YOUR FINANCES » WINE
Buying into wine futures
Broadcast: November 2, 1999
of Canadians are making early forays
into the wine futures market, buying wine long before it's
bottled to guarantee -- with luck -- a case for themselves
at a lower price than the stores will charge.
Smart is a patient man. He's waiting for these grapes to
be picked, crushed and made into wine. That's because he's
already paid for that wine.
He's one of thousands in this country taking advantage of
Canada's early forays into the wine futures market.
what I'm doing is buying my wine six months before it's bottled
or a year before it's bottled," Smart says. "What
that allows me to do is to guarantee my price and be first
in line for the wine when it comes out in September - so
I'm guaranteed a case."
Guaranteed a case and in Canada, you're almost always guaranteed
a lower price than what will hit the stores.
Joe Will, the winemaker and owner of
Strewn Winery in Southern Ontario, says "all we do
is ask for them to pay for it now and in exchange for that
we give them a guarantee of at least 10 per cent off the
release price and as much as 20 per cent off."
the winery there's an additional plus: "The payment
is indeed the advantage to us -- it gives us a guaranteed
sale and we get the use of people's money earlier than normal," Will
So every now and then Smart comes to Niagara-on-the Lake
to check on how the wine is faring.
"I like buying wine futures for the excitement of saying
in this barrel is a case of wine that I own," Smart
says. "I can come and visit it from time to time."
that sell futures
In a year or two, buyers take the wine home. But it will
want a cool cellar to stay in, storage that could cost a
few hundred to several thousand dollars. Simply stashing
it in the basement could be risky.
"Once you take it out of the winery it's really yours," according
to Smart, "so if your wine cellar isn't working in the
proper manner and your temperature control is off then something
goes wrong with the wine and it turns to vinegar that's your
fault. So storage for the average consumer is a big problem."
A problem you can avoid in Montreal.
Alain Proteau, a vice president at Quebec's provincial liquor
board -- the SAQ -- shares such a cellar with a friend. It's
one of hundreds the liquor board rents out to the public.
In the historic basement of its head office, the SAQ has
created rows upon rows of efficient wine cellars. More than
100 years ago this same place was Montreal's first jail.
cellar is rented out to a person, a couple of friends or
even a company. And the cost? "It's about $1.60 per
slot per year," Proteau says, "so it's a good deal
to keep your wines in perfect condition."
In the wine futures game, perfect conditions are a must
right from the start.
grapes of these fields in France have yielded some of the
world's highest priced wines: the flavourful bordeaux. It
was here that wine futures began.
And it's here that it remains serious business: investors
can make or lose thousands of dollars when they buy and resell
wine, depending on the quality of the vintage.
It's different in Canada, where it's illegal for average
citizens to resell any wine. So wine futures is about savings,
The debate amongst Canadian futures buyers is: where's the
best place to put your money? In the high-priced Bordeaux
or less expensive Canadian wine?
Optometrist Scott Peaker of Grimsby, Ont. has bought a
lot of Bordeaux wine on the futures market.
that's been one of the success stories in my investment career
-- my stock market career is another story," Peaker
says. "But in terms of the investment I can recall paying
$200 a case for those wines, say (19)88s, 89s and 90s. And
those cases now would be worth between $2,000 and $3,000
But you won't see Peaker shopping for Bordeaux futures anytime
soon. It's so expensive he won't buy anymore.
my point of view the futures are a big waste of time and
money now. I personally believe that the wine trade and the
wine market now especially with Bordeaux is overheated and
it could conceivably drop."
Wine reviewer Bill Munnelly agrees: "prices
for Bordeaux are sky high."
The author of Billy's Best Bottles says
the grand successes in Bordeaux are not going to happen
again soon, that they've "peaked
and the market is now strong as it was before so no advantage
of buying these wines."
Besides, he adds, they're not to everyone's taste.
his advice is simple. "For value of the money the local
wine is the one to buy. My advice is to buy the local wine."
And Munnelly isn't being nationalistic, either. He's criticized
a lot of Canadian wines in the past decade. But his change
of tune is music to the ears of Canadian wine makers all
Storing wine: what you need to know
Location is crucial when storing valuable wine, so get to
know the rooms in your house thoroughly if you're going to
try home storage.
underground first. The best place to start is a cellar or basement
area that's not open to natural light, and try to make sure
it's insulated from drafts and vibrations.
The temperature of the room needs to be fairly constant and
cool -- 10-16C should do, with humidity hovering between 60
and 75 per cent.
If you can, make sure your wine cellar is only that. Avoid
storing other things in that room that could cause smells to
migrate to your precious vino. Household chemicals, workshop
solvents, anything musty or moldy should be kept out.
There are other alternatives if the basement is no good. Refrigerated
wine chests can be purchased, although they're not cheap and
still require some place for storage and power.
Some homeowners have converted above-ground parts of their
house into cellars, especially old walk-in closets that aren't
used anymore. Again, the key is keeping out wine's traditional
enemies -- light and temperature changes.