By Jim Cash, founder of Revel Custom Wine Cellars.
Ok, you’ve finally built your wine cellar. Now it’s time to think about what you stock and how you stock it. If you’re like me, you’ve probably read so many articles on wine collecting that it’s hard to know where to start. Most of them are for beginners, and almost none of them offer any practical advice as to the smartest method of acquiring wines. My goal with this post is to discuss wine acquisition strategies and perhaps create a feedback loop where our clients can share some of their own secrets for the benefit of other wine collectors.
Let’s start with the obvious:
#1 Local Wine Shops: The most common advice I hear is to find a local wine shop, let them get to know your tastes, and have them recommend things. This might be fine for beginners, but not for collectors. In my experience, local shops rarely have the wines I’m seeking in stock. They often recommend the wines they want to sell instead of the wines you want to buy. And finally, pricing may be a bit (or a lot) above true market pricing.
Case in point: Where I live, the biggest wine retailer is a friend of mine, so I would really like to be his customer, but he almost never has the wines I’m seeking. In addition, he discloses his cost to me and whenever he does have a wine that I’d be a buyer for, I can invariably find it for 25%-50% less from another source. If I relied on his expertise to make my purchase decisions, I would willingly pay a premium, but since I don’t, I am compelled to seek the best price.
I would not rule out the local retailers categorically. If you live in Manhattan, Los Angeles, San Francisco or some of the other major cities, there are certainly independent retailers that have exceptional inventories, offer value, and provide excellent service–but proceeding with caution is the advice here.
One independent retailer that covers multiple market approaches is Italian Wine Merchants www.italianwinemerchants.com in Manhattan. They maintain a retail storefront in the heart of Union Square with the wine displayed “art-gallery” style. They are known for their outstanding personal service and tasting experiences and they also have a robust online business, shipping wine throughout the world.
#2 National Chains (i.e. Costco/Whole Foods/Total Wine, etc.): These organizations have the kind of purchasing power and market knowledge to be able to offer some excellent wines at great prices. They are great places to pick up something on the way home for dinner, but there are downsides here as well. They seem to deal with the larger wine producers that can deliver quantities to multiple stores across the country, so generally not a lot of low production or “boutique” wines, and also not a lot at the high end of the collector spectrum.
#3 Winery Mailing Lists: This is pretty much a California/Oregon/Washington phenomenon. The idea is that you visit or you hear about some wineries whose wines you enjoy, and you sign up for their mailing list, and each year, you get an invitation to purchase a certain allocation. Many of the clients for whom we have built custom wine cellars, (including me) purchase a significant amount of wine via this method. Some wineries actually only sell their wines through the mailing list — some don’t even make any available to restaurants. These allocated wines are often very good investments, as the laws of supply and demand tend to drive prices up for purchasers on the secondary market, sometimes very quickly and very dramatically. However, there are downsides to this method, such as:
- You may need to purchase the wines every year in order to stay on the mailing list;
- Depending on how many lists you are on, this can tend to contribute to overstocked or unbalanced cellars;
- If the wines do not sell out through the mailing list, the wines may depreciate in value and be available through retailers at a lower price than what you have already paid;
- Sometimes information on the quality of the vintage is not yet available when you must place your order – prices typically stay the same from one vintage to the next, even though the quality may vary.
#4 Online Retailers: This is a strong trend in the industry, and there are a number of online retailers that have huge inventories, storage facilities, and work on more of a high volume/low margin business model. They compile detailed information on the wines including ratings, and ship to most states. They cater more to the shopper who knows what they are looking for, and wants the best price possible. This is definitely the source where more collectors seek out the higher end European wines.
#5 Auctions – Both the commercial ones such as Christies, Sotheby’s, Hart Davis Heart, and the charity auctions can be excellent sources for collectors, but participating in auctions is definitely not for everyone. I have tried each, and had mixed results. Sometimes the provenance is difficult to establish, and this has been one area where the forgery of classic collectible wines has become a significant risk factor.
There are as many acquisition approaches as there are collectors, and they also vary with the end goals of the collectors. Most Revel clients don’t specifically plan to purchase wine as an investment with the objective of selling it later at a profit, but some do. More typically, they want to acquire wines when they are young and widely available, in order to cellar them for aging and eventual consumption. They also want to use their cellars to learn about wine and to enjoy it with their friends. While our clients generally are not specifically seeking “bargains” for their cellars, it is fair to say that they hope the wines they acquire do appreciate in quality and value, and they don’t want to pay more than a fair market value for them.
#6-My Acquistion Technique: I have my own little “algorithm” that I go through almost every time I make a purchase. Once I identify a wine that I am interested in, I research it before I purchase. I check to see if it has been rated by Parker or Wine Spectator (which affects value). If there is a positive there, I go to CellarTracker, which is the inventory management program I use, and look at the reviews and comments of the “community.” I personally place more emphasis on the CellarTracker reviews and ratings than I do of the experts, simply because of the laws of large numbers.
Only after going through this process do I make a purchase decision, and from CellarTracker it is just one click to access Wine Searcher, which shows basically every retailer in the country (also internationally) that is offering that wine for sale, organized from lowest price to highest. Not surprisingly, I find that the lowest price is generally an online retailer, and usually one that I have worked with in the past, so I’ll select a retailer and click to purchase.
So which approach is best for you? We started out by saying that every collector is different, so the acquisition strategy needs to follow the goals and objectives of the individual collector. The strategies outlined here are by no means intended to be comprehensive, but rather typical examples. How do you acquire your wines?