Latest posts by Editorial (see all)
- Intellectual Property for Banking and FinTech - 08 Aug 2017
- Learn to Trade Financial Markets with Investment Bankers - 27 Jul 2017
- Fast Track to Investment Banking - 24 Jun 2017
The wine market as a whole has been fairly resilient when compared with more traditional investment sectors. The reason for this is quite easy to explain: fine wine is a tangible asset; it’s a luxury product that we aspire to own, consume and know more about. As an investment asset, wine is considered far more useful than gold, and a lot easier to enjoy than art.
Interest in wine is growing at all levels. Most important is the supply, which is limited; the supply of any particular vintage is constantly diminishing while in the case of younger vintages it’s constantly improving.
Wines that do not perform financially as well as expected can be consumed and enjoyed!
Helpful tips for wine investment
Buy from a reputable merchant. Many unscrupulous merchants/wine investment houses will have few qualms about selling the wrong wines or the right wines at the wrong prices for investment. Only buy from established merchants and ensure you get the expertise needed.
Wine is not a quick win investment. Whilst customers who bought well before the financial crisis in 2008 will have done very well indeed over a matter of a couple of years, it is best to view any investment these days as a long-term one. Experience suggests that a minimum eight-to-10-year term is a good benchmark, but one should bear in mind that for the most part you will be buying wines with a lifespan of 10 to 20 years and more, and that their financial maturity will be linked with their drinking maturity.
Learn the law of supply and demand. Limited supply increases demand. Fine wine matures once bottled, and improves with age. A limited amount is produced every year and as bottles are consumed the supply of the wine becomes smaller. As supply diminishes, demand generally rises as the wine matures. Moreover, demand and interest in fine wine is growing around the world and supply of the top wines cannot be increased.
The key to investing in wine is buying the right wines, at the correct prices. The wines that have exhibited the best performance historically are the top 30 or so châteaux of Bordeaux. These are often best bought at their opening price en primeur, but because supply is so restricted and release prices have increased over the past few years, looking at back vintages could offer a valuable alternative. Your wine merchant will be able to provide advice.
The practical advantages to wine investing are fairly straightforward. Wine is an easily transferable asset, plus there is an established fine wine market and a thriving auction market.
Ensure your investment is correctly stored. Correct storage of investment wines is crucial for two reasons: firstly, wines should be stored ‘under bond’ to avoid paying excise duty and VAT on the wine, which cannot be reclaimed. Second of all, provenance is key to a wine’s future value; fine wine has to be stored in specific conditions.
Wine is a tangible asset. Shares that fall in value are good for nothing save for selling at a loss. Wines that do not perform financially as well as expected can be consumed and enjoyed!
Berry Bros. & Rudd: 3 St. James’s Street, London; 020 7022 8973