Investing in fine wines sounds like the ideal investment. If you have a love of fine Beaujolais, if a Macon Village floats your boat, then the idea of making money whilst indulging your passion sounds like an opportunity not to be missed. Although you’ve to remember not to drink it!
The figures can back that up too. If you choose the right wine at the right place there’s a profit to be made. Take Château Latour for example. A case of 1990 Château Latour would have sold for £370 in 1991, in 2011 that same case would have been worth around £5,800. This would make you approximately 1,400% return on your investment; compare this to the FTSE100 which, over the same period of time realised a return of just 370%, including dividends.
Now, of course, such dramatic profits are not always the case, although, throughout modern history fine wine investments have consistently outperformed more conventional investments. Simon Staples, the marketing director at upmarket wine merchant Berry Bros & Rudd, says that the estimated annual return on a wine portfolio over a five-year period is about 15% per annum which makes it a tempting proposition.
There have been some blemishes on the otherwise enviable record of wine investments. The ‘90s, and 1997 in particular, saw some dips in the market. But over the long term it seems hard to go wrong with wine. But, and here it is, there’s always a ‘but’, you need to know what you’re doing. If you want to invest in fine wines but can’t tell your Chateauneuf du Pape from a Retsina then you need to take advice from an expert, or maybe you should consider investing in a fine wine fund.
Fine wine investments locations
If you are interested in making your own fine wine investments, your first consideration will be to decide on the provenance of your wine. Although new world wines are accepted as some of the best, for investment purposes the old world is probably your best choice. French wines, above all, hold their price and are continually in demand. There is great interest in fine wines coming from Asia with China in particular representing a huge market for the budding wine investor.
Having decided on a French wine you will then need to choose which region would make the best investment. Bordeaux is always a favourite. Space here is too limited to go into any great depth on this subject, but it is worth mentioning the top five Bordeaux wine houses, all of which hold their price and consistently deliver good returns to investors. They are:
- Château Lafite Rothschild;
- Château Latour;
- Château Mouton-Rothschild;
- Château Margaux;
- Château Haut-Brion
*** 2005 was a good year for all of these and this would be a good place to begin your research.
Another thing worth bearing in mind is that profits on wine investments can sometimes attract a tax free status under the rather antiquated classification of “wasting chattel”. This is not always the case however, so take some professional advice.
So how much should you invest in wine?
Most experts suggest around £5,000 is a good starting point. Try to buy whole cases of unmixed bottles, in the original wooden cases is preferred as this attracts the best prices. One final word of warning – despite its popularity the wine investment business is unregulated. There are some charlatans out there and the market is open to abuse. We have seen a number of people taken advantage of which has been painfully illustrated on UK TV programs such as Rip Off Britain. Of course it goes without saying, do your home work, visit the offices or warehouses of the wine merchant, research them on Google, companies house only costs £1 to get a company report, ask for references, know where your wine will be stored and what access you might have to it. Get as much information as you can before you start this type of investment.