Wine as an asset: what collectors look for

Transcript: scroll to the areas that interest you

• PM: Palesa Mapheelle, Wine in Focus host
• WH: Wikus Human, Marble head sommelier 
• RvE: Roy van Eck, Wealth manager, Investec Wealth & Investment international

00:00: Introduction to Wine in Focus

PM: Do you love drinking wine, but feel you don't have enough knowledge to graduate from casual purchaser to wine collector?

Welcome to Season 2 of Wine in Focus, an Investec Focus Radio podcast series designed to elevate your appreciation of South Africa's world-class wines.

As proud sponsor of the Investec Trophy Wine Show, Investec is dedicated to showcasing the quality, potential, and global competitiveness of our local wine industry.

00:38: Recognising the storms in Western Cape winelands

This vodcast was recorded just days after devastating storms hit the Cape Winelands.

As rebuilding efforts continue, a reminder to our listeners that supporting South African viticulture and the people behind it matters more now than ever.

Behind every bottle is an industry built on resilience.

00:58: Introduction to guests

I'm your new host, Palesa Mapheelle, a marketer at Investec, and co-founder of Wineish, a marketing and experiences platform for all South Africans. In this episode, we'll be exploring fine wine collecting, what do experienced buyers look for, and what are the pros and cons of holding onto wine as an asset?

Joining me today is Wikus Human, head sommelier at Marble in Cape Town. Wikus works closely with some of the country's most discerning wine buyers and collectors, curating wine lists that balance quality, rarity, and experience. Also joining us is Roy van Eck from Investec Wealth and Investment International.

Roy is a wealth manager with a deep personal passion for wine, and in our previous series, he helped us unpack how wine fits into an investment portfolio. If you're interested in catching up on that episode, please click on the link in the show notes.

Today, we build on that thinking and explore how that translates into building a collection over time.

PM: Welcome to you both, and thank you for joining us.

WH: Thank you so much. 

01:56: Wikus and Roy's entry into wine

PM: Wikus, you're surrounded by exceptional wines, and you make a living from sharing your passion and knowledge of those wines. But where did it all start for you? Was it a moment, an experience? Please share a little bit about that.

WH: It definitely goes back a few years.

I worked at Forum Harmony and Roots. That's where my first job was, and I actually worked at the front desk as a receptionist, checking rooms and checking in people 'cause I have a love for serving people. And the one day the chef asked me if I would like to sit in a wine tasting, and I said "Well, I've never been in a wine tasting."

My parents grew up drinking wine, but it wasn't anything fancy. So, I sat in this wine tasting and it was chefs along the, alongside the table. We had sommeliers. There was waiting staff and the wines got tasted, and we started talking about flavors and different aromatics and different flavor compounds on the palates and what foods to pair with the wine.

And that's basically where the bug bit. My GM at the time, Jaco Minnaar, and his friend Francis Kroon, which is my mentor said there's a gap for young sommeliers in South Africa. And that's where basically I, I took it on and did my WSETS my Court of Masters and fortunate enough to win a few awards in South Africa.

And yeah, from there it's been wine out.

PM: Fabulous. Fabulous. You certainly earned your stripes.

WH: Thank you so much.

PM: Roy, you're not new to Wine in Focus, but for the benefit of our new viewers, I'd like to just touch on where it all began for you. What was the turning point to it moved from interest to something you started taking more seriously?

RvE: Well, it’s taking me back a few years now. But when I just started getting into wine I was the wine guru with my group of friends, and my one good mate, he was a musician at the time working at a small intimate company, asked if I would be able to do a wine tasting for them just to show them a bit about what wine is.

And yeah, it started there, where I was show someone how to drink wine, what the difference is between the whites that they are tasting, and to see it unlock something in their mind and their passion was just something to say, "Look, there is something to it. There is something deeper." And it started a thing in me that I wanted to help people get to wines that they actually like and prefer.

04:02: Collecting wine for investment or consumption

PM: Amazing. Amazing. Roy, staying with you, what are the top considerations for anyone wanting to move from being a casual wine purchaser to a wine collector?

RvE: I think it starts with you first defining what is your purpose of this. Is it for average wine consuming, your casual day-to-day, or is it for investment purposes?

