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Wine futures

post #1 of 18
1/2/10 at 1:52am
Thread Starter 
Seriously thinking of getting into this. How many of you have bought more exclusive futures before?
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post #2 of 18
1/2/10 at 2:11am
As an investment or for your collection?
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post #3 of 18
1/2/10 at 2:23am
Quote:
Originally Posted by SField View Post
Seriously thinking of getting into this. How many of you have bought more exclusive futures before?

Have not bought French ones. Heard many horror stories about them not being honoured. Usually seems that if you got too good of a deal, the seller wants to reneg.

With West Coast wines though, off the top of my head, I've gotten Stefania, DuMol, Loring, Beaux Freres, and probably one or two others. Lower price than release or wholesale and ensures I get the allocation I want.
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post #4 of 18
1/2/10 at 2:24am
Who wants to explain this to me?
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post #5 of 18
1/2/10 at 2:26am
Thread Starter 
Quote:
Originally Posted by cchen View Post
As an investment or for your collection?

No, to drink later on. I don't ever really plan on selling my wine. I'd just like to be able to buy some special wines without having to shell out a couple grand a bottle many years down the road.
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post #6 of 18
1/2/10 at 2:28am
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Originally Posted by kwilkinson View Post
Who wants to explain this to me?
Futures in agriculture are centuries old. I think they are actually the first financial derivative. Basically, the buyer pays up front before delivery, usually at a discounted price vs. when the product hits the market. This allows the grower to even out his cash cycle.
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post #7 of 18
1/2/10 at 8:52am
I've done this with Bordeaux. There are several dealers who are quite reliable on delivery-- Zachys for one.

There really aren't many other opportunities. Burgundy you can get on a dealer's call list for a few bottles of this or that, and you have to act fast for the good stuff. I suppose that would technically be a forward contract since you have to wait to collect.

Some retailers have advance purchases for some Rhones. Those have tended to be better value than Bordeaux, if you are at all inclined toward that style.
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post #8 of 18
1/2/10 at 10:11am
Read this. It will help you out a lot.
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post #9 of 18
1/2/10 at 12:24pm
I've purchased a handful in the past, but nothing in quantity or super expensive. Just watch out, you could end up paying more for a futures wine than the market would dictate upon delivery.
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post #10 of 18
1/2/10 at 12:25pm
I think a key difference between French and US futures is that you do not usually contract with the winery itself for French futures whereas you do contract directly with the wine maker in the US.
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post #11 of 18
1/2/10 at 12:31pm
I think the biggest difference is distribution and the price game. It isn't difficult to find some '05 Bordeaux from major estates like Ausone at any number of retail stores. It is difficult to find the 200-300 case production 'cult' Cali cabs that cater to wait lists. In the case of Bordeaux, futures buyers seem to be chasing the lower futures price vs. the full release price, while Cali people are chasing allocation. When you really look at it, many Cali producers aren't futures at all, just wait list.
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post #12 of 18
1/2/10 at 12:39pm
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Originally Posted by gomestar View Post
I think the biggest difference is distribution and the price game. It isn't difficult to find some '05 Bordeaux from major estates like Ausone at any number of retail stores. It is difficult to find the 200-300 case production 'cult' Cali cabs that cater to wait lists. In the case of Bordeaux, futures buyers seem to be chasing the lower futures price vs. the full release price, while Cali people are chasing allocation. When you really look at it, many Cali producers aren't futures at all, just wait list.

Yea but that's the problem. The cult Cali stuff isn't accessible until you get on the waiting list and wait decades to get your allocation. So if you're looking at it as an investment and a way to add to your portfolio then Bordeaux wines is what you need to look at. Some of the top Burgundy stuff does well too, but like I said, read the book. It's a good one.
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post #13 of 18
1/2/10 at 12:49pm
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Originally Posted by Piobaire View Post
Have not bought French ones. Heard many horror stories about them not being honoured. Usually seems that if you got too good of a deal, the seller wants to reneg. With West Coast wines though, off the top of my head, I've gotten Stefania, DuMol, Loring, Beaux Freres, and probably one or two others. Lower price than release or wholesale and ensures I get the allocation I want.
another issue is that in times of economic difficulties, the wine company may not be around to honor the agreement when it matures. quite a few people got screwed when Carolina Wine Company suddenly went belly up with no warning, and are now faced with getting pennies on the dollar (at best) in bankruptcy court
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post #14 of 18
1/2/10 at 12:59pm
Quote:
Originally Posted by gomestar View Post
I think the biggest difference is distribution and the price game. It isn't difficult to find some '05 Bordeaux from major estates like Ausone at any number of retail stores. It is difficult to find the 200-300 case production 'cult' Cali cabs that cater to wait lists. In the case of Bordeaux, futures buyers seem to be chasing the lower futures price vs. the full release price, while Cali people are chasing allocation. When you really look at it, many Cali producers aren't futures at all, just wait list.

I have to respectfully disagree. For instance, my recent Stefania futures. I could have waited until release and still gotten my allocation, only I would be paying $X per bottle. By purchasing the futures I was offered, I paid $X-Y. The only time you might not get your full allocation is if you waited until the end of the buying window to purchase. Most of the West Coast guys only allocate what they know they can cover plus substantial in reserve.

Quote:
Originally Posted by HRoi View Post
another issue is that in times of economic difficulties, the wine company may not be around to honor the agreement when it matures. quite a few people got screwed when Carolina Wine Company suddenly went belly up with no warning, and are now faced with getting pennies on the dollar (at best) in bankruptcy court

Completely agree. I would imagine, the same thing could happen to CA winery too, but I'm not too worried about that and your risk is spread around to the various wine makers vs. being consolidated with one wine merchant.
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post #15 of 18
1/2/10 at 1:42pm
Quote:
Originally Posted by Piobaire View Post
I have to respectfully disagree. For instance, my recent Stefania futures. I could have waited until release and still gotten my allocation, only I would be paying $X per bottle. By purchasing the futures I was offered, I paid $X-Y. The only time you might not get your full allocation is if you waited until the end of the buying window to purchase. Most of the West Coast guys only allocate what they know they can cover plus substantial in reserve.

I am talking about a generalization, you are talking about a specific example. Different levels of extraction. For your Harlan allocation, are they offering it at $500 a bottle and then releasing it at $1500? Same for Kosta Browne. I do know there are certainly futures prices for Cali wines, but I think it's important to distinguish between futures and wait lists.
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