What Constitutes Investment Grade Wines?

With all the wines currently on the market, it can sometimes be daunting to understand what makes a particular wine rate a cut above the rest. The term “investment grade wine” is reserved for those that have proven themselves, by place of origin, reputation and quality, to be the most exceptional. They are generally the product of the world’s best vineyards, and developed by the most respected and acclaimed winemakers. Having achieved what is now commonly referred to as “blue-chip status,” these wines bring a heightened enjoyment due to their enhanced complexity and richness in taste and composition. And, as expected, their quality is reflected in their respective price tags.

While “fine wine” is a broader term which encompasses wines that command a higher price, “investment wine” raises the bar considerably. Similar to luxury jewelry, automobiles or art, these rare and special wines fall into the category of Veblen goods, meaning that their demand is proportionate to their price. The higher their demand, the higher their status exponentially rises and the more their value and price increases.

It is estimated that there are tens of thousands of vineyards across the globe producing wine for consumption; however, out of this massive pool, investment-quality wines come from only around 250 of them – with only 30 of those really being the top desired – and make up a mere 1% of the global market. And, while wine investment is a growing and increasingly diversified market, the vast majority of investment wine still hails from France’s notoriously impeccable Bordeaux region – approximately 80% or more. The remaining percentages represent top producers in Burgundy, the Rhone Valley, Champagne, and the Tuscany and Piedmont in northern Italy.

So what are the major characteristics of investment quality wines?

1. Longevity:

Investment wine is known for its improvement with time. Most age for 25 years or more before maturing to their top value, rarely if ever peaking prior to 10 years minimum. And, as these fine wines age and improve, their value heightens as well. This desirability is also underlined by the increased consumption of mature wine – the more investment grade wine consumed, the more scarce it becomes, yielding a positive impact on demand and worth.

2. Origin:

Investment grade wines consistently represent the best, most iconic features of their regions of origin. These regions can be refined down to particular villages and terroir, which truly define the character of the products offered. From Bordeaux and Burgundy to Napa Valley, each area’s wines proudly carry all the distinctions which exemplify their individual locales and signature qualities, and extend these attributes to the consumer and/or investor. Secondarily, a wine’s origin should ideally secure proof of provenance, thus ensuring its place of origin and history of ownership.

3. History of Price Appreciation

While there have been exceptions, the majority of investment wines have enjoyed a consistent and verifiable history of significant price appreciation, often showing progressively increasing values for ten or more consecutive years. Certain vintages from particular chateaux carry a pedigree and prestige which are incomparable to most other wines on the market. They will always command top dollar.

4. Liquidity:

The supply of investment grade wine is certainly constrained, as it is produced in highly limited quantities. In fact, they represent a mere 1% to 2% of all wines produced worldwide. Nevertheless, in spite of these unwavering production restrictions and imposed limitations, they must be made in sufficient quantities so as to be bought, sold or traded on the secondary market.

5. Critical Acclaim:

Investment wines have all been unanimously praised by globally respected wine critics. Some of the top names in the field include Jancis Robinson, James Suckling and Neal Martin, but the most influential continues to be Robert Parker, Jr. In the 1970s, Parker established a definitive point system to score wines, with 100 points being the highest. Most if not all investment grade wines carry a score between 95 and 100 points.

While wine investments are influenced not only by the ratings of top international critics but also by personal style and preferences, Westgarth Wines is happy and able to assist in identifying the best in investment wines based on vintage data, scores and track records of overall performance excellence.

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