The Liv-ex 100 Fine Wine Investables Index, which tracks the price movements of the 100 most sought-after fine wines with active secondary markets, is up close to 40% year to date.
Wine-auction results are making headlines: an imperial-size bottle of Cheval Blanc 1947, a rare Bordeaux, sold for $304,375 in mid-November — setting a world record for a single bottle at auction, according to Christie's.
Wine futures are purchases of the leading Bordeaux vintages still in barrels and not yet bottled.
Tristen Beamon, general manager and Bordeaux buyer at importer and retailer Wine Exchange in Orange, Calif., says that after the grapes are harvested and fermented, the wine is stored in barrels. Wine producers invite leading wine critics and retailers to taste the wine at its early stage, usually in April.
The world’s top critics give the vintage a score as an early indication of its quality, and final scores are assigned when the wine is bottled.
For example, a particular wine might receive a score in the range of 94–97 when in the barrel, with 100 being the top score.
Producers use that range score to price the wine for future delivery, hence the term: wine futures.
The wine is sold in multiple tranches. If a tranche sells well, the producer will raise the price of subsequent tranches. Wine retailers then resell their allocations to retail customers who wait for delivery.
“Customers who are buying the 2009 futures won’t see their wine until the end of 2011 and perhaps early 2012,” says Mike Osborn, founder of online wine retailer Wine.com.
Futures prices can move quickly.
Osborn says that clients who purchased 2009’s first tranche in the late spring and early summer of 2010 have seen the value of their wines increase by 20 to 25% already.