Ten 'perfect' wines, but is 2010 vintage for investors?

 

Robert Parker, the US doyen of drinks critics, has spoken and the world of fine wine investors has listened. His latest pronouncements on the 2010 vintage of wines shows them to be of a great quality.

No fewer than 10 wines have achieved a perfect score of 100, while many of the great first-growth wines of Bordeaux – the likes of Latour, Lafite, Mouton Rothschild, Margaux, and Haut Brion have all achieved very high ratings. But what does this stamp of approval from the world's best heeded critic mean to those who are interested in adding a little French red to their investment portfolio.

"Prices for 2010 were already very high so there hasn't been any further uplift off the back of the Parker scores for the first-growth wine but further down the pecking order, the likes of the Château Pontet Canet (a fifth-growth wine) got a 100 score and its prices reacted instantly rising from around £1,300 per case to £1,600," says Peter Shakeshaft, the founder of the winebroker Vin-X.

John Barr, the director of European Fine (EF) wines agrees that much of the 2010 vintage is "overpriced" with value difficult to find. "Wines like Pape Clément achieved a 100 score for 2010 and saw its prices rise, but if I was looking to invest I would be looking at wine that is fit to be drunk now. The supply of this wine will fall over time as it is consumed and as a result prices should rise." Favourite undervalued vintages include the 1996, 1998 and 2001 according to Mr Barr.

But Mr Shakeshaft does have fears over the hold that Parker has on the fine wine community and how there could be a degree of grade inflation going on. "Robert Parker has only given a 100-point rating 61 times since 1978 but almost half of them were in 2009 (19) and 2010 (10)." However, this could just represent two universally recognised excellent years for wine from Bordeaux.

For those looking to take an investment in wine, the advice is to stick to the classic location of Bordeaux. "There are some wines in Burgundy which are traded but the market is almost exclusive Bordeaux reds; the new world, though it produces some excellent wine comes nowhere," Mr Shakeshaft adds.

But bear in mind that wine prices, while rising at present, can be very volatile: "We had a 25 per cent price drop between 2011 and mid-2012 mainly due to institutions selling off large amounts of stock, since then there has been a recovery but this investment is for people who want an alternative to shares, property and cash. It's a medium- to long-term investment," says Chris Smith, investment director of the Wine Investment Fund.

Generally, winebrokers and funds look to investors to have a minimum £10,000 to invest and buying physical wine involves buying and selling fees (which can be 10-15 per cent) as well as storage in a bonded warehouse. Investment funds charge an annual fee of 1 to 2 per cent but there are no storage costs: in effect, the investor is buying a share of a large wine portfolio. "We pool investor cash and then use it to buy wine in £1m blocks this brings diversification and should reduce risk."

Investors are urged to do their homework: "Only buy from long-established brokers and funds. Pay with a credit card for extra protection and, if buying physical wine, ensure it is in a proper bonded warehouse."

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