Is wine a good investment?

Last year’s Wall Street nosedive and mortgage crisis prompted many investors to seek out more stable markets than stocks and real estate. A handful of success stories (such as that of the 1961 Chateau Latour) make wine an attractive prospect. The Chinese in Hong Kong have recently begun investing heavily, garnering a good chunk of the fine wine market.

Yes, wine is a somewhat unique commodity in that improvement in quality is built into its molecules. This characteristic cannot, however, be equated with resale value. There are no guarantees or easy rides. Factors to consider:

Taste is subjective. A bottle of wine’s resale value is only as much as someone else is willing to pay for it.

The “butterfly effect” – in a global economy, the fine wine market can be affected by shifting currencies and even schemes such as Bernie Madoff’s.

The quality of a wine is not discernible at time of production.

Preserving and storing fine wines is expensive and subject to risk – floods, earthquakes, power outages. A bottle of wine, while aging, is subject to problems such as oxidation, corking, and cooking (exposure to heat).

One must be licensed to sell wine and must produce proof of provenance. Besides "chain of custody" that means documentation that storage requirements were consistently met.

Counterfeiting is on the rise. Even if a label is authentic, the bottle could have been refilled with an inferior product. (A clue to this is lack of sediment).

Wine futures can be a good investment for those who have the time and resources, along with knowledge of the product and the increasingly complex marketplace. Otherwise, the value of a bottle of wine is based on how much you will enjoy it when you drink it.