Valuing Wine Collections

The infinite complexity that goes into assigning valuations and appraising wine collections.

DURING THE PANDEMIC I developed in-house proprietary software for Enotrias. This allowed me to speed up an inventory substantially, with way more accuracy than was previously possible. As one can assume, Vintage, Producer, Varietal, Vineyard Sites, etc., all go into the the obvious category when inventorying a wine collection, but that is just the start when figuring out the true value of a collection.

Where and how a wine has been stored, the provenance (when and where it was purchased and any imperative lineage), and the bottle condition greatly impact the value. I've had to look at this for everything from insurance to insurance coverage, to Family Law and Trust and Estates needs.

A great place to start is Cellar Tracker, but the complexity of the valuation and what goes into the valuation is dependent on a number of different factors, and may not be accurate enough for your needs. Wine Searcher is a great place to do after you have a full inventory completed and in a spreadsheet, or uploaded to a cloud based system like Cellar Tracker. There you can find the average current price (if the bottle exists on the market) but you have to make sure that you are looking at the proper size, and within your country. And, you have to actually verify that the bottles do indeed exist, which is something that is often not the case on Wine Searcher with some of the more high end sought after bottles. Wine Market Journal is another source for the average price of wines sold at auction.

Now that you have an idea of what the bottle is worth in presumably pristine condition, there are a number of other factors to take into consideration. For the Enotrias inventory software, we currently have 41 bottle condition codes listed, and that list is constantly evolving, just as the list of AVAs, AOC's, DOC's, etc. is constantly expanding. For instance, as I experienced recently, what was unarguably a rodent issue, which, as you can imagine, resulted in a purchase offer far under what was originally anticipated, and a new acronym for my bottle condition column. Who knew ROUS's and fine wine would ever intersect. The codes for bottle condition describe everything from scratched or soiled labels, to fill levels. Each issue effects the value.

There are other factors, like a celebrity collector, or a history of the wines coming direct from the winery because of special relationships or being a wine club member that furthers the collection's prestige and value. These types of collectors are also likely have professionally built wine cellars, and/or a history of offsite storage that can be verified through invoices and contracts. Just mention that Tom Warner designed your cellar and you're guaranteed to raise interest (if you need an introduction, please reach out). Even if you keep your wine in an offsite secured wine specific facility, remember to keep the wines in OWC or OTP, this is a huge selling point. If they are unopened, this will fetch top offers.

There are also further factors that can completely erase the value of a wine. Counterfeit is the most obvious, but likely not to the person in possession of it until it comes time to sell. Something as seemingly innocent as a stain on the label, a drop of wine on the capsule, or a bit of mildew could indicate that storage was an issue, and the bottle was subject to heat fluctuations. Similarly the color of the wine in the bottle, and the fill level will indicate if a wine has been aged under ideal conditions. If the wine has a custom engraving, it will not sell on the open market, so if you got divorced, retired, or quit the company that gifted you the bottle, do yourself a solid and drink it. And yet another factor that is incredibly common, is any type of private label. If the wine was bought at an auction as a full barrel before being bottled for the auction winner, it has a $0 valuation because it is not resalable or replaceable, even if it has the name of the winery on the label. Similarly, if you partake in a wine blending and bottling event with your company at a prestigious winery, that is a wine that is not available to the public, so it is best to be consumed with friends versus seeing it as a valuable bottle, no matter the prestige of the estate.

And something I had not come across until this last year when inventorying a collection for a fiduciary for a client that was one of the original wine importers in California, is when a bottle has been dipped in paraffin wax (presumably to prevent seepage). I learned from one auction house, this is common practice by some Port collectors, because they notoriously leak. These wines are rejected for this reason. So, what was going to be a $29,749 bottle, was deemed tampered with, and therefore assigned a $0 valuation. Yeah. (I'd still happily drink it given the opportunity.)

For those of you are here for Capital Gains Taxes on Collections, you'll want to keep a record of what you paid for the bottles initially for your accountant. It is my understanding that this, as well as the storage, materials, utilities, transportation costs, and any other considerations pertaining to the management of the collection, can be used against the sale price.

Manage your expectations.

If you want top dollar for your collection, you will want the following: