Should I invest in wine?
Discussion
Jamoor, I had to bite my tongue a bit after reading your post, but I guess it's people like you who keep the wine industry (or any industry for that matter) going through hard times via unemotional (and perhaps uninformed) financial backing so thanks for showing the interest!
I would recommend you do a bit more research and you will find out there are very well organised and knowledgeable brokers and merchants out there (a million miles away from going to Tescos and stashing a few cases away in the garage for 20 years), set up to help investors like yourselves with investment and cellar planning and management, where you actually need never know any detail about what you are buying or selling and you will never need to see, let alone actually have to taste the stuff, so all you need to do is take advice, purchase, and sell when you feel the price is right.
You will also find that wine is a worthy investment, adding some interesting character to a mixed portfolio, where over the medium/long term, with the right wines and vintages, the investment is a well perfoming one. Apparently now is also a good time as wine prices are generally depressed and represent good values compared to high prices in recent years. However, the price of Sterling against the Euro is cancelling out some of the drop. South Africa/Chile/ Argentina could be a good option to look at for instance - but as you might expect (or not if you know nothign about wine) the highest prices and solid performers are with Bordeaux and Burgundy big boys.
I love wine, its history, the regions that produce it and the whole culture surrounding the subject. I also have a few hundred bottles knocking around my house (under the stairs and in a wine fridge for long term storage of the very posh stuff).
I am currently considering investing in wine in a more systematic way, similar to Siddicks above, both because I can't store any more wine for any long period in my own home and I'd like to be buying and storing some quality wine to be drunk at its optimum age (and we're talking mostly reds here - but champagne, port etc will be included), and secondly would be the potential profit I could make on the wine I could, or was forced to sell, which means it wouldn't just be money wasted on booze.
I've always wondered about the CGT on wine so that's a very interesting fact! That makes wine a rather more attractive proposition, especially as other investments are not performing too well at the mo.
Bebs - would be very interested in any advice. Ta!
I would recommend you do a bit more research and you will find out there are very well organised and knowledgeable brokers and merchants out there (a million miles away from going to Tescos and stashing a few cases away in the garage for 20 years), set up to help investors like yourselves with investment and cellar planning and management, where you actually need never know any detail about what you are buying or selling and you will never need to see, let alone actually have to taste the stuff, so all you need to do is take advice, purchase, and sell when you feel the price is right.
You will also find that wine is a worthy investment, adding some interesting character to a mixed portfolio, where over the medium/long term, with the right wines and vintages, the investment is a well perfoming one. Apparently now is also a good time as wine prices are generally depressed and represent good values compared to high prices in recent years. However, the price of Sterling against the Euro is cancelling out some of the drop. South Africa/Chile/ Argentina could be a good option to look at for instance - but as you might expect (or not if you know nothign about wine) the highest prices and solid performers are with Bordeaux and Burgundy big boys.
I love wine, its history, the regions that produce it and the whole culture surrounding the subject. I also have a few hundred bottles knocking around my house (under the stairs and in a wine fridge for long term storage of the very posh stuff).
I am currently considering investing in wine in a more systematic way, similar to Siddicks above, both because I can't store any more wine for any long period in my own home and I'd like to be buying and storing some quality wine to be drunk at its optimum age (and we're talking mostly reds here - but champagne, port etc will be included), and secondly would be the potential profit I could make on the wine I could, or was forced to sell, which means it wouldn't just be money wasted on booze.
I've always wondered about the CGT on wine so that's a very interesting fact! That makes wine a rather more attractive proposition, especially as other investments are not performing too well at the mo.
Bebs - would be very interested in any advice. Ta!
Edited by prand on Tuesday 17th February 15:44
Chaps, here are snippets from an article I wrote last year for a few magazines.
Mods, I have removed anything that resembles advertising and is purely giving my own personal view on this:
Investment in wine is not a new phenomenon. Those in the know have been exploiting this sector over the past quarter of a century and wine has proved to be one of the most consistently stable, high yielding, and low risk investments in the world.
The basic economic rule applies in that if an item is in limited supply, and the demand is greater than the availability, its value increases.
On the supply side there are perhaps only about 50 ‘labels’ whose annual production remain more or less fixed. However, on the demand side there are an increasing number of high net worth individuals around the world looking to own or drink these wines, resulting in an increase in values. Demand has been growing annually as the world’s population is introduced to fine Bordeaux wines whilst more investment minded individuals become aware of the opportunities offered by the wine market.
Fine wines have seen some remarkable returns in the past few years and in the last 20 years fine wine has outperformed a great number of equity and fixed income indices including the FTSE 100.
Additionally, wine is also regarded as a wasting asset (life expectancy less than 50 years) so does not attract Capital Gains Tax.
