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Invest £5K

How to invest £5k in fine wine

For some oenophiles, fine wine is more than just a passion – it’s a smart investment. Here’s where CultX’s experts would start if they had £5,000 to invest in wine.

By

Date

CultX Team - Wine Investment Specialists
09/11/2022

Summary

  • Start your portfolio with growth-friendly picks from classic regions like Burgundy and Bordeaux, then expand into emerging or established regions based on your appetite for risk
  • Look for wines that can provide great returns over a number of years, rather than the immediate future
  • Choose wines that have the best potential for growth, taking into account quality and relative value
  • Explore regions that have seen increased market interest and research the ones that might begin attracting attention

In this article, we cover

  1. Prioritise potential for growth
  2. Quality and value make a good combo
  3. Expand your horizons
  4. The best wine investment strategy for £5,000
    • Bordeaux
    • Burgundy
    • Champagne
    • Italy
    • The New World
  5. Get started with fine wine investment

Prioritise potential for growth

Building a portfolio of all the best-known name brands might seem like an easy route to appreciation, but our experts advise looking at a bottle’s growth potential over its initial name recognition.

Vintage can be one of the best indicators of potential for appreciation, and Kelly explains how to use it to make strategic picks:

“With a great vintage like 2015 in Burgundy and 2016 in Bordeaux or Italy, you want to look into smaller, up-and-coming producers, because people already have confidence in the vintage. In a lesser vintage, such as the 2017 Bordeaux, you want to look into more reputable producers, bigger names that can churn out really top quality wine even in difficult vintages. They blend, have top-notch terroir, and state-of-the-art winemaking know-how and equipment.”

If the vintage is good, Kelly advises going for something with greater growth potential within a category. Super Tuscans, which are Bordeaux blends grown in Tuscany, “are very sought after because of their quality and competitive price,” she says.

Super Tuscans have the quality of a Bordeaux but for a much lower initial outlay. Investors can pick up bottles for comparatively less than a top tier Bordeaux, but may see a much greater rate of appreciation due to that low initial cost and consistent demand.

Quality and value make a good combo

While investors will often try to find rare bottles that were produced in extremely limited quantities, these don’t always hold the most potential for growth. If a wine commands a high price upon release, it may appreciate but is less likely to do so at a very high rate.

When choosing a wine for investment, it is important to consider relative value. She points to the Tignanello by Marchesi Antionori, explaining that “the wine is a blend of Sangiovese and Bordeaux varieties, it was very reasonably priced within this Super Tuscan category. It was really widely available in the UK around 10 years ago and a lot of people remember drinking it with their pasta. Very few saw the investment potential back then. It’s an exceptional wine and has really picked up recently. The average price has increased from around €50 to €120 a bottle.”

The wine was once very easy to find and not yet seen as an investment, but after recent reappraisals and significant depletion of stocks, it’s become a very desirable find. It can be difficult to predict what’s going to attract future demand, but good quality wines often have real potential to appreciate.

Expand your horizons

Most wine portfolios have a strong foundation of classic Bordeaux and Burgundy wines, and even these well-established regions offer opportunities for growth, Aaron says:

“Up-and-coming producers with a good quality price ratio (known as QPRs) often produce wine that can rival the top names but they don’t yet have that gravitas or iconic status so they come with much cheaper price tags. We look for wineries who are maybe making a big investment in new equipment or having recruited a top name winemaker and vineyard teams – all the things that go into achieving really good quality wines every year. Eventually that should get noticed by the market and then price growth can follow. Chateau Smith Haut Lafitte for example, has really shot up in quality over the past decade.”

Aaron also emphasises the importance of looking beyond Bordeaux and Burgundy to regions that have seen growth, like Italy. “Just a couple years ago, it had one of the highest growth rates of any fine wine region and is finally being noticed by people around the world. Once Europe, America, China and Asia discover a certain region, the prices can shoot up quite quickly. Piedmont, for example, is very established but is still a top growth region from our perspective.”

And it’s important not to restrict yourself to the old world. “California has super premium wines with super small quantities (with price tags to match) but its diversification is interesting as more producers get established,” he adds. “And Chile has few producers but they’re making some wines that rival the best in the world. So they’re getting noticed.”

Finding new sources for growth is not only essential to diversifying your portfolio, but could increase your chances for incredible returns.

Best wine investment strategy for £5,000

When investing in an alternative asset like wine, it’s important to be realistic about the time frame involved, Kelly says:

“Really it’s an investment for the medium to long term – five to 10 years. As the price increases in wines from Burgundy and Champagne have proven in the past two years or so, you can realise big returns in short time frames. But fine wine’s real strength is stability and separation from the mainstream stock and bond markets, which comes down to an inverse supply chain, i.e. wines get better and more scarce with time because people start drinking it. It takes a few years for these benefits to really take shape.”

With £5,000 to invest, our experts share their strategies for getting the most out of your budget and choosing the bottles with real potential for long-term appreciation.

