How to drink Fist Growth Wines for free

Drinking First Growths for free? Too good to be true? Not so says James Fletcher of Albany Wines who specializes in building wine portfolios for private investors:
“The underlying principals of wine investment boil down to supply and demand. With increased demand from China, we are seeing ever greater upward pressure on the prices of top Bordeaux . So drinking these wines for free is theoretically very simple: buy two cases, wait for them to double in value, sell one case back into the market and - tah dah! – the other comes gratis“

But is this upward trend in prices sufficient to enable this to occur? James would argue yes, and recent figures released into the market would seem to substantiate his optimistic position.
In order to double in value in a period of, say, five years, it would be necessary to achieve compound growth in the value of the wine of roughly 1.2% per month. The Liv-Ex index (wines FTSE, if you like) is up 10% so far this year – an average of 1.25% per month. Indeed this trend would appear to be accelerating as confidence returns to the market: 4.6% of this growth was realized between August-September alone.

James is anxious to stress an amount of caution though; “things are looking good at the moment, but you only have to look to the latter half of ’08 for a wake up call to the fact that prices can drop, as well as rise. But, all things being equal, the finest offerings from the First Growth producers, especially those from the best vintages, tend to rise significantly over time”. But can they double in value in five years? “In my experience; yes, absolutely – for example, in ’03 I was selling Lafite ‘96 at around £2,500. By ’08 it was trading at around £8,000”.

So there you have it: First Growth Bordeaux for free. So what are you waiting for?

For more information: Albany Portfolio Management.

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