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Investing in Wine: Build a Self-Funded Wine Cellar Collection

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August 18, 2017
Wine collection: Investing in liquid assets
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Looking for a really liquid asset? No, we’re not talking “I-can-sell-this-easily-if-I-need-to” liquidity, but rather “it’s-drinkable” liquidity. We’re talking about wine investing. (And is it considered a portfolio if there’s more in there than port? Maybe it’s a winefolio.)

You don’t have to be a hedge fund manager to build and maintain a wine cellar; it just takes knowing your tastes and building a relationship with a few wine merchants, says Rob McKeown. Working out of both Toronto and Palm Beach, McKeown is a creative director (and a former Gourmet magazine correspondent) who has helped high-net-worth clients from the U.S. to Asia build their wine collections.

Short-Term Winefolio: What Do You Like to Drink?

New wine collectors should consider planning their collection based on what they and their friends like to drink and eat. If you like, say, Shiraz from Australia, ask a wine merchant for recommendations of two or three other Shiraz (also known as Syrah) vintages from other areas.

A wine merchant can explain what wines drink well now (or in three to five years) versus the classic wines made for aging, he said. And wine merchants can work with all types of budgets, too.

“A lot of wines these days are not made for aging past 10 years. If you hold them for three to five years and then another one to two years, that’s where the sweet spot is for the classic wines from great regions in Europe,” says McKeown.

Long-Term Winefolio: What Ages Best?

For wines that collectors may want to hold for 10 years or more, buyers need to take a different approach. Examples include Italian Barolo or French Burgundy.

“These are wines that by their nature need 10 years to begin to settle down,” McKeown says.

Wine publications are helpful for researching your choices. Buy when the cases are first released to get the best value. This is also where a merchant can buy on the investor’s behalf, McKeown said.

Caring for Your Wine Investment

Another good way to buy wines is to strike up a relationship with a favorite winery. Not only will buyers get discounts, but sometimes wineries will also offer special limited-release cases called allocated wines. These allocated wines can also appreciate in value over time, McKeown says.

He says that proper storage is critical, as fluctuating temperatures can destroy wine. Storage can be as simple as a closet in a basement that has a natural cellar temperature, or a wine refrigerator with a consistent temperature.

When it comes time to sell wines, those from the classic regions in Europe or the allocated wines from wineries will likely appreciate the most. Collectors with hundreds of bottles worth five or six figures could go the auction route, McKeown said, but there are also informal sales routes. That’s where the relationship with the wine merchant comes into play again.

“A good wine merchant will say, I know exactly the restaurant that will buy it,” says McKeown. “When it comes to the aged or allocated wine, there’s always market.”

Choice Is Opportunity

TD Ameritrade offers a variety of account types and investment products to fit your needs.

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