With most wines growing in value as time passes, a purchase of wine futures offers a way to invest in the early stages of the winemaking process. A wine future represents a claim on a yearly vintage that has been harvested but not yet bottled. If the wine rises in value after release on the market, the holder of the wine future can take a profit. Of course the alternative -- taking physical possession of the wine -- provides rewards as well.
When researching wine futures, decide on a particular producing region that interests you. If you can't visit several vineyards in person, then the opinions expressed by wine experts will form a critical influence on your investment decision. The "wine media" of print articles and Internet sites can overwhelm investors with complex, detailed information. By concentrating on wines from Bordeaux, for example, you can do more in-depth research into a smaller number of producers. You won't be able to sample the wine, however -- it hasn't yet been bottled, so you must rely on expert opinion.
Wines En Primeur
If you are a wholesaler, or wine distributor, you may purchase wine futures through individual producing vineyards. A wine future represents a purchase of a case of wine (12 750-milliliter bottles) to be delivered or collected at some future date. The wine has not yet been bottled at time of purchase; it remains in fermenting casks or barrels, and is prepared for the market according to the methods of the individual vineyard. During this "en primeur" process, wine wholesalers trade futures through wine exchanges and their automated websites, which list the offered futures by vintage, vineyard, price and rating. Prices can change from one day to the next based on supply and the rating that experts have given the wine.
Selling in Tranches
French producers of the Bordeaux region release en primeur wine futures in several tranches (slices), spread out over a few years. The market for a particular wine future will fluctuate from one tranche to the next, according to the general expert opinion of the wine's quality. Before a case arrives at a retail shop, its price may have risen considerably from the first tranche -- or it may have remained the same. Wine retailers and distributors may trade in these futures simply to make a profit based on their knowledge of wine in general and the producing region in particular.
Exchange Memberships and Sales
In order to buy and sell wine futures, you must gain membership to a wine exchange, such as the Liv-Ex market based in London, and apply for trading privileges. Although Liv-Ex restricts its main exchange to professionals, the exchange also offers Cellar Watch, a site that offers price data on the wines in your own cellar, merchant prices, auction information and updated trading data from the Liv-Ex exchange. The California-based Wine Exchange also allows customers to purchase wines by the case, with prices reflecting the latest futures market trades.
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