Valuing Wine Prices
Many clients often ask me how they value the wines in their portfolio independently so I decided to write this ‘D.I.Y’ article on how to value your wine portfolio.
System for Valuing Wines
Over the years we have developed our own system of valuing wines and we update these prices every four weeks. We will review between 50-100 different wine merchants price lists. The number of prices we compare on a single vintage depends on who has the stock for that particular wine, we select only the most reputable merchants in the global wine market who we know offer stock they are holding onto themselves or on behalf of their clients. We don’t look at price lists from the whole market because some wine companies will often broker stock between two merchants or suppliers and take a cut for putting the deal together therefore using these prices is skewed.
Bid Price
The first price is the Bid price and we base our Bid price on the lowest price our list of merchants are selling at. what is the Bid price? This is your guide to a sell price not taking into account a merchants margin. We often try to sell at 5% below this and if the wines do not sell in a timely manner then we can suggest lowering a further 5% and so forth.
Ask Price
The second value is the Ask price. The Ask price is valued based on the average price in our list of merchants. The Ask is a good guide to the price we can always source that wine at for you to make an investment. This all may sound quite easy but it involves many hours of work because merchants and suppliers around the world do not follow a standard format for price lists. As you probably know a wine name description can also differ on different wine websites. Some include the region, classification etc in the description which makes it a very difficult process to automate. Try not to get mistaken for searching a wine which is a lower quality wine because the description is slightly different but looks almost the same. Always check back with your broker on any recommendation he is making if you are not sure.
Competitive Prices
So I’ve just explained how Sure Holdings recognise the right value on your wines. Our goal and duty is to offer stock at a competitive price and recommend you an exit strategy with a good profit, on average 10% per year to beat inflation. You may think that our prices are valued slightly lower than some merchants. But remember we are investors and we are not buying these wines to consume. Therefore as any good investor will appreciate being priced correctly in the market to enable a swift selling process is just as important as getting the right price when buying. A fast and efficient sale of your wines enables you to obtain payment quicker and use the proceeds for other investments such as a younger vintage to add to your portfolio. If you are in a hurry to sell at any time its advisable for you to inform your broker so that the price can be adjusted accordingly to expedite a sale as quickly as possible. Otherwise your broker may put the wine for sale at the best possible price that may take slightly longer to sell. You are able to log onto your portfolio through our website and see these values on your portfolio at any time.
Network of Negociants
Over the years we have built up reputation with negociants who are tier one sellers of the top Chateau in France. It is common knowledge that some negociants choose who to do business with. It is not easy even finding these companies in the market because they often do not advertise excessively and it has taken us years to build up business relationships with them from doing good levels of business and being good paymasters.
Valuing your own Wine Portfolio
Now what if you wish to do it yourself. Well if you have some free time and you wish to do this you can go to a few good websites which will give you some guides on prices. Liv ex is a London fine wine exchange that can offer a good guide, there are several prices on their site so be sure to understand which price you are looking at. Its sometimes better to look for an active bid or ask price so you know that someone is trying to buy or sell that wine.
Wine searcher has a good directory of merchants selling wine, if a particular price looks way below other prices then drop them a note to enquire on the availability. It may be they do not have the stock any longer and haven’t updated their price list on WS. Its usually good to use a spread sheet to record your findings so that you can refer back or contact the merchants if necessary. Although WS may be helpful as it lists thousands of companies selling wine. If you are not knowledgeable within the many merchants in the market you could get boggled with the variation of prices available. Remember the lowest price does not always mean its really available stock. Some merchants advertise a wine at the lowest price but do not have the stock available. This is a marketing ploy to generate new customer enquiries. Another site which has some consistent prices is 1855.com who offer a mail order delivery service.
I hope this information has helped you to become a better wine investor. If you want to hear more from us just register for free on our homepage. We will send you regular market updates and our wine recommendations are free.
