How to Lose Your Shirt Buying Wine

lose your shirtI’m no expert on investing but this idea seems crazy. Former economist now media entrepreneur Ollie McAninch thinks we should be investing in “esoteric wines”. By “esoteric wines” he means unusual varietals from newly emerging wine regions.

While the fine wine market is currently dominated by Bordeaux and other well-known wine producing  regions, could esoteric wines become a lucrative investment? Wine investment refers to the acquiring of specific wines with the intent to sell them on in the hope that the wine’s value has improved. If you’re going to invest in a wine, you need to have some confidence that it’s going to increase in value over time.

Yep. That’s the idea. Now follow this logic:

Either way, esoteric wines are likely a relatively safe wine investment. Today, most esoteric wines are generally cheaper because they fly under the radar, which minimises the overall risk of making a purchase to invest. Emerging from new wine regions, still in their infancy, there is every chance any one of these new wine producers could significantly disrupt the market.

Huh? Good luck predicting which unknown producer from a wine region with absolutely no track record will “disrupt the market”. If esoteric wines “fly under the radar” that means few people know about them. So why would there be a market for them in 15 yrs. when even fewer people will know about them? The risk is not minimized; in fact its likely your esoteric wines will be worthless—you won’t be able to sell them because there is not enough people aware of them to bid up the price regardless of how good they are.

There is a reason why the top producers in Bordeaux, Burgundy, Piemonte, and a few cult wines from Napa are good investments. There is already a market for them and they have great reputations for holding value and ageing well, so as the supply of a particular vintage diminishes and demand remains constant the price goes up. That dynamic can’t exist for new regions with no track record and no reputation.

I guess there is a reason why he’s a former economist.

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