There are many factors that have to be considered when deciding whether a wine or spirit is investment-grade, but ultimately what drives their value is their quality and scarcity. The following criteria are important when determining both the quality and scarcity of a bottle of wine or spirit.

Type of wine/spirit

Nearly all investment-grade wine is red wine, because it tends to age better and for longer than other types of wine. There are some very high-end white wines and champagnes that buck this trend, but generally investors stick to reds. For spirits, the vast majority of investment-grade assets are whiskeys, and generally the longer a whiskey has been aged before being bottled, the more valuable it is.

Region‍

France has long dominated the market for investment-grade wines, specifically the Bordeaux and Burgundy regions. Those are still where most of the “blue-chip” assets come from, but Tuscany and the Napa Valley also have a long track record of producing high-end wines. Nearly all the highest end whiskeys come from Scotland, but there are some very high-end Japanese whiskeys as well.

Producer

The name brand of the vineyard or distillery is perhaps the key factor in determining whether it is investment-grade. The highest end wines come from producers and vineyards that have the highest reputations, such as Domaine de la Romanee-Conti in France or Screaming Eagle in the Napa Valley. A distillery’s reputation is just as important and has a significant impact on how valuable a bottle of whiskey is, with distilleries such as Macallan, Glenfiddich and Dalmore well-represented on lists of the most expensive whiskeys in the world.

Vintage/Year

Every vintage is different, both in quality and in quantity. Weather can have a significant effect on the grapes grown in a specific year, so the vintage is very important in determining a wine’s value. Some years are much more coveted because the quality is known to be high, and there are some harvests that were very limited, leading to lower production runs. Vintage charts are a terrific resource to learn about specific vintages, with Wine Enthusiast’s a particularly well-regarded one in the industry. Wine Spectator also has very comprehensive charts with a lot of details about each specific vintage.

An example of a vintage chart. Source: Wine Enthusiast

For whiskeys, certain years within distilleries also carry different reputations for quality. There are often price differences between bottles from the same distillery that have been aged the same length depending on the year they were bottled.

Production Run/Scarcity

This is fairly straightforward - the fewer bottles of a given wine or spirit, the more desirable it tends to be, as long as it meets the other criteria. The aforementioned Domaine de la Romanee-Conti has very low production runs, which only adds to its mystique. If something is difficult to obtain, people will spend more to get it. A good example for whiskeys are those from the now-shuttered Japanese distillery Karuizawa. Because it no longer exists, no more bottles are being produced, and the value of existing bottles has skyrocketed. All else equal, the lower production run, the better.

Reviews

A good gauge of quality is how critics rate the wine or spirit. While critics are not always right and their tastes may vary from your own, it is a good way to understand how the industry views a specific product. Perhaps the most influential metric in the wine industry is the score given out by Robert Parker’s Wine Advocate, and the most well-known metric in the world of whiskey comes from Whisky Advocate.

Aging Potential

This is specifically important for wine, which has to be able to age into maturity in order to increase in value over time. Generally, investment-grade wines mature around 7-10 years after bottling, but there are high-end wines that can continue maturing for decades. This time period varies significantly depending on the type of wine and the vintage and producer. Vintage charts can also be helpful for this factor, as they also rate the maturity levels of specific vintages. Another way to determine the aging potential of a wine is to look at a producer’s track record. Generally, the longer a wine can age for, the higher returns over a longer period can be achieved.

Source: Wine Folly

Provenance

The provenance of a bottle - its full history, including its source and storage records - is of the utmost importance as it determines the wine’s authenticity. While this does not affect the quality or rarity, it is certainly a huge factor for collectors and investors, who need to be sure that what they are buying is actually what is advertised and that its quality has been maintained. Buying from reputable marketplaces and auction houses is paramount, and of course, if you can buy directly from a producer or distillery, this should not be an issue.

Conclusion

It is crucial to examine all of the factors listed above when evaluating a potential investment into wine or spirits - no shortcuts should be taken. Of course, this applies to any investment you might make - it is key to do your research before making any decisions.

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