For a wine to be regarded as a good investment the following criteria must be met;
It must be a recognized label/brand that carries a long track record. It must be a highly rated wine by leading wine critics and from a great vintage. It must have strong global demand and the ability to age and improve. Wine should be considered a medium to long term investment. It is possible to make quick returns in that some wines may go up rapidly in value. However, generally speaking wine prices tend to experience short bursts of upward activity and a medium to long term view is a less risky and volatile approach.
Bordeaux represents around 90% of the wine investment market and should be the mainstay of any wine portfolio. Blue Chip wines from this region are highly sought after worldwide and are considered one of the best sources of investment potential. Look for left bank First Growth clarets like Chateau Lafite, Latour, Margaux, Mouton-Rothschild and Haut Brion. The most sought after names on the right bank are Chateau Cheval-Blanc, Ausone, Petrus and Le Pin.
Stick to the great vintages which have a longer potential of ageing and therefore a greater potential for an increase in value. The best Bordeaux investment vintages include:
1982, 1986, 1989, 1990, 1996, 2000 and 2005.
As always, there are exceptions but by focusing on the very great trophy wines of the best vintages wine investment can be a fairly safe bet. Poor vintages and ‘lesser known’ properties should be avoided altogether. Furthermore, don’t buy wine which you happen to like, hoping it will go up in value. Instead concentrate on the blue chip investment wines as personal taste is irrelevant and has no place in investment decisions.
Typically wines suitable for investment will have a life span of 40-50 years, some lasting even longer than that.
In terms of portfolio size you can invest as little as £500 in a case of wine. However, Blue Chip wines command considerably more per case and a general rule of thumb is to buy a small number of high value cases rather than having a sizeable amount of more modest wines with less long term potential and the added costs of multiple case storage costs.
Try to buy three to five cases per Chateau as larger parcels are often more interesting for potential buyers. Provenance and condition of the wine is important. Ditto storage conditions for long term maturation as wine requires the correct storage temperature.
Typically your wine merchant can suggest a suitable bonded warehouse for storage in your own account with annual charges per case around £7-10.
Chateau Lafite in particular is heading the group in terms of its investment potential due to its current popularity in the expanding Far Eastern markets which has pushed prices upwards. Over the course of the past couple of years the 1982 has risen from a not insignificant £7000-8000 per case to a heady £22,000. The 2003 vintage went from
£3500 to £6500 in just a year and the 2005 released two years ago has almost doubled in value. It is worth mentioning again that windfalls such as these are not subject to Capital Gains Tax.
There are several ways of realizing your profits when the time comes. Wine merchants and brokers will offer a spot price based on current market values. International auction houses run specific wine auctions and will accept wines for sale against a commission.
Ultimately it is crucial to obtain the correct advice in order to purchase the right wines at the right time.
With a growing demand world wide for high quality, Blue Chip wines there has almost certainly never been a better time to invest in Fine Wine.
Bebs
Mods, I have removed anything that resembles advertising and is purely giving my own personal view on this:
Investment in wine is not a new phenomenon. Those in the know have been exploiting this sector over the past quarter of a century and wine has proved to be one of the most consistently stable, high yielding, and low risk investments in the world.
The basic economic rule applies in that if an item is in limited supply, and the demand is greater than the availability, its value increases.
On the supply side there are perhaps only about 50 ‘labels’ whose annual production remain more or less fixed. However, on the demand side there are an increasing number of high net worth individuals around the world looking to own or drink these wines, resulting in an increase in values. Demand has been growing annually as the world’s population is introduced to fine Bordeaux wines whilst more investment minded individuals become aware of the opportunities offered by the wine market.
Fine wines have seen some remarkable returns in the past few years and in the last 20 years fine wine has outperformed a great number of equity and fixed income indices including the FTSE 100.
Additionally, wine is also regarded as a wasting asset (life expectancy less than 50 years) so does not attract Capital Gains Tax.
For a wine to be regarded as a good investment the following criteria must be met;
It must be a recognized label/brand that carries a long track record. It must be a highly rated wine by leading wine critics and from a great vintage. It must have strong global demand and the ability to age and improve. Wine should be considered a medium to long term investment. It is possible to make quick returns in that some wines may go up rapidly in value. However, generally speaking wine prices tend to experience short bursts of upward activity and a medium to long term view is a less risky and volatile approach.
Bordeaux represents around 90% of the wine investment market and should be the mainstay of any wine portfolio. Blue Chip wines from this region are highly sought after worldwide and are considered one of the best sources of investment potential. Look for left bank First Growth clarets like Chateau Lafite, Latour, Margaux, Mouton-Rothschild and Haut Brion. The most sought after names on the right bank are Chateau Cheval-Blanc, Ausone, Petrus and Le Pin.
Stick to the great vintages which have a longer potential of ageing and therefore a greater potential for an increase in value. The best Bordeaux investment vintages include:
1982, 1986, 1989, 1990, 1996, 2000 and 2005.
