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Wine a fine ‘liquid’ investment

In recent years the attraction of wine as an investment appears to have reached fever pitch if the current level of discussion is any indication.

Every taxi driver and associate can regale you with stories of the ‘person down the road’ that sold their bottle of Grange that Auntie Mavis had left to them for some astronomical figure.

So is wine recommended as an investment?

There are few better-qualified people to discuss this subject

with than Sterling Auctioneers managing director Lynton Barber.

Lynton has addressed some of the issues in publications in the past. As he sees it there are certain imperative and unbreakable rules that attach themselves to wine investing.

These are some of those rules:

• Only buy vintages renowned as outstanding – 1996, 1994 and 1990 in South Australia, 1995 and 1990 in WA

• Only buy wine that you have tasted and liked

• Look at the big name middle value wines first. Penfolds 1994 Bins 389 and 407 and Wynns 1994 Coonawarra Cabernet are easy to find, made to a high standard, will improve considerably with bottle age and, most importantly, even the most cautious buyer will be comfortable bidding on product with such a distinguished track record

• Buy dozens. Unopened cases attract a premium of up to 15 per cent on loose bottles. If you are considering buying super premiums, don’t forget one bottle of Penfolds Grange will buy a case of high quality well respected ‘lesser’ wine.

• Search for bargains. Today, as you read this, a bottle of 1995 Moss Wood Cabernet lurks in a local retailer waiting to be discovered

• Finally, don’t expect to make money from pioneering tastes. Good old shiraz, cabernet sauvignon and blends of these two grapes make up around 95 per cent of all investment wines. Merlot, grenache, semillon, pinot noir, riesling and chardonnay make stunning wines that can cellar for years. Invest in these wines when, and if, the demand for back vintages arrives.

The overriding principle that can be drawn from Mr Barber’s comments to exercise a certain amount of caution.

Like most other industries and professions there are the good and the bad operators.

It is important that anyone venturing into this veritable minefield is able to distinguish the wheat from the chaff.

No-one knows what is to come as far as vintages or weather

conditions are concerned.

There may be a bumper year around the corner.

The wine industry is based upon the supply of, and demand for, grapes.

It is possible that the plethora of projects that we saw at the end of the last financial year will cause an imbalance in the supply side of things and cause the price to drift quite markedly downwards.

Finally though, I take comfort from the words of one of WA’s finest winemakers, Bill Crappsley of Sandalford Wines: “Investment in wine is an investment in future drinking”.

If we approach investment in this area in that fashion then we aren’t going to be disappointed when prices of our favourite wines don’t escalate as we had hoped.

• Economist Suresh Rajan is a director and proper authority holder with Smith Martis Cork and Rajan – financial planners.

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