Thursday, September 3, 2009

Investing in Collectibles: Off the Beam

Like many investments, collectibles have the possibility of great gains -- Picasso ceramics come to mind -- or decline to worthless as witnessed in the not-so-distant “Beanie Baby” fiasco. During these times when bank savings and money market funds are paying miserable interest, investing in artifacts becomes increasingly attractive. But buyer beware. A case in point are the ceramic decanters that the Jim Beam Distilling Company of Nelson County, Kentucky, has produced for more than a half-century.

In 1952 the Beam family-owned distillery determined to enter a new field of packaging in order to corner a greater share of the Christmas gift-giving market the following year. The initial offering, a cocktail shaker decanter filled with Beam whiskey, was a huge hit with the public. That began an era in which Beam liquor bottles of many shapes -- animals, fish, automobiles, states, customer specialties -- proliferated. So important did these items become that Beam bought the Regal China Company of Antioch, Illinois, to manufacture them. To date some 500 different objects have been issued.

From the beginning collectors were encouraged to think of Beam bottles as investments. Jim Beam clubs were formed around the country. Price lists issued by various individuals showed impressive annual increases for the decanters, causing a rush by collectors to amass large numbers.

Particularly sought were the Executive Series decanters. Begun in 1955, the initial offering commemorated the 160th birthday of the distillery. That ceramic bottle was followed each year by another until the series was discontinued in 1987. As shown here, the decanters were gaudy productions, often with gold ornament and extravagant designs: the ultimate in kitsch. One price guide enthused about Executive decanters as “seemingly out of a King’s treasure room” and predicted that they would “surely be tomorrow’s treasured antiques.” As investments, however, the Executive Series, as well as most other Beam bottles, have been major disappointments.

Take for example the first decanter shown here. It is called “Gray Cherub” and is among the more tasteful examples. It probably cost $30 with contents when issued in 1958. A 1967 price list saw the decanter (empty) appreciate to $45. In 2002, the Koval’ Bottle Price List set its worth at $120. The 2005 Antique Trader guide pegged it at $260, a gain of more than 850 percent! But a price list is not a sale. When a Gray Cherub sold at auction recently, it fetched $39. That is $6 less than it was assessed 42 years ago.

Another case in point is the 1977 “Golden Jubilee” Executive, shown second. Despite being supremely ugly it has enjoyed some popularity, listed at $20 by the Kovels and at $48 in the Antique Trader guide. A recent sale of the Golden Jubilee, however, was for a meager $15. Other decanters shown here, in descending order, are the “Royal Gold Diamond” (1964), the clot of blueberries “Presidential” (1968), the triangular “Charisma” (1970), and the tall, grotesque “Fantasia (1971). All can be bought for less than $10.

What happened? First, tastes change and the flamboyant appearance of Executive Series decanters is distinctly out of fashion. Second, Jim Beam Distillers, after all, primarily were selling whiskey not bottles. When a particular design proved unusually popular the company issued more, diluting their scarcity. Third, people who collected Beam bottles expecting a quick payoff got disappointed, sold off, and left the game. While some fans remain their numbers are small and dwindling.

This gets to the moral of the Beam saga: Speculating on collectibles as an investment is akin to trying to get rich in Las Vegas. Financial Planner Michael Walther has advised: “To make 10 or 20 percent on your collectibles, the piece probably has to appreciate 50 to 100 percent from what you paid for it.” The Beam Executive Series fails miserably when held to that yardstick, not to mention the misplaced taste the decanters represent.

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