Many Types of Wine are Solid Investments Despite Recent Decline of U.S. Dollar

As I write this, I’m seeing on CNBC that the U.S. dollar has reached a record low against the Euro. The wine trade is, of course, watching this development with angst, as it affects every part of our business.  Generally speaking, the net effect of our weak dollar is that wines from Europe are much more expensive for Americans to buy.  This should push more and more collectors purchasing fine wine to look at domestic wines and European choices from back vintages already stateside and purchased when the dollar was stronger.  As with all things economic, there is no simple answer, however, so even wines sold on our shores at auction are attracting increased interest from abroad. 

But fear not dear drinker, as so far this season the biggest price run ups have been with 1982 and 2000 Bordeaux. While there are few deals in these sectors, a flood of fantastic wine is available at auction currently.  Bordeaux had great luck with 1995 and 1996, and with their 10^th anniversary upon us, these types of wine are starting to show some real character.  Prices are moderate, even for the first growth, and represent an excellent opportunity currently. Many people who feel priced out of 2005 Burgundy are finding solace with 1990, 1993 and 1996 wines, or even the better wines from lesser vintages which are drinking well today, such as 1997.  Also, well aged California wines seem to have been flat and even the classics have been surpassed by more recent favorites such as Harlan Estate. Also, consider the Rhone and Piedmont, where a string of excellent vintages has left us with plenty of fantastic wines to choose from for cellaring or near-term drinking.

As you can see, every trend or price run up in one section of the wine market leaves opportunities in another.  For collectors with a broad array of interests, the market is not nearly as bleak as the currency numbers would suggest. I will also share a piece of advice passed on from a wise, older client.  He noted that the record prices for the best Bordeaux and Burgundy are being attributed to new European and Asian collectors, willing to pay anything to get the best wines.  While this is no doubt true, there are not an unlimited number of these collectors coming into the market.  As these very aggressive buyers buildup their holdings, they will slow down acquisitions.  My client notes that there has always been a new sector eager and willing to buy aggressively, but with time, prices moderate and the cycle begins anew.  As the wise oenophile Benjamin Franklin noted, “he that can have patience, can have what he will.”