Fine wine is a widely-used phrase. It fits nicely on signs and business cards, and it rhymes in a pleasing way. It’s also a phrase that is rather poorly defined, as became clear to me when a non-wine friend asked me to tell him what fine wine is.
Many wine merchants talk casually about selling fine wines, but the meaning of the term has shifted substantially, with the transformative change in wine buying from something fundamentally personal (“I’m buying this to drink”) to financial (“I’m buying this to sell”).
Historically, fine wine existed in opposition to carafe wine. It was wine that was worth ageing in a cask and putting in an expensive glass bottle instead of a jerry can. The determinant of whether it was worth putting in a bottle was its ability to improve, rather than deteriorate, over time. This is what most of us probably think of when we talk about fine wine.
The trouble is that the standard of winemaking is now so good that a huge number of wines satisfy criteria that only a handful of French producers could satisfy 100 years ago. The emergence of wine as a legitimate financial investment in the past two decades has redefined fine wine. Liv-ex, for example, qualifies fine wine on solidly commercial terms: how often a wine is traded, the offer made and the bids received. Farr Vintners advises clients investing in wine to focus on wines that have a “history of having traded at a profit”.
Fine wine has become a commodity. Although quality and ageing potential are both assumed, these attributes are much less important than those of tradability and profitability. There is nothing that the power wines of the Liv-ex list have that many other wines do not, except a track record of increasing in price over time thanks to market demand. In this instance fine wine is expensive wine that gets more expensive. It doesn’t even need to taste better than the competition. It is simply a wine that can make a profit for more people than just the producer.
If a wine is not expensive enough, it cannot be a fine wine; otherwise wouldn’t it be traded more and, therefore, be more expensive? But what about all the supposedly fine wine that gets bought and doesn’t end up turning a consistent profit?
In recent years, investors have speculated on what the next fine wines will be. Burgundy beyond DRC and Leroy has been a key area of growth, and Piemonte seems to be next. No doubt some investors have taken bad advice, or none, or believed the hype around overrated cult wines.
Taking such risks may not bring the rewards expected. According to Liv-ex data, many investors are now sitting on their stocks, reluctant to sell at a loss, or returning to the security of the best vintages of good old claret when buying, a blue chip investment if ever there was one. If cult Burgundy is the bitcoin of fine wine, Bordeaux is its AAA bond.
This year is lining up to continue the fine wine detox, with prices seeming not to have reached the bottom just yet. The plentiful harvests of 2022 won’t help. Still, it’s hard to feel too sad for wine investors. Their interest in driving up wine prices is the polar opposite of what most retailers and drinkers want. We can only hope they enjoy their £600 Aligoté when they are finally forced to drink it.