine should be bought primarily for financial gain. As a CFA charterholder, a former portfolio analyst managing institutional portfolios for pension funds, and someone trained in economics and finance, I believe financial security is best built through a diversified portfolio of equities, bonds, commodities, real estate and, depending on individual circumstances, other mainstream asset classes. That portfolio does not need wine. It does not need art, watches or Pokémon cards either.
I want to be unequivocal about this.
Over the years I have criticised wine merchants and wine investment firms for marketing wine as a “safe haven”, a “currency hedge”, an “inflation hedge”, “uncorrelated asset” or an essential portfolio diversifier. Those claims are, in my view, misleading and plain wrong. You do not need wine to diversify an investment portfolio or to protect yourself during market downturns. Too often these narratives have been used simply to sell more wine.
But if you love wine, then I believe it deserves a place in a different kind of portfolio. That is where In the mood for wine comes in.
Wine, like art, watches or classic cars, is a passion asset. It is something people buy because it enriches their lives, not because they need it. If we borrowed from Maslow’s hierarchy of needs, collectibles would sit close to the top: they fulfil aspirations rather than necessities.
People buy wine for countless reasons, and those reasons are deeply personal.
To drink and enjoy.
To celebrate life’s milestones.
To share memorable bottles with friends and family.
To build a cellar that reflects their tastes.
To collect every vintage of a favourite château.
To follow the evolution of a great wine over decades.
To preserve a family tradition.
To connect with a region, producer or vintage.
To satisfy curiosity.
To own something rare or historically significant.
Simply because owning beautiful wines brings them pleasure.
In behavioural finance, these benefits are often described as emotional returns.
Passion assets can therefore generate two forms of return: a financial return and an emotional return. For passion assets, the latter is often far more important, yet it is also impossible to measure objectively.
That is precisely why I spend so much time analysing the financial side.
Financial returns are one of the few aspects we can measure with reasonable confidence. They provide a benchmark that allows collectors to make more informed decisions.
Suppose I conclude that Cheval Blanc is expensive relative to previous comparable vintages. That does not automatically mean you shouldn’t buy it.
Perhaps your ambition is to own every vintage of Cheval Blanc. Perhaps it is your favourite estate. Perhaps you want to experience the evolution of an exceptional vintage over the next forty years. Perhaps production was unusually small and scarcity matters to you. All of those are perfectly valid reasons to buy the wine.
But by understanding how much of a premium you are paying, you can make that decision consciously rather than blindly. You know the financial cost of pursuing the emotional reward.
I believe that is what today’s collectors increasingly want: they make purchasing decisions differently from previous generations because they expect transparency in every other aspect of their lives. They compare prices, read reviews, analyse data and make informed choices and why should wine be different? I believe transparency and rigorous analysis ultimately help the market rather than harm it. Better-informed collectors are not less likely to buy; they are simply more likely to buy with confidence. That belief was one of the main reasons I started In the mood for wine.
There is also another audience for this analysis.
Collectors are driven primarily by emotional returns. Merchants, négociants and producers, however, are businesses. Financial returns are fundamental to their survival. Analysing release pricing can therefore help explain why one En Primeur campaign succeeds while another disappoints. It helps producers understand how collectors perceive value, merchants understand demand, and ultimately benefits everyone participating in the market.
On this topic, I wanted to re-share the interview below with Greg Davies, one of the world’s leading experts in behavioural finance. Greg founded the first behavioural finance team in banking at Barclays and now leads behavioural finance at Oxford Risk, where he helps investors make better investment decisions. He was also my Behavioural Finance professor at Imperial College London, where we first met.
Since In the mood for wine has grown by more than 50% since this interview was first published, it felt like the perfect time to revisit a conversation that perfectly captures why our emotions, biases and motivations play such a powerful role in the way we buy, collect and think about wine.
I don’t know why I didn’t subscribe sooner.
"I believe financial security is best built through a diversified portfolio of equities, bonds, commodities, real estate and, depending on individual circumstances, other mainstream asset classes."
Nope, financial security is built by understanding where we are in capital and political cycles, and positioning yourself ahead of the masses. Each asset class works until it doesn't, and you need to adapt your estate to meet upcoming challenges. Diversification isn't a way to build security; it's just roaming with the rest of the herd. Concentration in specific assets at specific times, armed with the patience to see the payoff, is how you build financial security and independence.
Wine may well have a place in that strategy, depending on where we are in the aforementioned cycles.