Once you've defined that, or maybe it can be both, if you define that and it's for both, it's great. Next thing you have to define is your storage. Do you have enough storage for it? It doesn't help if you buy wine to age and then you're putting it next to your oven. So, you need to have the proper facilities for it as well.

And then also your budget. Does it align [00:04:00] with your budget? You can purchase annually, you can purchase some wine, and then to keep track of it you can use a spreadsheet. So it can be very easy to get into. The barriers of entries are low. I think you first need to just need to define why are you getting into this.

If it's for investment purposes, then you have to be quite more in the front line of it, understanding what you're buying. And you need to understand like there won't be always a yield that'll be satisfactory, but maybe it's just a hobby.

PM: I think those are some excellent tips for our viewers. Great, thank you.

05:00: How do you know that a wine is worth aging?

PM: When you're building a list or advising on a collection, what are the elements that would guide a thoughtful wine enthusiast in terms of aging potential, any clues of age worthiness and other factors?

WH: This is go- quite an important question, and I mean, it's everyone thinks putting a wine list together or buying wine, something to store or something that you would like to put away it's a very difficult and daunting task.

A lot of it goes into tasting. Fortunately enough within the whole Marble Group no one pays to be on the wine list. It is basically a whole team of sommeliers that taste the wine. We sit with the winemakers, we find different wines, and we have to have also a diversity of wines and varietals on the list as well.

But the most important part is tasting. So, we look for things when we are tasting of course there's different flavors, but everyone's smells and tastes do differ. But we look at the core fundamentals of what is in a wine and that would be something like the acidity in the wine, the structure, the finish, the tannin.

Is the alcohol in balance? How long is the finish? How youthful is the wine? What vintages are we tasting? So, all of that plays a very important role in selecting a wine for the wine list. 

06:08: Separating personal wine preferences from commercial guidance

PM: You touched on diversity there, and how would you say sommeliers keep their own tastes and preferences (in check) as you are guiding consumers and also sort of advising other people?

WH: Can't have any favorite wines on the list. And that's a mistake I made probably in one of my, in my early days as a sommelier, is I sold a wine on a table that I enjoyed, and you need to listen to what the consumer wants. I had one stage only sell the wine that it was Cinsaut at the time, and I sold so much Cinsaut because I thought, you know, this is the new in thing.

Cinsaut is such a great varietal, but there were people looking for heavier wines. Wines at different kind of structural levels, something a bit more light-bodied, something a bit more full-bodied. I mean, that's why also we taste as a team. I can't say that I don't like this wine or I don't like this varietal.

It's important to, to have Merlot on. I'm not a big fan of Merlot and I don't think South Africa is great for Merlot, but We do make Merlot in South Africa and we have to showcase it. It's just to go and find those great examples within South Africa where Merlot is produced best.

PM: So just maintaining that objectivity.

07:03: Never buy one bottle at a time: Lessons on purchasing

PM: And Wikus, knowing everything you know, and having learnt everything you've learnt along the way, how would you start your own wine collection if you could go back in time? Would it be with this glass of wine perhaps?

WH: Sure. I would change a lot of things. First off stop buying one bottle at a time.

Buy six at a time because if you only buy one bottle you don't know how the wine ages. If you buy a case, in two, three years time you can open a bottle and you can see what it does. But yeah, there's a lot of factors to consider. I mean, wine scores. If you're looking for something to keep long and try and make it into an investment, then wine scores are important.

I mean, that gets a lot of recognition within South Africa. But for me, I like to buy wines and keep them and enjoy them with people. So I would look at something that definitely has some ageability to it. But yeah, I would also buy diverse wines, not only wines that I think will last or something that's like I don't really drink Cab.

I'll probably buy different varietals, something that I wouldn't usually open on a daily but I think has the ageability to it and buy it in that sense, yeah.

08:00: The risks associated with investing in wine

PM: Roy, beyond the obvious considerations like insurance and storage, what are some considerations or risks that people don't fully appreciate when it comes to wine as an asset?

RvE: Wine is an alternative asset class, like luxurious cars, Rolexes, and all those, and art. So, one needs to understand that there's a high risk to this asset class. So, when you're looking at a full portfolio of investable assets, alternatives usually make about anything from five to twenty percent of your portfolio, depending on your risk tolerance.

