Does wine flipping pencil out?

Question for you amateur wine flippers out there, is it really worth the effort where your primary goal is Return on Investment? I got on one of the sacred cult lists 12+ years ago with the intention of flipping most of my 12-24 bottle annual allocation and keeping a bottle each year as a small dividend. I have about 6+ year vertical of the good stuff and plenty of the second tier going back to 2010. I have a cellar and don’t pay for off-site storage. I’ve gotten quotes from the brokers (Benchmark, et) who take quite a bite out of any potential profits. Negotiating a private transaction and shipping seems tricky at best. My back of the napkin calculation shows I would have made more money had I invested in the SP500 each year than buying and flipping to a broker. Now I’m thinking i’ll just keep it all and enjoy it in my retirement. champagne.gif I’m curious what other experiences are?

The over-pricing of hostage wines and off vintages is an under-recognized deterrent.

There is 1 Napa wine that I have flipped. When I joined the mailing list, I wasn’t sure what I was going to do when I got an allocation. When I did get the allocation, the price was well beyond my comfort zone to buy and keep.
But I was able to arrange to flip it-prior to my purchase . Made about $450, with minimal work, and sold it only a couple of months after purchasing it. Did the same a year later, but only made $150. Will see what happens next year.

So worth it to me.

Certain wines at certain times (mostly times before today) could have yielded a nice profit, but yes, I imagine a sensible stock market or real estate investment would have performed better once you really account for everything you pay in wine flipping – shipping, storage, commissions, shipping again, buying hostage wines and off vintages, risk of loss, etc.

Having said that, it doesn’t mean you can’t or necessarily shouldn’t sell your Screaming Eagle or whatever it is, if the monetary return and whatever else you could do with the money is worth more to you than drinking those wines. It doesn’t matter at this point how the return would compare to some hypothetical past use of those dollars – you have what you have, and the question is what make most sense to do with it.

Viewing wine as an investment on par with stocks or bonds is foolish IMO. Some people struck it lucky with 1982 Bordeaux or hot Burgundies back in the day but that’s very rare. Most you could do is reduce the total cost of wine collecting, you’re not going to come out ahead relative to conventional investments.

Flipping is more like speculation. You could do it every year until there’s no premium.

That’s why he’s known as Marcu$, he understands these financial issues.

LOL I wish! just trying to not be googled.

I suspect your back of the napkin is correct. You mention you have your own storage but there were costs to purchase and operate it, and presumably insure it.

I’m sure there are people who profit from flipping. But people in general aren’t great at a) asking what are the alternatives for deploying their capital or b) understanding the true costs involved.

Do those and the S&P 500 starts to look a lot better.

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I think it’s very tough to remove the emotional element and desire to have something rare for it to pay off as a real investment. Like someone said above, the best case scenario is to slightly offset the addiction.

Yes, it pencils out. Because you come back as a tapeworm in your next life. Karma.

Generally I see different schools of thought. flipping and investing. The OP seems to be talking more about investing than flipping. As mentioned above I don’t think investing pans out very often. You’d be better in the market especially when you consider the fees involved to sell. But if you can buy massively under market and flip immediately I don’t see why you wouldn’t. For example the DRC RC sometimes comes out here for ~$3k. I’d much rather sell for $16K, than wait 10 years and sell for $25K.

Most successful collectors buy what interest them. It’s only after decades of collecting that they may realize a significant profit, which usually wasn’t the aim at all.

I agree with Tom. Buy what you love, drink what you love, flip when you have too much wine that is too valuable both in $$$ value but more importantly in cultural value to hang around.

We flipped many cases of Chablis (producer shall remain nameless) with good age on it 6+ years ago once we started a winery and realized we would be dead before we would be able to finish it. For my husband and I, it’s more a matter of releasing the wines into the marketplace “for a better home” than hoarding. Wine is meant to be enjoyed in the appropriate drinking window, by the original owner, or by someone else!

As a mid-thirties gal, I’ve learned A LOT about the benchmark wines of the world through generous collectors.

So anyhow, you can try to buy and flip the benchmarks, or try to discover the new benchmarks, but fundamentally you will be rewarded both financially and personally if you collect for love and flip later as a personal collection - as long as you know what the wine is worth and push for that in the marketplace.

I suspect you can make a few bucks here and there flipping highly desirable wines, note that some wineries track auction sales though and if they figure out your bottle # they will cancel your future allocations. I believe Harlan does that. Also, look at what happened to folks that bought 2009 BDX in the futures offerings, they lost. And I did actually buy a few 2018 BDX futures thinking I could sell some upon release to help cover my other purchases, but then COVID hit, and the 2019 futures prices were 30-40% lower, so that plan probably isn’t going to particularly pan out for me.

After a few minutes of googling, here’s an example of how hard it is to come out ahead if you try to use wine as an investment product.

Say you had invested in a first tranche of 2005 DRC La Tache on its release in Spring, 2008. You paid 35.6 thousand pounds per case at that time. Today, 12 and a half years later, that wine would be worth 51.8 thousand pounds per case, for a gross return (not taking into account inflation) of 45.5%

(source: 2005 | La Tache | Domaine de la Romanee-Conti | Cult Wines)

Now compare the S&P 500. If you had invested your money in April 2008 in the S&P 500, you would have multiplied your money 2.41 times, for a gross return of 141%.

$100 in DRC would give you $145 12 years later, vs $241 for the S&P investment. That’s a whole lot to give up!

That’s for 12 years of investment in the top wine from the top vintage of the hottest wine region ever at first tranche pricing (the price spiked over 20% over the next few months after April 2008), with ZERO transaction costs in buying or selling and ZERO storage costs

Not pretty!

Agreed.

People confuse price increases for consumption goods, such wine (non-durable consumption) and homes (durable consumption), with total returns on investment assets.

That mindset is how auction houses and Six-Percent limo drivers make their money.

1990 DRC La Tâche released in 1993 for $233/bottle. Put that in an inflation calendar and fast forward to 2020 and $233 is worth $419.11, up 79.9% yet it sells for $6000. S&P in 1993 was 435.23, now 3338.99, rise of 767% while that DRC bottle is up 2575%. So it depends on the time frame chosen to make one’s point.

Just like in the stock market, the real gains are made on finding the undervalued stocks/wines. The top wines such as DRC are priced accordingly. Try doing the same exercise using Jacky Truchot or maybe Rene Engel wines.

One could cherry pick many examples from the 1990s that, with the benefit of perfect hindsight, could make you money. Some people on this board I’m sure lucked into such returns from their collecting. But the point is, what is your chance of guessing in advance at such an investment and putting major money down on it? Very low, extremely low. The S&P is an index of all stocks and you are comparing it to a single perfectly chosen wine, chosen with the benefit of hindsight. A better stock comparison would be something like, what if I bought Microsoft in 1993? That would be up something like ten thousand percent.

I picked the 2005 DRC La Tache because it’s a reasonable example of what one might think is a “blue chip” wine investment that you would pick and expect to be good/solid without advance knowledge, expect to be a secure investment. But relatively to other investments it would have been an absolute disaster.

Trying to guess in advance the next wine that will blow up in the way that DRC did from the 1990s is almost impossible and even if you get it right you would need to put almost all your money down on it. If you diversified across a lot of wines you would water down your returns. So you are talking about an insanely risky strategy. In recent years, the alcoholic beverage that has really blown up in value hasn’t even been wine, it’s been bourbon. If you already enjoyed the stuff and had it around you could have made excellent money I’m sure. But the chance of guessing that in advance?