With interest rates at a historical low, the stock market bouncing around like a yo-yo and even the banks not providing security for your savings, savvy investors are looking around for alternative opportunities in which to increase their net worth. And only a few days ago the director of the Oracle Paradis Wine Fund, David Nathan-Maister, has said that he believes that older cognacs are very undervalued right now. In fact, the company is acting on its own advice, by purchasing both vintage wines and older cognacs for its own investment portfolio. However, this is a long-term investment strategy, not a quick buck profit, and one that needs to be managed in a logical and professional manner.
So, with the demand for cognac rising on virtually a daily basis thanks to the continuing rise in sales to China and Asia, might investing hard cash into top quality cognacs be an untapped opportunity for today’s investor?
Fine wines, cognac and gold – the new currency in which to trade…
In times of economic turmoil, the price of precious metals such as gold always increases. And for a long time fine wine has been seen as an excellent alternative method of investing money. Cognac – in particular limited editions such as Remy Martin Louis XIII Black Pearl, for example, and older eaux-de-vies – are extremely desirable to collectors.
To invest in cognac provides one big advantage over investing in fine wines, in that once it’s bottled it doesn’t age and generally doesn’t spoil. This means that if stored correctly it last a long, long time, keeping both the drink and your investment safe.
And because such cognacs are not widely available, and demand outstrips supply, the value generally continues to increase. You only need take a look at some of the recent sales of older cognacs at auction to see how the selling price usually ends up far higher than that of the pre-auction estimate to see why investing in a few good bottles could well be a money-winner.
So what Cognac bottles might prove a wise investment?
Older bottles, such as those that were produced in the pre-phylloxera era, will always be a good choice. The taste of these eaux-de-vies is very different to that which is produced today, making them sought after by collectors over the world.
Limited edition bottles are produced by many of the cognac houses. However, care should be taken when choosing which to invest in. The worth of a cognac will only go up if demand outstrips supply. So if a half a million bottles are produced, this doesn’t make for a great investment option.
In general, the smaller the run, the more likely a limited edition is to go up in value. And you don’t always need to invest thousands to purchase such a product. For example, the Delamain Reserve de la Famille Fut No 340-50 Cognac can be purchased for 477.50 euros ($623.76) and only 180 of these were produced.
And if you’re looking for a long-term investment, then a bottle such as the Bache Gabrielsen Vintage Pure & Rustic Borderies Single Estate 1995 Cognac could be a viable option. Only 850 were produced and are a snip at 50 euros ($65.32) per bottle.
Some other options…
If you’ve a little more funds to invest, then the following might be of interest:
– Camus recently released Camus Cuvee 5.150 Cognac, produced for the 150th anniversary of the house is a very nice bottle. Only 1,492 have been produced, and in addition to this, if you can get your hands on one of the first 150, these also include a miniature numbered bottle that was taken from the very last sample just before the decanters were filled. This retails at $13,500 and comes in a beautiful Baccarat Crystal decanter.
– For a cool $4180.16, Courvoisier Succession JS Cognac is a limited run that was produced for the bi-centenary of the crowning of Napoleon. This is no longer produced, making it particularly worth investing in.
– Another choice might be the Leyrat Sharing Cognac, which is presented in a crystal decanter and only 52 were produced in total.
– The Courvoisier Edward VII Reserve Cognac was an extremely small run of only 50 units. Presented in an Art Nouveau crystal decanter, it’s a blend of cognacs dating back to the 1800s, making it an extremely desirable bottle.
Correct storage to protect your investment
Of course, once you’ve bought your special bottles, you’ll need to ensure that they’re correctly stored. In general, a cellar is the best place to store cognac as it ensures a constant temperature and keeps the bottle safe from direct sunlight. Our article ‘How to Store a Cognac Bottle’ gives more advice on this.
We think that investing in cognac in today’s fragile economic climate is a very real way of protecting your assets, and hopefully making a tidy profit as well. The only problem you might come across is having the willpower not to drink it…