So, within that five to twenty percent, you can... You need to understand that there needs to be diversification within that as well. So, from that five to twenty percent, even like one percent maybe into wine investments. High-risk assets, so first diversify between that. Because of the high risk that one would have, like liquidity, there is a secondary market to sell your wine.

It can either be within your friend group or on, at auctions. But if you're gonna sell it at the latter, at auctions, you need to understand that auctions aren't every day. You have to wait until the auction is there. Your wine might not even be sold at the auction. And even if it's sold, another risk is the high commission.

Some auction houses charge a lot of commission. Yes, you can negotiate the commission and value, but it will still have an effect on your yield. And then there's also time. Wine can age and it can age beautifully, but there's also a time limit to that age. So once it's gone over its peak and there was an illiquid market, you couldn't sell it, then it's lost its value.

So there's that risk as well from the other side, from the tail end. So, there's a whole other bunch of risk associated to this. The reward can be rewarding, but you can also lose all of it.

The benefit of having a wine investment hobby is that you can still consume it with, like Wikus mentioned, with good friends and a good occasion, and then your return on investment would be a good time.

PM: Love that. Love that. 

09:51: Liv-Ex Fine Wine 1000 Index: Wine returns on the sharp decline

PM: I think we need to keep it real. It's important to acknowledge that the fine wine market has experienced a lot of turbulence in the last few years. Yeah. According to the Liv-ex Fine Wine 1000 Index, returns have been declining as much as 27% from its peak at around 2022.

If you look at what's happening in Bordeaux, like falling prices, excess stock and other factors, does that challenge the idea of wine as an asset?

RvE: Yes. So, there's a few things that are playing into the market. China is not the big powerhouse buying of wine that it used to be soaring the prices of Bordeaux and Burgundy, and you also have younger people drinking less.

So, there's that posing as a risk as well. So, there are risks that like we mentioned, we are addressing this as an alternative asset class, and it- we understand that there are risks involved in it. And one must also understand that when we say it's an investment doesn't automatically mean it will appreciate, okay?

So, there is that risk that it will not appreciate and that you're taking that risk. So is it as lucrative as it was once was? No. Again, I think there are still pockets of value that one can pick up. As with any investment class of volatility, you can buy certain wines at a good price and it will probably appreciate or probably not.

One must take comfort in that, that if it doesn't appreciate that you can still consume it then with your friends. 

PM: Yeah, certainly love your expertise on this. Thank you. 

11:11: The reason behind falling wine prices

PM: And Wikus, I'd like to get your opinion on the current state of the investment wine market from your perspective. Do you think falling wine prices is a necessary correction?

WH: Look, it's ... There's a lot happening in the world at the moment, and I feel there needs to be a price adjustment somewhere. I mean, especially if we look back, who bought all the big Bordeaux vintages and the Burgundy wines? That generation is drinking less. They're not opening five bottles a week.

It's maybe two bottles. They've definitely stopped buying because they probably won't be alive to drink the wine. It will just go over to their grandkids or to their children. And also, our younger generation we ... I see it on the floor day to day, not a lot of wine does get ordered by the youthful people anymore.

It might be a glass. It's not a bottle anymore. So there is definitely less wine consumption from want I can see on the floor. It's not down super dramatically, but it's small little trends that we start picking up, like people drinking non-alcoholic cocktails on the floor, or people not drinking at all. People are drinking less during the week.

But I still think in South Africa there's a lot more avenues being opened up into where you can buy wine as an asset. Back in the day, we all would buy it and, as you would say, you might store it next to your oven or down in your basement. The conditions weren’t correct. But there are suppliers today that open this world up to us where we can buy wine, and they can store it for you at a facility where it's air controlled it's cool, there's temperature controlled and you almost got a guarantee that the wine will age in a perfect condition.

That opens the SA market a little bit. Globally, there's a lot going on. You know, Burgundy vintages, climate change. I definitely think that people are not buying en primeur anymore. That sales has declined as well. I think just think from a price point of view as well, the younger crowd of today don't have the money to buy Bordeaux en primeur.

