Have you ever wondered why some bottles of wine are priced at $10 and some at $100? After all, they both contain fermented grape juice, and the difference between them might seem obscured. If you are a wine enthusiast or considering wine investment to diversify your portfolio, you will love this article. Keep reading to discover the factors influencing a bottle of wine’s price and how to take advantage of them when selecting your investment.
Name, origin, and the appellation
A bottle of wine is directly priced from the fame of its vineyard. Therefore, you can find average quality wines that sell for a premium because of their house’s fame. You can also find high-quality wines that are undervalued because they come from lesser-known houses. Wine appellations also play an essential part in their value. Appellations are legal enactments that guarantee the geographical origin and production process of a bottle. If a wine has a famous appellation like Bordeaux, it can claim a high premium. If a vineyard is located in a neighboring region and cannot claim that prestigious appellation, even if the quality, environment, and production process are the same, it might be priced lower because of the lack of appellation.
Vintage
The vintage is the year the grapes were harvested. Every vintage wine is unique because weather and climate conditions differ from year to year and impact the taste. So a wine’s vintage plays a key role in its price. A key criterion that defines a good vintage is sunshine. If grapes enjoy plenty of sunny days, they have more chance to develop their taste. But if the weather is too hot, too cloudy, or too rainy, the harvest might produce a bad vintage. It is a delicate balance that can’t be controlled, so excellent vintage wines are challenging to find and are highly priced, even more than older wines with lower-quality vintage. As it is tied to a local climate, vintage is specific to regions. Therefore, you shouldn’t assume that a good vintage for one bottle of wine is good for another.
Although vintage might not affect the price of mass-produced wine, it has a much greater impact on premium wine produced in limited quantity, such as Bordeaux Grand Cru. As an investor, you must buy good vintage wine and avoid wine from a bad year as it will seriously affect the return on your investment over time.
Critics and Awards
Famous wine critics and labels can also influence the price of a specific bottle of wine. If a bottle gets the praise of well-established critics and certification from famous awards, its price will rapidly increase. In the wine community, good critics and awards are guarantees for buyers that those wines are of good quality and could represent an investment opportunity.
Supply and demand
Like any product, wine prices fluctuate with supply and demand. As a vineyard can only produce a limited amount each year, the supply is finite, and of course the number of available bottles decreases over time as they are consumed. In other words, good-quality wines with high demand and low supply are expensive.
Age
There is a common misconception that the older a bottle of wine the better it gets. On the contrary, most bottles of wine are meant to be drunk within five years, and only a small percentage of the production of wine is designed to age well over five or 10 years.
These are premium bottles produced in smaller quantities and are therefore more expensive. Wine is a complex drink that contains many elements: alcohol, acids, phenolics, and so on. Those elements gradually evolve and change the wine’s structure, taste, and even coloration. Over time, tannins tend to fall and become sediment at the bottom of the bottle. The taste becomes smoother, rounder, and less harsh. The coloration can also change due to slow oxidation: white wines often become darker with age while red wines get a more tinted brown color. Some wines are designed for aging and will only show their best taste after several years. As it is more difficult to find these bottles of wine, they tend to be more costly.
When investing in wine, you should select bottles that will age well, such as premium Bordeaux, Barolo, Grand Cru Burgundy, or Rioja Gran Reserva. To ensure the best results, you should always research or ask the producer how many years a bottle can be aged.
Conclusion
Investing in wine could be a very rewarding experience for people passionate about it. However, when selecting wine, you must always keep in mind those five factors, as they will influence the price of your bottle over time. Like any investment, there is no return guarantee, but your bottles will be more desirable if they have all those characteristics and are more valuable when aging.
Finally, the great thing about moderately investing in wine is that even if you got it wrong and your wine does not appreciate as much as you wanted, you can still drink and enjoy it.
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