As always, there are exceptions but by focusing on the very great trophy wines of the best vintages wine investment can be a fairly safe bet. Poor vintages and ‘lesser known’ properties should be avoided altogether. Furthermore, don’t buy wine which you happen to like, hoping it will go up in value. Instead concentrate on the blue chip investment wines as personal taste is irrelevant and has no place in investment decisions.
Typically wines suitable for investment will have a life span of 40-50 years, some lasting even longer than that.
In terms of portfolio size you can invest as little as £500 in a case of wine. However, Blue Chip wines command considerably more per case and a general rule of thumb is to buy a small number of high value cases rather than having a sizeable amount of more modest wines with less long term potential and the added costs of multiple case storage costs.
Try to buy three to five cases per Chateau as larger parcels are often more interesting for potential buyers. Provenance and condition of the wine is important. Ditto storage conditions for long term maturation as wine requires the correct storage temperature.
Typically your wine merchant can suggest a suitable bonded warehouse for storage in your own account with annual charges per case around £7-10.
Chateau Lafite in particular is heading the group in terms of its investment potential due to its current popularity in the expanding Far Eastern markets which has pushed prices upwards. Over the course of the past couple of years the 1982 has risen from a not insignificant £7000-8000 per case to a heady £22,000. The 2003 vintage went from
£3500 to £6500 in just a year and the 2005 released two years ago has almost doubled in value. It is worth mentioning again that windfalls such as these are not subject to Capital Gains Tax.
There are several ways of realizing your profits when the time comes. Wine merchants and brokers will offer a spot price based on current market values. International auction houses run specific wine auctions and will accept wines for sale against a commission.
Ultimately it is crucial to obtain the correct advice in order to purchase the right wines at the right time.
With a growing demand world wide for high quality, Blue Chip wines there has almost certainly never been a better time to invest in Fine Wine.
Bebs
If you're serious about it, and thinking of buying en primeur to sell at its prime, say 10-15 years down the line, then I'd get someone else to store it for you, or invest in a temperature/humidity controlled shelf/case, as an english garage will just not cut it as far as ageing wine is concerned, unless you want vinegar 
Maybe you'd get away with selling a few if you just kept it in the garage, but if you're looking at £100+ stuff over a decade of ageing then I'm sure the buyer will question its history before buying on mass.
Maybe you'd get away with selling a few if you just kept it in the garage, but if you're looking at £100+ stuff over a decade of ageing then I'm sure the buyer will question its history before buying on mass.
The wine market is just as supceptable to rumours etc as the money markets.
The vast majority of prices, particularly in America can often be determined by the point scores of one man, Robert Parker, who everyone seems to look up to as some sort of wine god!
The US investor sees good score -> lots of people buy -> prices go up.
I mean what else does the lazy investor have to base their investment portfolio on? Obviously the key is to predicting which wines will get the highest score before they are reviewed
The vast majority of prices, particularly in America can often be determined by the point scores of one man, Robert Parker, who everyone seems to look up to as some sort of wine god!
The US investor sees good score -> lots of people buy -> prices go up.
I mean what else does the lazy investor have to base their investment portfolio on? Obviously the key is to predicting which wines will get the highest score before they are reviewed
navier_stokes said:
I mean what else does the lazy investor have to base their investment portfolio on? Obviously the key is to predicting which wines will get the highest score before they are reviewed
But you don't need to, they don't release their proces for the en primeur until after Parker releases his scores. Annoyingly that is how they work out their prices!Ozzie Osmond said:
Bebs said:
Wine is certainly better than the stock market and ..... with a growing demand world wide for high quality, Blue Chip wines there has almost certainly never been a better time to invest in Fine Wine.
And I've got a great tip for the 2.15 at Kempton Park.
Mate, I looked into this cusas i wanted to short wine but turned out impossible as ODL stopped quotting prices and no liqudity on other one (prediction market forgotten name of) that had prices on liv-ex..... anywaysss live-ex 100 whihch is an index of wine @ http://www.www.liv-ex.com/ is decling so suggest you don't - like asking to invest in porperty atm you can possibly make money with exterme expertise but a stupid idea in general unless you know what you're doing if nfor no other reason than you can t tell who really has expertise*!
Wine is notorious for bulls
tters actually, even more than properyt or stocks...
ETA two fun things I remember about wine 'exprts':
1) With foood colouring added to white wines at random to make them red they didn't even notice
2) A simple computer program did a lot better than them at predicting quality of a vintage
*believe me this is really important. how can you possibly tell who know s what they're doing if you don't?
Wine is notorious for bulls
tters actually, even more than properyt or stocks...ETA two fun things I remember about wine 'exprts':
1) With foood colouring added to white wines at random to make them red they didn't even notice
2) A simple computer program did a lot better than them at predicting quality of a vintage
*believe me this is really important. how can you possibly tell who know s what they're doing if you don't?