It's just getting too expensive. So the price correction might be a positive but I still feel in South Africa, if you buy clever and you store it at one of these beautiful warehouses that we have in Cape Town or in Johannesburg that can keep the wine for you, there is probably a chance that you can make a return on investment by popping that wine onto an auction, or there is a lot of secondary markets out there, like a brokerage where I sometimes purchase wines off that you can still make a buck.

13:17: “En primeur” explained: buying wine still in the barrel

PM: And because for the benefit of our audience and viewers, could you tell us what en primeur means?

WH: So en primeur happens in Bordeaux in France. It's a big red wine growing wine region in the world. And these wines get sold en primeur. So that would mean that the wines are still in barrel, and you get invited to a tasting.

And it's technically not the end product of what the wine is going to be. The wine has probably done most of its fermentation, but they haven't done the final blend. It's still lying in barrel. And then you get the opportunity to taste the wine in its, say, 70% finished form, and then you buy the wine In advance, but you will only receive the wine about 18 months later in its finished form, and they might have some things changed.

They might have changed the blend just a little bit. They might have been a delay in fermentation or whatever it could be. Any- all the factors are possible. Wine is, ... Wine is a living organism. If they sell it on Premier, they get all their money in early enough before the wine is basically finished product.

So they've got now all the funds to do the harvest that's coming up. And that means that, I mean, all wines, not all wines, but red wine specifically needs to spend some time in barrel and in bottle as well. In other countries, there's laws where you have to wait three years or two years before you can even sell the wine.

That's not even in barrel - that's bottle maturation. That's excluding your barrel maturation. So, on Premier, it gives the châteaus the money in to keep the business going but they're not even selling a product. They just ... I mean, they are selling a product, but it's not a finished product, so they're getting in this constant flow of money just to keep the operations going at the château.

15:29: Wine regions and wine varietals worth noting

PM: All right, and let's return to investing in wine for enjoyment. Wikus, are there regions, producers, or styles that you find yourself returning to at the moment where the quality and opportunity intersect?

WH: When getting into regions there's different varietals and different regions of Africa that do very well.

So for example the Swartland, Chenin Blanc, and Syrah is great for that. If we're looking for great Cabernets, you would tend to go more to kind of Stellenbosch side and different sub-regions or wards that's now becoming quite evident in Stellenbosch like Paardeberg or Bottelary that you can look at different varietals even in those smaller sub-regions or wards within South Africa.

If you're looking at Chardonnay and Pinot you'll probably head all the way to Hemel-en-Aarde. That's a great area for looking at buying those kind of varietals. Elgin, probably one of our coolest climates areas. That's great for Sauvignon Blancs, some great Chardonnay, Pinot Noir coming out there.You might pick up a good Riesling from that area.

But that's kind of something I would look at. Vintage is also a factor to consider. To classify a good vintage in South Africa, yes, it could be a consensus among all the winemakers, but I don't think in a necessarily bad vintage where there's a lot of rain.

We've got so many different mountain ranges in South Africa and different smaller kind of sub-climates that we can't just write off vintages. Like for example, 2014, everyone said it was such a wet vintage. You know, no one wanted to buy '14 to invest in. I've picked up some great '14s that, you know- it might have rained a hell of a lot in Stellenbosch, but Swartland was dry or, you know, they bought the grapes in before the big rains came.

They did an earlier pick. You know, there are so many different characteristics that are at play. It's not like Burgundy, where Burgundy you can drive from the one side of Burgundy; from the top to the bottom in one day. And when it rains 90% of Burgundy everyone gets rain. And in South Africa there's so many different, as I say, microclimates or “micro pockets” that it might rain there but not right rain there.

It's very interesting. And that's where also vintage is important, but don't write off the bad vintages 

17:22: 2014 and 2023 deemed poor vintages but not across the board

RvW: If I can ask as well are there any other bad vintages? You mentioned 2014. Are there maybe any other vintages that we need to look out for?

WH: Sure. Look, '23 is probably the other one that everyone was very concerned about just because there was a lot of rain.

But an interesting fact is in living in Cape Town now, and spending a lot more time with winemakers is what you actually realize now is it's not all about what happened around January and February in South Africa around picking dates. It's actually the winter before and the build-up to when the grapes were picked.

What happened in that period of time? 

