Read on to learn more about some of the best strategies for fine wine investment:

Fine wine, although one of the most popular alternative investment vehicles, doesn’t always attract the interest of novice investors. This we feel is often due to the unpredictability that is associated with alternative investments in general. Unlike some more traditional areas, when it comes to fine wine investment you are generally required to invest in a product that should stay bottled for a minimum of 5 years before you can generate healthier returns. In addition, there is no guarantee for the future value of the wine, but there are ways to make these investments safer.

For starters, before getting involved in fine wine investment, it is critical to seek advice from the right people. Considering the relatively exclusive number of individuals who are truly knowledgeable about fine wine, one necessary step is to seek the services of an investment company that specializes. Also, keep in mind that while there are many locales around the world that are known to produce fine wines, France is still the top choice for most wine connoisseurs and Bordeaux is still considered to be the home of the best vineyards and wineries in the world.

Some of the main benefits of fine wine investment are well-documented:

If approached carefully, not only will investors ideally enjoy the privilege of watching their investment grow, but they will may also discover that when executed correctly, fine wine investment can actually maintain a much lower risk profile than previously thought.

You might be asking yourself what attracts so many savvy investors to fine wine as an alternative investment?  Past years have shown that first-growths have been known to appreciate by as much as 15% annually. This is sometimes enough to convince people that fine wine is a tangible, viable alternative investment.  And we mustn’t forget that with the recent surge in Chinese interest in the fine wine market there is added potential (global economic conditions notwithstanding) for many more years of strong appreciation rates.

However, for those who are new to the world of fine wine investment, there is no greater disappointment than to learn that you have invested in a clever wine scam.  To begin with, apparently nearly 5 percent of the world’s wine is counterfeit and is simply new wine in an old bottle. Perhaps more of a serious problem is the prevalence of purported “investment” companies who purchase no wine for their clients and then disappear, never to be seen again – or even worse still, similar companies who claim to look after “investment” clients’ best interests, yet overcharge massively – such a prima facie failing is unfortunately all too apparent in the UK.

If you are considering an investment in fine wine, key factors to consider (amongst many others) are that you purchase only the very best examples of investment-calibre wines, at fair prices, through a reputable organization – if it feels “wrong” somehow, it probably is; and in doing so ensuring the provenance of the wines. Once bought, storage should be done only in a professionally managed facility, ensuring the stability of the product (it requires the proper temperature in a humidity controlled environment to be maintained. Such protections are the only ways to ensure that you maintain the potential for return when you decide to sell.

The 2010 trading year saw returns as high as 418.5% on cases of Lafite Rothschild 2008. Since these figures are extraordinary and largely unprecedented, some experts project further returns of at least 25% + this year, whilst some see the beginnings of a ‘bubble’. China’s maintained demand for Bordeaux and United States re-entering of the market should see demand raised once more – and auction prices are also expected to continue to increase.

Experts wisely advise that wine investors shy away from the “quick buck” and enter fine wine investment with the expectation of following at the very least a 5 year plan. A strong market base should always lend itself to higher capital appreciation over a long-term investment.

Lower capital investment wines may include Lynch Bages (as its Far East importance is increasing); it sold high volumes in 2010 and may perhaps be expected to behave similarly in coming years. Beychevelle has also been chosen as a good portfolio addition to buffer against any instability as this wine has consistently seen fairly healthy appreciation.

Lafite Rothschild continues to appreciate far ahead of other wines in the First Growth category and remained one of the most traded wines of 2010 (across all vintages) and interest is expected to be just as high for the 2010 vintage. A word for Chateau Haut Brion; traditionally one of the slower-moving First Growths, in 2010 this asset has shown solid returns of 20%+ within better vintages.

Ian Ford, the managing partner of Summergate, indicated that there was simply a divergence of strategy between the two companies. DBR wished for control and Summergate wished to remain independent. Having rebuffed the purchase proposal, they could no longer remain in business together. Ford stated, “Clearly we took the decision not to sell any stake to DBR with full knowledge we were going to part ways. It was a long-considered decision”.

Summergate believes that China is a huge market with enough room for several different brands and will now concentrate on Burgundy. In an effort to capitalize on the efforts of the Burgundy trade body (BIVB) for a Chinese marketing campaign, Ford indicated that Summergate has “plans with two companies in local regions to market and distribute Burgundy in very significant amounts in 2011”.

Summergate is already working with Bouchard Pere et Fils and has contracts with three other Domaines. Burgundy and Italy – particularly Tuscany – are poised to experience rapid Chinese growth in the coming year. Popularity of Bordeaux in China is indubitably because of its history, rarity, prestige and very high prices. Might wines from Tuscany and Burgundy in particular perhaps also fit that profile very well…?

