Investing in wine: The top drops that will pay for themselves

Is wine a good investment or just good to drink? Experts weigh in on a hobby that has the potential to really pay off.

Wine auctioneer Darren Davis in his warehouse. Picture: Liam Kidston

Is wine a good investment or just good to drink?

For Australia’s ultra-high-net-worth individuals, the fine wine market remains one of their top investments of passion, according to the Knight Frank 2024 Wealth Report.

And for good reason, with prices for the 100 most sought after wines in the world increasing by 7.6 per cent over the past five years on the global fine wine marketplace Liv-ex.

Much of that may be due to the quality, says Brent Williamson from Brisbane’s The Wine Emporium, which specialises in top-notch drops.

“If you are well off and want to invest in great wine for your own happiness and wellbeing, there has been no better time to buy wine,” he says.

“Everyone in the world has made the best wines they’ve ever made, so from that point of view, it’s a really, really good investment in yourself and in a hobby.”

From a financial point of view, however, Williamson says he’s not so sure the timing is right for making great returns, with Liv-ex showing wine prices dropping consistently over the past six months.

“This is the first (time) I’ve seen price decreases come through for a number of wines,” he says. “In the past people have been able to, on paper, make a lot of money from wine, but that gap has now closed significantly.”

That doesn’t mean there aren’t great wines worth investing in, however, says wine auctioneer and retailer Darren Davis of Davis and White Fine Wine Merchants in Brisbane.

“The key tip for investing in wine is you have to have rarity and quality – the ones that will make you money are the rare ones,” Davis says.

Brent Williamson from The Wine Emporium

His top pick of Australian wines, also backed by Williamson, is Rockford Basket Press from the Barossa Valley in South Australia, which is sold so minimally that most people can’t even buy a full case.

“If you buy it from their cellar door it’s about $80 or $90, if you were to buy it from a retailer it can be anywhere up to $300. On the secondary market you’ll easily double your money,” Davis says, revealing that the cheapest place to buy wine is direct from the winery.

Other Australian drops topping Davis’ list are Giaconda Estate chardonnay from Beechworth in Victoria, and Wendouree in Clare Valley.

“Wendouree does super, super small vintages and you have to have a handwritten letter to request to be on the mailing list, not an email; and you’ll get a handwritten response,” Davis says.

While Penfold’s Grange was once Australia’s top investment wine, Davis believes there’s now too much on the market and the retail price is too high for it to be investable.

However, he says there’s still good potential in fellow Aussie icon Henschke Hill of Grace.

“It’s only one single vineyard and sometimes they make only a couple of thousand bottles,” he says. “Every time I get Hill of Grace through the auction house, it goes like that.”

Of the overseas wines, both experts say France’s Domaine de la Romanee-Conti is the clear choice of investors with bottles selling for tens and even hundreds of thousands of dollars. While the “Super Tuscans” and Grand Cru of the champagne world will also command a pretty penny.

But if you want the elite wines, Williamson says it comes at a cost, with many premium wineries in Australia and overseas demanding customers prove they are oenophiles by buying substantial quantities of the vineyard’s other ranges first before being allowed access to the “good stuff”.

“You have to be careful because spending $50,000 on wine, just to get a bottle of Romanee-Conti, to make $5k on a bottle of Romanee-Conti doesn’t really work,” Williamson says.

Wine auctioneer Darren Davis at his warehouse. Picture: Liam Kidston

Davis’ other choice for investing is large-format bottles like magnums, jeroboams and imperials, as he says there’s value in the theatre they bring to the table, and their rarity.

However before investing in any wine, it’s important to have somewhere to keep it, as poorly stored wine is the biggest factor behind it losing its value.

“You can’t just put it in the bathroom, so invest in a wine cabinet, not a wine fridge, and there’s a big difference,” Davis says, with a wine fridge only to be used to chill a wine immediately before drinking, while a cabinet is humidity controlled to ensure the wine doesn’t dry out or go off over time.

A wine cabinet also stops large variations in the temperature of the wine, which is what causes wine to go bad.

“If there’s a 10C change in temperature between summer and winter, if the wine’s got a cork in it, the cork will suck (the wine) in and then when it warms up, it’ll push it out, it’s actually breathing in oxygen. It’s just basically turning your wine into vinegar,” Davis says.

Telltale signs of poorly stored wine include an indented cork, which means it’s sucked in oxygen; a stained cork means it’s pushed wine out. A capsule that won’t turn because it’s sticky means wine has gone out and a faded label shows it’s spent time in the sun.

While storing wine correctly is crucial to receiving return on your investment, it also comes at a cost, says Williamson, revealing the racking alone in a home cellar can cost between $50,000-$100,000, while wine storage facilities can charge about $5 a bottle.

“While $5 a bottle might not sound like much, if you hold on to that wine for 15 years and then inflation takes a chunk out of it as well, some of these investments look good on face value but then if you really start boiling it down, it doesn’t sort of always work,” Williamson says.