17:44: SA offers quality and affordability

PM: Roy, do you see South African wine as an undervalued opportunity or is that a narrative that's overstated?

RvE: No, I think, like Wikus mentioned as well we are quite undervalued. I think in the world, and we have a big opportunity to provide very good quality wine at a very decent price.

The rand has strengthened as a currency in the emerging market significantly over the last year and a bit. But it's still, when you're earning in dollars and euros and in pounds, it's very cost effective to buy South African wine. And I think if you look at certain pockets, like Wikus mentioned…

We have these pockets where we can buy if it's a good vintage. We are on the ground. We understand our country and we understand what's happening here. We can find those pure nice vintage and buy it at our rand and then hopefully maybe sell it in, in, in dollars and euros. So, so there is value to unlock to be unlocked and I think that's the beauty of having this as a hobby or as an investment is you can find joy in the analytics of where do I need

Where can I find this value? Where can I find this hidden gem that will be listed at an auction as a record s- selling price for South African wine? I think there's joy to be found in that. So yes, to answer your question, I [00:18:00] do think that we are undervalued. It's not something that we underplay it.

But again South Africa has always been seen as an underdog in everything you know? And like we like to say no DNA, just RSA.

PM: Just RSA.

RvE: Yes. 

19:22: A sommelier’s observations on changing wine behaviour

PM: Wikus, you advise and deal with high-end clients and diners constantly. How has their drinking and buying behavior changed? You touched on it a little bit earlier…

WH: Younger people are definitely drinking less wine and also exploring if they are drinking wine, what I do see and when I go to wine bars and just go and walk around and a bit of trade a bit, it's like they're all kind of not pulling towards a style but going to this new kind of trend of wine, of orange wine coming through which has been prominent in a lot of other countries and in South Africa there's very few producers that make these kind of skin contact wines or orange wines when it comes to white wine.

Orange wine is essentially a white wine that's made in a red wine style. So usually when you get white grapes in, you'll take off the skins completely to keep your juice clear and white.

But when you make orange wine or skin contact wine, you will actually get more, a bit more skins on the grapes, and that will give you this kind of orangey color, and that, that's where orange wine comes from. But it's definitely a different style of wine and it's not as acidic, it's not as racy.

It's got this kind of weird fruit spectrum for me. But the younger wine drinkers tend to go for more orange wine, so they also diverse away from the classic varietals just because it might be too bold for them or it might be a little bit too acidic for them or too sour or too tart for them.

And the younger crowd also prefers a bit more sweeter palate so you see a lot of the kind of special late harvests moving. If someone does still order rosé, “is it sweet?” That's the question we get a lot on the floor where 90% of our rosé styles now are dry. 

20:50 When to drink a wine and when to hold onto it?

PM: And Roy, how do you decide when a wine should be enjoyed versus held?

And this is a question that I think everyone's always teetering between.

RvE: Yeah it's a deep question. I think it's a very personal question as well.

PM: Yes.

One needs to look at do you have the storage, do you have the budget, and all those type of things. That aside, now you've made your choices and you deciding if you wanna hold it in in storage.

I think for me, a big indicator is the occasion. Who would I want to share this wine with and is this the right time for it? I'm fortunate enough to have great friends that also share my passion in wine, and I would love to give them a wine that they haven't tasted yet or that has aged and beautifully and say, "Look! Let's taste this. And do you remember when we found this wine 10 years ago?"

That type of thing will then dictate if I would want to open this wine. If it's just a casual braai on a Saturday, you know, you just wanna just enjoy a bit of vino, then you open something that you just recently bought and you don't have to worry about it being stored or aged up.

Yeah, so for me, a big indicator is the occasion. From an investment point of view, of course you don't wanna dive into your investment if it's for purely for investment cases. I tend to buy wine more for my consumption and maybe a little bit of investment. Yeah. 

21:57: What exciting about the future of SA’s wine market

PM: Fair. And I think we've spoken a lot about risks and challenges when it comes to collecting wine as an asset, and even the outlook on South African wines, but is there one particular thing that you're very excited about in the future or where South African wines are going?

And Roy, we'll start with you.