Edited by Somewhatfoolish on Saturday 21st February 22:58
Fellas, clearly you do need to know what you're doing or trust someone else to do it for you.
I have been dealing with fine wines for 22 years now and have put 100s of people in and out of wine investments around the world. Its my business and its what I do for a living.
Personally, I put the majority of savings into wine.
Its a no brainer if you buy wise - where else are you going to net a legal tax free profit..
Happy to answer any specifics.
I have been dealing with fine wines for 22 years now and have put 100s of people in and out of wine investments around the world. Its my business and its what I do for a living.
Personally, I put the majority of savings into wine.
Its a no brainer if you buy wise - where else are you going to net a legal tax free profit..
Happy to answer any specifics.
prand said:
Article in the TImes Finance today abotu Berry Bros dropping the price of top level "investment grade" wine (e.g Chateau Lafite from £16000 to £4000 a case) due to the bankers not getting bonuses this year and the arse dropping out of the market.
Certainly a good time to buy....
This is complete rubbish. In fact the article said BB&R had dropped the price of Lafite 2005 from £11,000 to £6000 case. I called them straight away since Lafite is the wine of the vintage and I'd immediatedly take any cases they had at £6000! and guess what? Its a misprint in the paper and they don't actually have any.. :shakeshead:Certainly a good time to buy....
JRM said:
Well whatever you do don't invest in Cos - presumably you just watched that programme on BBC Four last night and the owner just came across as the most greedy arrogant tosser ever.
Thought Berry's came through it rather well though.
Anyway onto the OP's topic, it has been a pretty sound investment and ticks along quite well, but this, like many investments, has a lot to do with the success of the overall global economy.
I don't think it has always been the case, but if you were to purchase anything with a decent Parker score (and that means Bordeaux) en primeur, then store it in bond for around 5 years, you could probably sell for at least 50% on top, often much more, but then your money has been tied up for 5 years. So you take your pick. Personally I go for wine, but then I have a passion for it and at the end of the day if it didn't make any money I wouldn't be bothered.
I watched said programmed and found it really interesting. Obviously Berry bros & Rudd sell the expensive end of the market, but can you go there and get a bottle of wine for say, £15-20? I just think it would be a great place to visit whilst in London and buy a token gift. Would that price bracket be sniffed at or would they be accommodating? It just looks a lovely shop to browse around.Thought Berry's came through it rather well though.
Anyway onto the OP's topic, it has been a pretty sound investment and ticks along quite well, but this, like many investments, has a lot to do with the success of the overall global economy.
I don't think it has always been the case, but if you were to purchase anything with a decent Parker score (and that means Bordeaux) en primeur, then store it in bond for around 5 years, you could probably sell for at least 50% on top, often much more, but then your money has been tied up for 5 years. So you take your pick. Personally I go for wine, but then I have a passion for it and at the end of the day if it didn't make any money I wouldn't be bothered.
Teresa
You can indeed visit to just buy a bottle - but better still visit their shop at Basingstoke in Hampshire where they sell off their bin ends - a great place to shop for party wine (tends to be £10-15 ish bottles reduced to circa £4-5 )
Bebs - thanks for the email, interesting stuff. Will have a look at respond in due course, manic week at the mo!
)Bebs - thanks for the email, interesting stuff. Will have a look at respond in due course, manic week at the mo!
TimCrighton said:
You can indeed visit to just buy a bottle - but better still visit their shop at Basingstoke in Hampshire where they sell off their bin ends - a great place to shop for party wine (tends to be £10-15 ish bottles reduced to circa £4-5 )
Bebs - thanks for the email, interesting stuff. Will have a look at respond in due course, manic week at the mo!
Excellent stuff! Down in Hampshire in the Summer so a visit to their Basingstoke shop will be on the cards. )Bebs - thanks for the email, interesting stuff. Will have a look at respond in due course, manic week at the mo!
Bebs said:
prand said:
Article in the TImes Finance today abotu Berry Bros dropping the price of top level "investment grade" wine (e.g Chateau Lafite from £16000 to £4000 a case) due to the bankers not getting bonuses this year and the arse dropping out of the market.
Certainly a good time to buy....
This is complete rubbish. In fact the article said BB&R had dropped the price of Lafite 2005 from £11,000 to £6000 case. I called them straight away since Lafite is the wine of the vintage and I'd immediatedly take any cases they had at £6000! and guess what? Its a misprint in the paper and they don't actually have any.. :shakeshead:Certainly a good time to buy....
Was a good long programme on BBC last night about Chateau Margaux, and the production of the 2008 vintage, plus alot else (like a fair amount of wine poncing) besides. It doesn't sound like 2008 is a great year, but would still be pretty good! You ought to be able to catch repeats on iplayer/BBC4 etc
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