The Art of the Wine Deal

In this short video Levi Dalton, Sommelier at Boulud Sud states:

It’s so much cheaper to buy and cellar wine for a long period of time than to buy cellared wine.

What Mr. Dalton is referring to here is purchasing premium wine that can age for an extended period of time long before it reaches its peak of drinkability (usually en primeur or through a wine future), then cellaring it yourself. This is what real wine collectors and investors do rather than buying retail. Of course all of this comes with a substantial upfront cost, and there are no guarantees that you will make or save money.

The upfront cost of course includes the building, buying or renting of a wine cellar. Then the wine itself must be purchased in bulk, usually a minimum of a case of 12 bottles (plus fees for delivery and taxes etc.). And after all of that, whether you make or save money depends on the en primeur offer. According to

In the past, en primeur prices for First Growths (Bordeaux) were astonishingly good value as wines often rose quickly in value on the secondary market. The 1982 Latour, for example, came out at around £250 a case, and is now trading at around £9,000.

But in the last 10 years windfall profits for investors buying en primeur have all but disappeared as chateaux have priced their wines at full market value – and pocketed the proceeds themselves.

Making things more difficult, Bordeaux First Growth Chateau Latour stopped offering wine en primeur. Perhaps more will follow.

However, you don’t need to buy wine before it’s bottled to get a deal, if you’re a Costco member you should know about all the wine deals (including wine futures) that are available there, even for cult classics like Screaming Eagle. Though I would be skeptical of such a bottle’s provenance and the current storage conditions (i.e. how the extremely expensive bottle of wine was transported, where it was kept before getting to the store, how and for how long it was displayed at the store). Does Costco even provide such information?

No wine investor at a Christie’s wine auction for example would touch a bottle of Petrus without knowing its provenance or history. In fact, the critiques of the CNBC Special “The Costco Craze: Inside the Warehouse Giant” that caused so much buzz in the wine world a few years ago seemed obsessed with the comparison of wine to toilet paper (i.e. it’s just a commodity or beverage), but completely overlooked the fact that $2000 bottles of wine were being displayed in an ordinary glass case, under fluorescent lights. Simply being in an air-conditioned building is not good enough, if it were we could all afford wine cellars.

Interestingly, one of the reasons the manager of Chateaux Latour gave for stopping the practice of en primeur was that by controlling the storage themselves, they could guarantee both the provenance and the quality of the wine. Seeing that Costco is the largest importer of fine wine in the United States, perhaps there’s a connection.

Jim Campanini

Oh well! But Costco’s not the only place you can find a wine deal. Deals can also be had at your local wine shop. Jim Campanini in his article “Buying wine with a stock picker’s strategy” likens bulk wine buying at a discount to dollar-cost averaging. But, you have to be careful about the amount you buy. A bottle of wine unlike a roll of toilet paper can’t sit in the garage forever, and most wines are ready-to-drink and should not be kept for more than a year.

Some people, however, just want a unique experience that won’t break the bank, and as good as Costco prices are, they can’t compare with being able to drink a $600 bottle of Burgundy for $43. To do that, you have to have connections like Charles Antin of Christie’s wine department, and you need to know what your trading partners want, what they really, really want. And of utmost importance, they can’t be cynics (i.e. people who know the price of everything and the value of nothing).