Yeah. I'm very excited of the wines that I have not yet to taste. Yes, we shared a quick conversation beforehand about a particular vineyard that that's quite new on the market, and I absolutely adore their wine. And for me, it's like now getting into their vintages and tasting them over time it's something that I'm excited for and it's also something that I'm excited for is to share that with other people and to share that passion.

So, 100%, I'm excited for the wines to come, if I can say it like that. Yeah.

PM: Wikus?

WH: I'll probably 100% agree with Roy. If I look at my journey in the wine industry if I would have tasted 10 years ago- 10 wines I probably only would have listed three or four. If I do a wine tasting today out of 10 wines probably list eight or nine of the wines.

I think that in South Africa wine has evolved tremendously in the last 10 years, and what the winemakers are doing and trying to express South Africa as a call for wine. It's not ... It's everyone's moving away from this 100% new oak. It's about expressing terroir, what we, what grows in South Africa and we get certain winemakers that are planting different varietals that's never planted here before just because of the climate that we have.

Yes, Chardonnay Pinot Noir is great, but we don't have the same climate as Burgundy. Yes, the microclimate in, in, in Hemel-en-Aarde works great for that. But think about varietals that don't n-need much rain or irrigation or things like that, droughts, that can handle droughts, that can handle high heat.

And that's gonna be the future for South Africa and that's what excites me of also what's to come. And I think we just at the tipping point of where South Africa wine is going to go.

PM: Absolutely. Absolutely. 

23:49: One wine moment that Wikus and Roy will never forget


PM: And as we near the end of what has been a fascinating discussion, I'd just like to ask you both a question that I like to ask all my guests, which is please tell us about a wine moment that you will never forget.

And Roy, should we start with you?

RvE: Yeah. So, let me tell you the story about how I got into wine from the very beginning. So, when I was a very young lad at varsity I didn't have money to buy wine, and I didn't do much drinking then. Yeah, contrary to popular belief. But we had this opportunity…

I was in a res at a certain university, and we had this opportunity where we brought wine. And the idea was to bring a bottle to drink with the lads and then to store a bottle to age. We were students. We didn't have a lot of money, so we never stored any bottles. We just drank everything.

And then the one particular afternoon or evening a lad brought a wine from his dad’s cellar And I still remember we were drinking it out of residential sippy cups. We had one bottle of a very cheap red wine and we poured one of his dad's bottles. We were like, "Oh," we're still joking, and we poured it in our cups and we cheers and we took a sip.

And I still remember that when I took that first sip I was like, what was I drinking the previous years? I was like, “this is amazing!” I need to understand, like why is this tasting different than the previous red liquid beverage I had previously? I was (wanting) to deep dive into this to understand like why.

And that set my journey to, and passion for wine like that particular moment. And till this day I can't remember what wine it was, which haunts me. But I will always remember that moment that got me into wine. Tasting a beautiful bottle of red out of a sippy cup at Varsity.

PM: With mates.

With mates. Good mates, yeah.

PM: Love it. And for you, Wikus?

WH: Sure. I can remember the first case of wine I bought. And it was…I still actually have two bottles left of it, and it's a contrary Cinsaut. That you shouldn't age that long. I don't wanna mention the wine farmer's name, but it was I don't know, the wine I was working at for Harmony and Roots and I worked a lot with this wine on the pairing menu and every time I tasted this wine and it had this cool story on the back about two older vineyards, Cinsaut, and how they've preserved it and how False Bay played an influence.

I don't wanna give too much away. But and I kept on telling that story to everyone because it was on the pairing menu. And as I said, the first day I got a good enough paycheck I went into a liquor store. It was somewhere in Blackheath if I'm not mistaken, and I bought a case of this wine and I've fortunately still have two bottles left of that.

I think when I bought my first case of wine, I think that's when… it's like you're buying your first tennis racket. You in it for now. The bag's open. It's like buying a surfboard. There's no going back, and you just riding out the wave now.

PM: So thank you so much for joining us for a wonderful conversation, and cheers.

WH: Thank you so much for having us.

Yeah.

WH: Thank you.

Pleasure. Cheers. Cheers! Thank you.

Disclaimer

Focus and its related content is for informational purposes only. The opinions featured on the site are not to be considered as the opinions of Investec and do not constitute financial or other advice. The information presented is subject to completion, revision, verification and amendment.