The collecting instinct

Francois Barraud's Le Philateliste

This week and next, not how to buy wine but how to sell it. Wine merchants may be glad of any local top-up of stock at the moment. A shorter version of this article is published by the Financial Times. See part two, How to sell wine.

So strong is the collecting instinct (our illustration of the grip of stamp collecting is François Barraud's 1929 painting Le Philatéliste) that many of those who start to buy wine seriously end up with wine collections that would take a couple of lifetimes, even pre-coronavirus, to consume. As one particularly avid collector put it to me when I asked how long he would have to live to consume every bottle, ‘I’ve never done the calculation because (unless I lose my taste buds and have a garage sale), I know I shall die with far more wine in my cellar than I can possibly drink. And I’m still buying almost as fast as I can drink, if not faster.’

Ian Mill QC saw the writing on the wall at just the right moment. On 26 October he sold about 65% of his wine collection through Zachys, New York, netting $8m and breaking 353 world records for prices of individual wines, mainly fashionable burgundy. He had been intending to leave the wine in bond in England but, to encourage bids from the American wine trade, Zachys advised him to ship the wine to the US in advance of the sale. It arrived just nine days before President Trump imposed his 25% tariff on wine imported from Europe.

With 7,000 bottles of hand-picked, professionally stored fine wine to sell, Mill was heavily courted by the major auctioneers. Sotheby’s had initially proposed holding the sale in Hong Kong, which, given the unrest and economic meltdown there, would not have been so clever, as it turned out. As Mill observes now about the Zachys sale at the three-star restaurant Le Bernardin, ‘The timing was great as the market was just starting to dip’. Prices for these high-end wines have softened considerably since he sold them.

He chose the American wine retailer and auctioneer because, he says, he felt Zachys’ love for his particular collection, and was impressed by their creativity in how best to sell it. They organised a series of special dinners for potential bidders, chez Alain Passard in Normandy, at Fäviken just before this world-famous northern Swedish restaurant closed for good, and at The Modern in New York. The idea of these dinners was to show off some of the wines in the sale and, as Mill reports happily, ‘Every bottle sang, and I’m sure that had an effect. The people at the dinners bought heavily and I’ve had nothing but nice words since the sale about how the wines are showing. The wines were sold under my name and I think that probably helped as well, so buyers could have confidence in the provenance of the wine.’ You can’t complain about out-of-condition bottles to an anonymous vendor.

The British lawyer’s love affair with burgundy was ignited, as so often, by a single bottle. In this case a grand cru white burgundy, Domaine Leflaive’s 1982 Bâtard-Montrachet. ‘It was infanticide to drink it in 1995 of course but it completely blew my mind', he says now. Mill reports that he became ‘indoctrinated’ when he lived close to the Pimlico shop operated in the 1980s by Jasper Morris, who would go on to be a notable Burgundy expert.

‘When I started buying from Jasper, I met all these amazing Burgundy producers. Those were magical times', he remembers happily, musing further on the psychology of wine-buying. ‘You start off completely convinced you’re going to drink everything you buy. So, for example, I bought everything duty-paid initially. But from about 1999 I started to buy in bond because I realised I was going to sell some of my wine. I took a view 15 years ago that equities were an extremely dull investment and that I could do better in wine.’

He was already a shareholder in Morris’s business Morris & Verdin by 1992 as well as, later, owning a 10% share in the Beaune Premier Cru Pertuisots vines acquired by one of Morris’s growers, Jean-Yves Devevey.  Today he is also a shareholder in a Burgundy-focused restaurant located conveniently for both legal and financial worlds in London, La Cabotte.

I was inspired to write about selling wine by Thomas De Waen, a wine-mad Belgian private-equity executive. He emailed excitedly to tell me about his experience. ‘I had too much wine in my cellar and figured that, Marie Kondo style, I would sell off anything that did not spark joy. It felt very liberating. Everyone with a big cellar should do this.’

He realised that about half his wine collection, bought when he was less sure of his tastes, sparked no joy whatsoever, notably ‘New World fruit bombs, special cuvée Châteauneufs, and old wines that should have been drunk long ago.’ He also admits to having been caught up by the hype surrounding some producers and specific wines. ‘If at some point you develop a true independent taste you wake up one day and realise that you actually have zero interest in all that Supertuscan, bordeaux, grand cru white burgundy, Guigal LaLas, etc that you bought because they were desirable.’ 

He systematically looked critically at every wine he owned. ‘For me, the results were eye-opening', he says, and suggested to him that, ‘once you go past £20 a bottle, there is very little relationship between the price of a bottle and how much you’re looking forward to drinking it.’ He accordingly cleared out these unwanted bottles, many being sent to auction, and professes himself ‘very happy I did it. And I’ve just used part of the proceeds to buy one of the most amazing natural wine collections I’ve ever come across!’

You don’t have to have a big wine collection to make money from it. My brother-in-law amassed quite a few bottles of Dom Pérignon during his previous career, Dom being standard gifting currency. He was very pleased by the three-figure sums they each raised when sold by his local auctioneer, who, unlike major auctioneers such as Christie’s and Sotheby’s, was not particularly interested in exactly how they had been stored. 

The avid collector referred to above has sold wine only twice: ‘a case of 1983 Le Pin, which I sold when it reached £3,000 [having paid less than £300 for it] and a half-case of 1982 Ch Lafite when the Chinese were chasing up the value (or rather, price) and it reached £24,000 a case.

He defends his collecting habit thus: ‘I also say to myself that since I have mainly bought good wine which appreciates on the whole, I can always sell it when the Tories have destroyed the NHS and I need money for a high-priced, privately turned wooden leg.’

But prices can go down as well as up. Wine is by no means a sure-fire investment, as witness the examples below.

Auctioneers of all sorts depend substantially on private individuals to supply them with wine to sell, but other options are available to collectors nowadays. I shall be examining them all next week.

Less successful wine investments

All prices are for a case of 12 regular 75-cl bottles, from Liv-ex, the fine-wine database and trading platform.

Buying bordeaux en primeur, in the spring after the harvest, has been financially rewarding only for the vintages 2008, 2012 and 2014 in recent years.

The most obvious examples of this were the 2009 first growth Bordeaux. Some examples: Ch Lafite 2009 released in 2010 at £13,000 and peaked at £14,500 in January 2011. It is now £7,000.

Ch Margaux 2009 released in 2010 at £8,500 and peaked at £8,950 in April 2011. It is now £6,080.

Many of the 2010 bordeaux were overpriced too. Liv-ex compared prices on release in 2011 with those in February 2020 and found that 23 of the prime 50 wines had fallen in price since they were offered en primeur.

The most extreme example of rise and fall is Ch Lafite 2008, embossed with a ‘lucky’ 8 for the then-rapturous Chinese market. It was released at a relatively modest £1,850 but if you bought at market peak in February 2011 you would have had to pay £14,200. It is currently selling at £7,000.

Sauternes in general, regrettably. Ch d’Yquem 2010 has steadily declined since release in 2011 at £4,700. It is now £2,580.