Do you remember the circumstances that surrounded your becoming an oenophile? Perhaps it was while drinking a glass at a riverside restaurant amidst a jovial or relaxed atmosphere. Or maybe it was more of a gradual occurrence; one day, you realized just how interested you are in it. Regardless of how it came about, thoughts of building a wine collection have likely now come to mind. Should you do it? If you love it and love learning about it, that is reason enough, and your next step should be focused on learning how to do so. With that said, you could also take into account that this can serve as an investment opportunity as well.
Should you build a cellar?
Storing a selection of wines in a cellar is a commonly used option. Building one is also a great way to utilize the benefits of generational wealth or wealth attained via passive investing or other types of investing. Doing so will allow you easy access to your collection for those times when you want to be able to bring one or more bottles up for a gathering, for personal use or for other reasons. A cellar can also serve as an interesting stop on a house tour.
However, a significant amount of planning should go into this process to ensure that your wines are being kept at an optimal temperature and in otherwise optimal conditions for the years that they will likely be there.
You should ensure that your cellar is kept between 50-60 degrees, as close to 55 as possible, and that the temperature does not vary much. If it must be warmer than that temperature range, note that anything about 68 degrees is likely going to cause a considerable increase in the aging process and may even cook your bottles’ contents, so to speak, resulting in flatter flavors and aromas than had been intended. Regardless of what the temperature is in there, keeping it from fluctuating should remain a focus.
Also, it should be between 65-75% relative humidity in your storage facility so that your corks do not deteriorate. For example, too little humidity can lead to a cork drying out and oxygen passing through the now-brittle cork and into the bottle, which would, in most cases, result in its contents oxidizing or otherwise spoiling.
Light must also be kept away from your collection as it has been shown to adversely affect flavors due to light-induced premature aging. This light-avoidance focus is also why many bottles come in green or brown colors.
Ensuring that your bottles do not experience more than minimal vibration is important as well. This is because this act breaks up chemical bonds within the substance. It is understandable and expected that vibrations will be experienced during transport, but once your bottles are settled in your cellar or elsewhere, they should be kept in a non-vibrating environment so that those bonds are not continuously breaking apart and reattaching.
Other storage options to consider
Another option to consider is a wine refrigerator. This is often preferred by those who want to build a collection but do not wish to create or use the space necessary for a cellar. Note that this type of refrigerator offers benefits specific to its intended purpose, such as doors that block out light, an ideal temperature setting and a locked door to keep heat variations and vibrations to a minimum. However, many believe that this is not the best option if you are looking to store bottles for a considerable amount of time – i.e. years.
Conversely, you could use the services of a storage facility that is dedicated to keeping bottles in the conditions that will allow them to age as intended for extended periods of time and with no further effort necessary on your part. This is a great option if you want to solely focus on building a collection without actually storing it yourself. However, one con to consider is that access will not be as easy as going downstairs to your cellar to pick up a bottle.
Building your collection
A couple of the most important aspects related to building your collection are your own knowledge and what interests you. Regardless of how much wealth you have, you want to ensure that what you are purchasing is being bought at a fair price and that it coincides with the types of wines that you want to collect. If necessary, consider paying for the services of a personal buyer or consultant.
You should also consider which wines go well with foods that you tend to eat, and buy more of the types that you are apt to consume in general as well.
Deciding on your budget is another important step in this process, and it can vary significantly. If you purchase bottles that have already aged as intended for years or decades, you will be spending considerably more than if you are instead focusing on newer bottles with an intent to age them yourself. In fact, some aged bottles sell for hundreds of thousands of dollars.
When you make any purchases, ensure that you or someone you trust can effectively assess the trustworthiness of the seller or the auction house that is providing the wines. Most important is making sure that you avoid unintentionally buying counterfeit versions. As far as research goes, also consider information such as a winery’s history, ideology and wine-making processes.
Once you start to build your collection, you should keep records of exactly what you have and where it is being stored. You want to be able to quickly get to what you need when the time comes, and you want to know when the best time to open a bottle is. Also make sure to store items such as receipts, seller details, auction catalogs and pictures of the bottles upon purchase. Note that many of these records are essential to selling any bottles in your collection for the highest price possible.
You should also strongly consider getting insurance that covers bottles’ shipping and things such as breakage and theft that could occur while it is being stored.
Regardless, you should make sure that your collection matches your interests and personality. It is a reflection of you. The only exception to this general rule occurs if you are purchasing various wines with the sole focus of engaging in wealth building as a result of doing that and selling them on at a later time, hopefully for a profit. Of course, you could always incorporate a combination of these factors and build a collection that both interests you and will, you believe, turn a profit.
Investing and other considerations
Although investing in a collection can result in a considerable profit, you should keep in mind that this is one of the least predictable ways to engage in wealth building. That is one of the reasons why you may want to have your collection assessed and appraised on a frequent basis, to keep up to date on the value of it and if you are earning or losing money as a result of the latest trends related to what is in your collection.
Due to these factors, most believe that you should have a passion for wine and be willing to lose any money that you have put into it. Diversifying your collection is one way that you could limit any monetary damage that may result.
With that said, also consider some other potential benefits that come with building a collection.
As you attend wine-related events, take part in auctions and do the research necessary to smartly purchase rare wines, you will be interacting with others who share your interests, and those connections will not only improve your knowledge of various types of wines, but they may bring you connections that could ultimately prove to be monetarily beneficial.
Also, a cellar has the potential for benefits related to real estate. A well built and maintained one can significantly improve the real estate value of a home, and a quality collection in that cellar, if you are willing to part with it, would cause that value to further increase a considerable amount.
Plus, note that this alternative way of engaging in passive investing could result in you passing on generational wealth in the form of bottles that may be of considerable value to future generations.
There are several reasons why you may want to start a collection. However, many believe that the best one is to create memories. Seeing one of your bottles may spark thoughts of where you were and what you were doing when you purchased it. The same is true of when you open it and consume it, if that is what you ultimately decide to do with it.
In fact, building a collection, particularly if its contents are especially personal to you, may end up becoming one of your favorite ways to use your wealth.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.