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Monday, 25 January 2010

Australian wines for investment?

I have recently received an enquiry from someone who has been offered some Australian wines as an investment. I will shortly be posting a reply to this equiry but here are some general comments on investing in Australian wine.

If you have never invested in wine before, do not start with Australian wine. With few exceptions, most notably Penfolds Grange and Henscke's Hill of Grace, Australian wines do not have a long track record of resale.  Australian wine tends to be speculative and high risk. This is particularly true of cult wines, often small production, This has nothing to do with the quality or drinkability of Australian wine but merely whether it is a good investment. It is not a beginner's investment.

Australian wines hardly feature in wine auctions in Europe. I asked David Elswood, head of Christie's wine department, about the proportion of Australian wine at their auctions.  'Pretty negligible really - less than 1% I would say and mostly Grange,' was his response. It is a similar story at Sotheby's as Stephen Mould, senior director and head of department, Europe wine, confirmed: 'Approximately less than 0.4% of our sales are of Australian wines.  This is based on data we looked at from sales dating from 1999 to 2006 where Australian wine made up 0.37% of our sales.  I pretty sure since then this figure has not improved and may in fact be as little as 0.2 to 0.3%'. 

If you are looking to start a wine investment portfolio, then you should start with top Bordeaux, which has a long track record and makes up the majority of the business handled by fine wine merchants and wine auction houses like Christie's and Sotheby's. As always buy from an established and reputable merchant not from an opportunistic cold call.

Langton's is the largest wine auction house in Australia and is the specialist for fine Australian wine sales. Their website provides regular reports on the wine market and there is a price guide listing wines that have appeared in Langton's auctions and their prices.  

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