• The pitfalls of this favored resource
  • Make your own wine…investment
  • A Wine Hedge Fund?

I know
enough about wine to get by. I can tell
a chardonnay from a merlot – and I’m additionally blessed with a palate just
picky enough to enjoy good wine and still tolerate cheap wine. That’s a narrow window of taste…

I’m very
interested in somewhat unusual wine-food pairings. What’s your favorite red wine for fish, or
white for beef? What kind of wine is best
for spicy Mexican food? Send your
favorite pairings to [email protected].

I’ve also
planted my own grape vines for the express purpose of making wine, though I
never had a successful harvest. Being a
vintner even on a small scale is something of a full-time job. The plants are quite fickle.

Before you
can even put root-stock in the ground, you have to first dig deep to loosen the
soil.

I learned this
tip from my now well-worn copy of “From
Vines to Wines: The Complete Guide to Growing Grapes and Making Your Own Wine
.”

It’s important to loosen the soil 3-4 feet deep
because grape vines like to put down a long root system. According to this
website
about growing grapes, “the
roots of a well developed grape vine can easily reach a depth of 15 feet and
spread like a fan
.”

Digging a trench 4-feet deep with nothing but a spade is quite an
experience. While I was digging, I was
reminded of the old westerns where the bad guy would make his hostages dig their
own graves. If I had to dig 6 foot
trench, I’m quite sure the villain wouldn’t have to use any bullets to finish
me off.

After you dig your grape bed, you have to put up a
strong trellis to support your quickly growing plants. Each mature grape plant can yield 10+ pounds
of grapes, so trellises have to be quite strong. And every year, you have to carefully prune
the majority of growth back, and then nip all but a few buds on each plant
every spring.

The work doesn’t stop there. Depending on the variety of grape plant, the
leaves are susceptible to all kinds of mold, insects and other pests. Japanese beetles, I can personally attest,
love to make Swiss cheese of chardonnay grape leaves. Grapes love lots of water early in their
growing season, but they also need good drainage. And once the plants begin to fruit, you’re
faced with a host of new challenges, not the least of which are hungry birds,
deer, and many other varieties of grape-loving fauna. If it rains too much late in the growing
season, your grapes will become watered down.

So I know a thing or two about wine, but maybe not
much about horticulture…

I do know you can invest in it! Like my article about coffee, it makes sense to invest in things that
you tacitly understand, and to put your money in trends that you deeply and personally
believe in.

And there
are quite a few ways to invest in wine. The easiest way to start would be to do a little research, and buy a
case or two of Bordeaux
region wine. A good case of a Bordeaux could cost you
as little as $1,000 or as much as – well the sky is the limit really. To track the value of your purchase, there’s
an index (non-traded) known as the liv-ex. This index tracks the value of 100 top wines,
mostly from Bordeaux. You can easily see the weightings of
this index
for yourself, and seek to duplicate the index. There’s also some more in-depth coverage
available for a small fee. Over the past
5 years, the wines in this index have gone up in value by more than 150% – an
average compound annual growth rate of 35%.

As with any
self-directed collection, you’re best advised to buy from reputable wine
dealers. I don’t know of any with a
buy-back guarantee, but many of the best wines will typically sell at
auction.

If you’re
interested in the high-flying world of wine auctions, I recommend picking up a
copy of a book called, “The
Billionaire’s Vinegar
.” It’s a great
read about the pitfalls of investing in really, really old wine. A real page-turner.

If storing such a tempting consumable is not your idea
of a good investment, you can seek out some of the more exclusive wine
funds. I should warn you that many of
these funds require that you first become an accredited investor, and that you
have a large sum to invest up front. One
such vehicle called The Wine
Investment Fund
even has a huge disclaimer on its website.

35% gains
aside, I’m more interested in drinking the stuff anyway. I don’t think wine is going out of style
though, so if you like the trend, these funds could be great investments if you
have the storage space and the up-front investment capital.

Kevin
McElroy

Editor

Resource Prospector

Published by Wyatt Investment Research at