Wine as an Investment: Burn After Reading by Jerry Clark

Today we welcome my friend Jerry Clark. Jerry has been a guest on L’occasion when he shared his thoughts on big dollar investments in Napa.

Jerry  is a wine writer and president of Winemaven Enterprises in Mystic, Connecticut. Jerry and I are both contributors to Provence WineZine and we had the good fortune of meeting in Lodi, California earlier this year. Susan Manfull, founder of Provence WineZine, was there as well as we all attended the Wine Bloggers Conference and accepted awards for our work. Provence WineZine was chosen at the Best Single Subject Wine Blog.

 

Susan Manful, founder of Provence WineZine, with writers Jerry Clark and Jill Barth in Lodi, CA Wine Bloggers Conference.

Wine as an Investment: Burn After Reading by Jerry Clark

Actually, the more honest heading should be IF YOU WANT TO INVEST IN WINE READ NO FURTHER.

There is a lot of money out and about looking for smart buys in the world of wine, but that is not me. For openers, the Dow Jones is up almost 20% year over year, and though I have no clue which collectable top growth can match that performance, I doubt there are many. And then there is available capital I have to put into buying and cellaring wine compared to a Bill Koch. He cashed in last May when he sold at auction his 43,000 bottle collection for $21.9 million. Given his personal success track record I suspect he came out all right on his investment, meaning even better than 5% annually. For now he ain’t talking about it. But what about a Joe the Plumber who is wondering if the wine game can pay for his kids college tuition, now that sports card values have plummeted (except for Ty Cobb and Mickey Mantle). What would I tell him if he came to me and proposed shelling out 5 grand a year over the next fifteen years for a selection(s) I would recommend? I fear he would be after me with a pipe wrench when Junior leaves high school.

This all came to mind recently when I was looking at some back copies of Wine Spectator and came across a story in the July 31, 2016 issue written by James Laube. He had the good fortune to taste from 50 consecutive vintages of Robert Mondavi Reserve Cabernet Sauvignon, beginning with their first offering from 1966. This is certainly one of the best red wines of Napa, and Laube gave 91+ scores to every vintage since 1999, with six of those scoring 95+ points. Solely looking at this Cab from an investing standpoint one might determine this to be a wine to load up on. Wrong! Well, surely right if you want to drink a consistently outstanding Napa offering. But Laube also listed the selling price of the wine at release, and then compared that to current market price. Not a single vintage showed a present day cost higher than when it first hit the market. Five vintages noted have values today less than half of what they sold for originally. And three of those five (1999, 2000, and 2004) had scores from Laube of 95 points or higher. While several of the vintages prior to 1999 showed current market pricing higher than at time of release, only one, 1987, would provide an attractive annual return. It came out at $25 and will cost you $139 now.

I cannot say that I have never sold wine from my cellar. A decade ago a Canadian friend wanted to add some older wine to his cave and I put together a list of things for him. The money received was used to pay for a daughter taking a summer course in London after her Junior year in University. Gave me a good feeling, as each of them were very happy with the transaction. On the other hand, I still live with my memory of buying a case of 1966 Château Palmer (Third Growth Margaux) for $60, and six months later having to sell ten bottles for $100 to raise some urgently needed cash. At the time I was quite pleased with my return. Today? Well, I try not to think about it, though I have kept one bottle in the cellar to remind me that perhaps I should have tried instead to sell our Yorkie rather than the Palmer.

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Yet before I say sorry but no to Joe I would suggest that some portion of his disposible income is well worth putting into wines to put aside, ie. lay down. The reason is not for investment, but for future enjoyment. For my own part they include the following categories:

a. Year You Met Your Spouse.

b. Year You Married.

c. Birth Years or Children

d. Birth Years of Grand Children.

Six weeks ago my wife and I shared a sweet Coteaux de Layon from 1976, the year we first met. A very satisfying wine, and a truly lovely moment for reflection. Our wedding year representative rests in the cellar, a 1984 Chateau Yquem.

 

Thank you to Jerry for this story…Now, who is jealous of the ’84 Yquem in his cellar? Yeah, me too.