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Wine Investor Case Study: Michael Rareshide

Written By: Kasey Carpenter on Monday, December 17, 2007

Just so you guys out there understand that this is a very real practice, this investing in wine, I have begun to pepper this column with a few interviews here and there - our first installment will be an interview with a good friend and former (I no longer sell retail) client of mine, Michael Rareshide.

While he has his "day job" in the world of commercial real estate, his nights and weekends are often spent doing a little "research" either via the bottle or with a lot reading on the subject of wine.

So without any further ado, here is the Q&A of our interview:

KC: What wine "did it" for you?

MR: I think it was two wines that I had within a month of each other. The first was the 1994 Beringer Howell Mountain Merlot and then the 1997 Chateau St Jean Cinq Cepages. After having the Cinq Cepages that evening, I went to just about every wine store in Dallas the next day to find this wine and bought out the entire city.

KC: When did you first start collecting with a view to investment potential?

MR: In early 2002 a friend in the wine business knew that I had a certain wine in the cellar and wanted to buy it at nearly twice the price from when I purchased just 30 days earlier. Though I still purchased wines that I like, I also started including possible investment potential as another reason.

KC: What type of research do you do?

MR: I use several resources, but my primary research includes Robert Parker's The Wine Advocate for up and coming producers and stellar vintages. Online resources include erobertparker.com, Wine Commune, Vinfolio (a great site for up and coming producers), Winesearcher.com and a few other private wine blogs. I also talk with many local and national wine experts for their perspective and usually read as much as I can from any other wine publication.

KC: What kind of cap do you put on your investments in wine?

MR: When I first starting buying a small portion of my cellar dedicated to wines for investment, I needed to know that my returns would be at least 30% immediately. My whole approach has changed over the past five years to focus on wines that I like with minimal speculation. At the end of the day, my wife and I drink wines we love (primarily California cabernets), either with the two of us or with our many wine friends, and we realize that the quality of the wines coming out of every wine-growing region in the world keeps getting better.

KC: What was your best ROI on a bottle/case/lot of wine?

MR: I have been lucky enough to sell a few wines at over 5 times my initial purchase price, holding these wines for less than one year.

KC: Your worst?

MR: I think everyone who has invested in wine has a story of purchasing on hype instead of on the pedigree and the vintage. And yes, those are the wines I will be drinking instead of selling.

KC: Have you seen any new trends in wine or are you still sticking with the tried and true?

MR: The significant run up in Bordeaux prices is a well-publicized trend. I have fun finding up and coming wineries than sticking with the tried and true. To me, it is much more fun at our frequent wine gatherings to open up a wine that no one had heard of up to then and having that wine become the "wine of the night."

KC: Do you buy online? If so how do you protect yourself?

MR: I only buy from reputable retailers online that have developed their name over many years. If there were any retailers I did not readily know, I could easily access their reputation on many wine blogs. Let it be known that the wine blog community across the country is very tight knit.

KC: How do you decide what to buy at auction?

MR: I really do not participate in wine auctions, since most are held outside of Dallas and I would prefer to view the bottles myself and talk to the auction house.

KC: What is the one bottle you will not sell, regardless of price?

MR: I have several that are based more upon the year that my sons were born. I am glad that one of my boys was born in 2001, an excellent vintage in California and also for the 2001 Chateau d’Yquem, likely one of my favorite wines ever.

KC: Have you come across any surprise regions/bottlings?

MR: Since my focus is more on domestic wines, it seems that every week there are new boutique wines coming out of California, Washington and Oregon that are stellar. Two recent finds are Kutch Wines and Auteur, both small up and coming wineries making incredible pinots in California and Oregon.

KC: Do you follow the careers of those who you have invested in in the past? If so, who are some of those winemakers and/or vineyard managers that you track?

MR: The winemakers I most closely follow relate either to their styles of wine-making or to having met them in the past during trips to the wine country. A few notables include Bob Foley, Bob Egelhoff, David Long, Dan Kosta and Michael Browne of Kosta Browne, Manfred Krankl (Sine Qua Non), Kenneth Juhasz (Auteur), and Mark Aubert.

I’d like to thank Michael for this chance to sit down with him, despite his busy professional and personal life. Hopefully this interview, as well as the others that will follow, can help you readers out there to see that wine isn't quite the risky endeavor you might think it to be with some research and market knowledge.

How about a wine pick on the way out? Check out Modus Operandii Cabernet. I had a bottle of the 2004 Napa Valley - everything you look for in a big ol’ Cabernet – and no one knows about it... for now!

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ikigai108
Bernville, PA
Posted on 12/19/07

Very interesting interview! Great suggestions and observations.

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