FineWineCollector.com, a leading e-commerce merchant of rare and fine wine based in San Jose, CA, today reported that 25% of 2010 sales went to buyers in China and another 7% to buyers in other Asian markets. FineWIneCollector.com saw Asian sales increase 46% over 2009, and 106% over 2008.
Overall wine consumption in Asia is expected to increase by 25% over the next five years, according to WineChina.com. During that period, wine consumption in China, already the 8th largest global wine marketplace, will grow five times faster than the rest of the world. The high-end market can grow even more dramatically.

“The demand for fine wine in the Far East, and particularly in China, is growing rapidly,” explained Edward Mackauf, founder and president of FineWineCollector.com. “There is an intense demand for premium labels and vintages, including Chateau Lafite-Rothschild, Margaux, Latour, Mouton-Rothschild, and Domaine de la Romanee Conti.”

As much as the increase in sales to Far East buyers helped FineWineCollector.com flourish in a sluggish U.S. economy, the trend also signals the growing importance of the preferences and tastes of a whole new class of high net-worth buyers on fine wine makers, markets, and merchants.

According to Mackauf, “Top California wines, especially from Napa Valley are highly sought after. And the Chinese demand for Ch. Lafite-Rothschild has reached an almost fetish level.”

Founded in 2002, FineWineCollector.com (FWC), located in San Jose, CA, is an Internet business that sells “The Finest Wines at the Finest Prices.” The company specializes in California cult wines, First and Second Growth Bordeaux, Sauternes, and Vintage Port. FWC also acquires and sells the best wines of Burgundy, Rhone, Italy, Australia, and Oregon. FWC buys wine collections from collectors in the U.S. and guarantees rigorous inspection and proper storage to ensure provenance. All FWC wines are sold online or by phone. Visit http://www.finewinecollector.com

Source: http://www.benzinga.com/press-releases/10/12/p655605/finewinecollector-com-defies-recession-as-it-reports-46-increase-in-onl

Ms. Lee received the master of wine accreditation, a self-study program that takes at least three years to complete, in 2008, becoming the first Asian to hold the title and only one of 280 masters of wine in the world. A frequent contributor to industry publications such as Wine Spectator, World of Fine Wine and Decanter, Ms. Lee, 41, published a book on Asian food and wine pairings in November 2009, titled “Asian Palate.”

Ms. Lee is well-positioned. Asia’s recent appetite for fine wine brought record auction sales in October: Three bottles of 1869 vintage Chateau Lafite-Rothschild sold for 1.8 million Hong Kong dollars each (US$232,692) – the highest amount sold for wine at auction world-wide. “Hong Kong is really establishing itself as the premier wine center in Asia,” Ms. Lee says. She says she has a broad perspective of the Asian food-and-wine market, with Hong Kong being her viewpoint. Here are five trends she is watching out for.

The Next Lafite: “Right now there’s a huge Lafite phenomenon in China. I think there will be another iconic wine brand from France that the Chinese will embrace. Some up-and-coming wine producers to look out for are Chateau Haut Brion, Domaine de la Romanee-Conti and Chateau Mouton Rothschild.Winemakers, for their part, are looking to Asia as a security buffer for future economic downturns. The 2008 financial crisis didn’t really affect Asia, so the price of wine was somewhat cushioned. China in particular holds enough promise that wine will always enjoy high pricing.”

Women in Wine: “Women will play a greater role in both the wine trade and on the consumer side. More women are buying wine, and within the trade, there are more female sommeliers, wine CEOs and executives emerging in Asia. Look at markets such as Japan, where women are one of the most significant buyers in the Japanese market. As the wine market matures in Hong Kong and China, this will happen there, too.”

Wine Pairings with Asian Food: “A couple of years ago, hardly anyone was making an effort to introduce wine with local Asian food. Suddenly, everybody’s doing it. I think this hails a whole decade of experimentation. You’ll see a lot of Chinese restaurants with more serious wine lists. You’ll see wine groups appear. More Asian restaurants and hotels are taking wine more seriously.”

Asian Wine Critics: “Wine experts from Asia will be playing a greater role. You’ll see strong voices from key cities in Asia who will represent the palates of their areas. Wine producers will start to take note of what is the Asian palate, which is not a concrete definition but more an amalgamation of various opinions. So there will be an opinion leader that specializes in Bordeaux, Napa, Burgundy, you name it.”

Fusion Ingredients: “With travel, chefs have greater exposure to all sorts of ingredients. There is already usage of common Western ingredients in Asian cooking. For example, in Hong Kong, foie gras and truffles have infiltrated everything from dim sum to braised beef. I don’t think it works in all those contexts but it is a period of experimentation. In the West, many three-star Michelin restaurants use Japanese ingredients such as yuzu and uni. In the next couple of years, I think you’ll see more Chinese ingredients such as sea cucumber and abalone in Western cooking. This crossover of ingredients will happen at a more accelerated speed, too.”

