Most wine collectors begin to buy and sell wine simply out of passion and enthusiasm for fine wine. As your connoisseurship evolves, your collection grows with you and tells the story of the development of your passion, and the changes in your personal tastes. For this reason, it can be difficult for many collectors to view their collection as something as sterile and impersonal as a financial asset. Nonetheless, as your collection begins to take its own form over time, it can also become a major part of your net worth. It is therefore crucial that you recognize the value of what is stored in your cellar and take steps to carefully inventory and protect it.
Step 1: Create an Inventory
In order to come up with an accurate calculation of your collection’s worth, you must first ascertain exactly what your collection is made up of. Your inventory should include any and all information that will help you identify the wine in your collection, where they can be found, and anything else you think might be pertinent to assessing the bottle’s value. Start with a general description: size, vintage, Cuvée, type of grape, wine aging potential, tasting notes, the name of the winery where it was bottled, or however else you might identify it. Collectors organize their collections in many different ways, but it can be helpful to categorize your wine in bins by region. If you decide to do this, include the bin number and region of the wine in the general description. Photograph the bottle/label, as well as the area where the bottles are stored to assist the person responsible for interpreting your inventory. Inventorying software and mobile applications can be useful, and many allow you to scan a barcode to access a great deal of information about a bottle, including market value indicators such as aging potential, reviews, and tasting notes.
Why do I need to know the value of my collection?
You never know when you might need to readily access information about the value of an item or items in your collection. Having this information readily available can make a whole host of processes relatively painless. Any of these scenarios wil require you to have reliable estimates or formal appraisals of the value of your collection:
- Purchasing insurance
- Making an insurance claim
- Making a charitable donation
- Consigning to a dealer
- Selling to another collector
- Setting a reserve on an auction sale
- Applying for a loan secured against an object
- Gifting a piece of the collection
- Moving your collection
- Or making estate planning decisions
A thorough inventory will of course make it much easier to have your collection appraised. Once you’ve completed step one, whether with the help of inventorying software or a professional team, it’s time to get your collection appraised!
Step 2: Get an appraisal
There are several types of appraisals you can have done, which are appropriate in different scenarios. A professional appraiser can give either an opinion of value or a formal appraisal. An opinion of value can be the baseline for negotiation and planning, but a formal appraisal is useful when moving or liquidating your collection and generally required for insurance and tax purposes.
A formal appraisal is defined as the objective assessment of a piece of property’s value at a certain point in time, as determined by a professional, registered appraiser. The appraiser will analyze the object based on historical and market-related information in order to provide an accurate description of the item’s value. A formal appraisal of your wine collection takes a great deal of knowledge and expertise, so when looking for an appraiser, make sure that you choose someone who possesses expertise in the wine market. A fine art appraiser might be legally able to appraise your collection, but is likely to have a hard time knowing what to look for to determine the value of your wine. There are several characteristics that a qualified appraiser should consider which have the most effect on the bottle’s value.
- Product Knowledge: Obviously the product itself is one of the most important considerations when determining the market value. A qualified appraiser should have expert knowledge about wine appellations, different grapes, and regional classifications.
- Physical Attributes: Specific physical attributes might seem less consequential than the type of wine you have, but these details can be important in identifying your wine bottle. Tannin and alcohol content, bottle size, bottle color, the foil/label type, the bottle condition, ullage, sediment, even whether the wine has a corks or a screw cap are all factors to consider when valuating of a bottle of wine.
- Storage Conditions: The conditions in which wine has been stored can affect the quality and therefore value of the wine. Humidity and temperature play a large part in the life of a bottle of wine. The appraiser should not only consider the conditions in your storage facility into account, but also those of the people who’ve owned the bottle before you, which will be linked to the bottles provenance.
- Provenance: The history of ownership of the wine. Provenance is very influential on the value of a bottle, as who has owned it in the past can obviously affect the storage conditions as well as the authenticity of the wine.
- Authenticity: If the bottle was ever stolen or misattributed, its value will obviously be negatively affected. Substantiating the provenance and authenticity of the wines in your collection is another reason it is so important to have a detailed inventory that includes your bills of sale or gift receipts.
Cataloging and appraising your collection will give you a greater sense of what you’d like to do with the collection. Some of the wine you might be ready to drink; some you might want to sell as you realize there are gaps in your collection you’d like to fill; you might choose to donate portions of your collection; and of course, there will be those special bottles you can’t imagine parting with and choose to hold on to! Often wine enthusiasts don’t realize they’ve amassed a collection of value until they one day need to build a larger cellar. It is essential, however, that you don’t wait to make accurate account of the value of your collection, both for legal purposes and so you can begin to plan for the future of the collection you’ve worked to acquire and care for.
Brielle Cotterman and Paige Stover Hague are the principals of Crowninshield Consulting. Their firm partners with professional advisors throughout the country assisting with succession planning and transfer of non-traditional assets. They also work with individual collectors who seek to inventory, evaluate, and/or transfer highly-valued items of personal property with specific wealth transfer and philanthropic objectives. For more information about their company, please contact Brielle at 765-776-0492 or Brielle@CrowninshieldConsulting.com.
by Paige Stover Hague, Esq. and Brielle Cotterman