Bordeaux

Kelly and Aaron agree that they’d put the majority of their £5,000 into Bordeaux and Burgundy. The two regions have well-established track records, so it’s easy to buy and sell those wines. “Of the two, Bordeaux is the most liquid, most established, so the returns are often less exciting but it’s incredibly stable.”

To investors just testing the market and looking for a fairly quick turnover, Kelly suggests something more liquid, such as a bread-and-butter Bordeaux like Pontet-Canet, Beychevelle or Lynch-Bages. “These are all left-bank, classic Medoc wines that have a global audience and are hugely popular in Asia and America,” Kelly says. “That kind of brand recognition creates market liquidity.”

On a recent trip to Bordeaux, she also tried Branaire-Ducru, which is currently selling at around £50 a bottle. “It may not be the most well-known name, but it’s great quality with a wide distribution network.”

Aaron recommends finding one Bordeaux First Growth (considered the best wine in Bordeaux with a price tag to match), such as the Chateau Haut Brion. Chateau Canon and Carruades de Lafite (which is a Second Growth of Chateau Lafite Rothschild) are also great wines to target.

Burgundy

“The top Burgundies have doubled, tripled in price recently. It’s astronomical,” Aaron says.

But that doesn’t mean it’s out of reach for investors. Aaron continues, “For around £6,000, you might be able to get a Grand Cru from Perrot-Minot for example, which is viewed as just as good as some of the big names for a fraction of a price. Or you could double up with a couple up-and-coming names such as Domaine Tortochot and a case of great wine from Charles Van Canneyt.”

For adventurous investors with a greater appetite for risk, Kelly recommends appellations such as Santenay, Fixin, and Marsannay. These offer price-quality ratio and, if some of the vineyards are upgraded to premier cru, potential for growth.

The key here is to go for more widely recognised names, such as Bizot, Denis Mortet, or Meo-Camuzet. “After all, we just witnessed Pouilly-Fuisse receiving a round of upgrades in 2020. Burgundy is a vibrant and exciting region, full of possibilities. And that’s one of the reasons why it captures the imagination of so many wine lovers,” Kelly says.

Champagne

Aaron also mentions that he’d set aside a portion for a small case of Champagne, such as the Piper-Heidsieck Rare 2006. “The good thing about Champagne is people will buy a bottle for a special occasion, and it gets drunk. That creates real scarcity over time so it’s definitely an age-worthy investment.”

Italy

To diversify your portfolio, Aaron advises looking to Italy. “If you’re risk averse, Barolo 2016 was a fantastic vintage – something like the Vietti Barolo Brunate 2016 would be a great purchase,” he says.

And Biondi Santi wines from the Brunello di Montalcino region can offer something very interesting to investors with a little more appetite for experimentation. He shares, “It’s a very small Tuscan region with a handful of producers that make excellent wines. Biondi Santi started the appellation 150 years ago so they’re the icons here but a case of their wine is still (incredibly) great value compared to top wines in Bordeaux or Burgundy.”

The New World

If you have any remaining capital, Aaron suggests going for something more speculative that speaks to your personal tastes. Simply looking for what you like can lead to some interesting (and potentially profitable) discoveries. He shares, “In Chile or Rioja, for example, you can find some excellent wines for a few hundred euros a case from regions that are increasingly in demand.”

Investing in emerging regions is riskier, so do your research and identify which years had the best conditions. Those vintages could have better chances of appreciating in value and providing interesting returns in the mid-to-longer term.

Get started with fine wine investment

Empowering people through technology, data and access to a global community, Cult Wines is redefining the fine wine market – making it accessible, secure and rewarding.

Combining Cult Wines heritage with the latest technology, and powered by world-leading data and predictive AI, CultX is the ultimate marketplace for buying, selling, collecting and investing in over £200m of the world’s most prestigious Fine Wines.

If you are looking for the control of a self-managed portfolio with low fees then CultX’s wine investment app is for you.

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Meet the experts

Aaron Rowlands - Research Editor & Investment Writer - WSET Level 3

Aaron Rowlands began his career as a financial journalist and his passion for wine after spending time with a winemaker in Bordeaux.

He brings his experience of both finance and fine wine to his role as Cult Wines’ Research Editor. Working with the investment team and portfolio managers, he’s become well-versed in the essential strategies for identifying new investment opportunities and building successful portfolios.

Kelly Liang - Wine Writer
WSET Level 4 Diploma in Wine in progress

Kelly Liang is currently studying for her Wine & Spirit Education Trust Level 4 Diploma in Wine, the highest qualification offered by WSET.

A chance tasting of a Vouvray Demi-sec from the Loire Valley inspired her to learn as much as she could about wine and set her on her path toward pursuing wine expertise. She’s already achieved the prestigious WSET Levels 1 - 3 Awards in Wines, and brings her knowledge and passion to the industry.

* Past performance is not indicative of future success; the performance was calculated in GBP and will vary in other currencies. Any investment involves risk of partial or full loss of capital.

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