March 4, 2007

Marvin Shanken's take on wine funds

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Marvin Shanken is the Editor in Chief of Wine Spectator magazine. Here are his thoughts on the recent emergence of wine funds.

Wine Belongs on the Table, Not in a Hedge Fund
Posted: 01:33 PM ET, February 26, 2007


This past Saturday my eyes stopped at an article in the Wall Street Journal titled "Investors Buy Wine to Drink in Profits." The subhead read, "Funds Snap Up Cases of Prime Vintages to Sell at Tidy Prices. "

There is a growing trend now, firmly established in the U.K., for wine hedge funds. According to the article, the first fund bought heavily in 2003 and is now up 90 percent. How many such funds exist today? I don’t know, but according to the article, others are coming.

In my book, these funds are an awful idea. All they will do is further drive up prices. Many fine wines are already too expensive. At some point in time, fine wine will hit a price ceiling and reverse itself. These investors may well get caught with their pants down.

Too many people are beginning to look at wine as art--collectible art. That is nonsense. You don’t eat a painting. You do drink a wine. Art is not consumed; it is admired. Wine is meant to be enjoyed. The goal is to pull the cork with friends.

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