The Wall Street Journal – Author: Cathy Yan

Source: http://blogs.wsj.com/hong-kong/2010/11/30/the-future-in-wine/

In fact, demand is skyrocketing: A case of the 2008 vintage was already selling for the handsome price of £8,500 (which is $13,420 US). Following the proclamation about the new embellishment on the bottles, however, cases jumped 20% and were selling for £10,160 ($16,040 US) in a single afternoon of trading. Simon Staples, the sales director at Berry Bros and Rudd, was quoted as saying “It’s gone bonkers; we sold 75 cases this morning…we literally cannot buy any more of it.”

The Lafite 2008 experienced something similar in April of 2009 when Robert Parker gave the wine a score of 98-100. Cases were selling for £2,000 ($3,160 US) prior to his announcement. Afterwards, the price for a case shot up to £3,500 ($5,530 US) and also sparked a buying frenzy.

For a wine that sold en primeur for £1,950 ($3,080 US) per case just 18 months ago to now be selling for over £10,000 (nearly $16,000 US) per case is simply incredible. The managing director for Farr Vintners, Stephen Browett, indicates that “almost everyone who buys it is Chinese or an investor planning to sell it to China, once it becomes physically available in the New Year.” It is thought that the addition of the Chinese symbol will make the bottle the ultimate gift to both give and receive among Chinese elites.

For example, this is the first time the fine wine industry has witnessed the short selling of wine, a development that has received mixed reviews, with some seeing it as a natural progression in efforts to develop fine wine as a highly regarded asset class. Furthermore, wine merchants tend to dislike this practice the most, since it tends to cause chateaux to increase release prices, and merchants have to deal more directly with the clients.

On the other hand, some industry veterans believe the short sales will not actually affect the release prices, while still others point out that short sales are very common investment vehicles outside of the fine wine industry, and that they could be key to price recovery in the market. Regardless, Liv-ex claims that all trades will be fulfilled and that their en primeur supply is secured by bank guarantees with limits in place for all suppliers.

Although several of the top chateaux have released some initial prices, including Lafite and Mouton, the quantities have still remained quite small, leaving many merchants to wonder what their actual allocations will be and how much they will ultimately cost. In fact, many industry experts have noted that it can be a challenge to procure a significant quantity of the first growths, a fact that has caused much attention to fall on the second tranches, which will be offered in the very near future.

This fact alone has been enough to make some industry leaders note that it seems as though the high prices of the Bordeaux 2009 first tranche were little more than a publicity stunt, and may not provide much of a real indication about the actual final prices. Still, since May of 2010, Liv-ex has already sold 16 cases of Lafite 2009 for €10,000 – €13,232 per case, and a case of Latour sold recently for €10,213.

Regardless, many top merchants will not publicize prices for the First Growths until they have observed the prices and quantities of both the second and third tranches. This will allow them to get a real feel for their true cost averages, and in some cases it could even provide an indication of future availability and its possible effects. In addition, it is important to note that allocations of First Growths have been declining for years, regardless of demand by consumers and investors.

This year, many merchants are reporting steady sales and most expect to have little trouble selling Bordeaux 2009. So far, other expensive wines have experienced robust sales in many markets, leading merchants to believe that Bordeaux 2009 will be no exception.

Now that the harvest had been completed and there’s just three months to go before the 2009 en primeur will be available, interest in this vintage is considerable. It is the considered view of the experts that if a vintage’s en primeur receives a good review, the earlier vintages should also pick up both sales as well as price increases. With everyone predicting that 2009 would be an exceptional vintage, the canny investor would need to consider investing in the 2009 en primeur.

Buying en primeur wines is similar to trading in futures, the wine being purchased at a predetermined rate from the producer at the time the grapes are harvested and taking delivery of it when it is bottled, usually two or three years later. In effect, the investor is able to get the vintage at its cheapest. A favourable rating by the likes of Robert Parker and Jancis Robinson, among others, could see prices surge as the vintage comes into the market. Though it is not unusual for wines sold en primeur to sometimes be available later for a significantly lower price, the demand for the Big Five of Lafite Rothschild, Latour, Margaux, Haut Brion and Mouton Rothschild reduces this risk considerably, assuming that initial prices aren’t set too highly of course!

Investing in en primeur has the advantage of ensuring the wine’s provenance, since the wine is bought early on in its lifetime and without a long chain of ownership. Add to that the fact that obtaining wines en primeur may be easier than trying to get the same vintage a few years later when one might face the twin issues of higher prices coupled with less stocks available.

As always, prudence requires that the fine wine investment is made through a reputable and reliable distributor in order to be sure that he is getting the real thing rather than counterfeit goods.