Wine collectors hope to taste big profits

Wine is a gaining popularity as a collectible among amateurs and professionals thanks to growing demand leading to sharp price hikes.

The growing demand has drawn interest from investors who have created funds to treat wine much like stocks. The Fine Wine Fund and Wine Investment Fund, both based in the U.K., buy wines making bets on how different vintages will sell later.

Former investment banker Steve Bachmann founded Vinfolio -- a San Francisco company that sells wine through its Web site, stores bottles for clients and helps them catalog their cellars -- to follow a passion for wine that had already led him to create a personal 7,000-bottle cellar.

Bachmann's clients sometimes end up as accidental investors. When his clients are buying wine for personal consumption, they sometimes add a few cases to their order, with plans to sell them for a profit later.

Bachmann generally doesn't encourage wine collecting as an investment strategy, but he concedes that in recent years at least, wine has proven to be a good investment. For example, he bought six bottles of a 2003 Petrus for $670 a piece in July 2004 that have nearly tripled in value, with an average auction price of $1,878.97 today.

"I don't in general advocate people treating wine as an asset class, like securities, partly because that's not what it's intended for," Bachmann said. "It's intended to be consumed."

But the collecting sickness certainly seems to afflict at least some of Bachmann's buyers. He reports a near-fanatical loyalty by some Chinese customers for certain vintages from the Bordeaux region of France, popular partly because of its long track record for producing quality wines.

"The press hypes a vintage and everyone wants it," Bachmann said.

Rising demand, particularly from China, has affected world markets, he said.

"There seems to be almost like a fixation on particular labels people want and pay prices that almost don't make any sense."