Wine Investments in a class of it's own

Dec. 24, 2010 - PRLog -- Fine Wines investments can be a safe haven for investors in difficult times, anticipated growth in wine futures look good, even today with a worldwide recession, over the past 30 years most companies suggest 15-20% growth, tax free!

With annualised growth of 1000-2500% and more over the period of 15-25 years equating to 14-18% compound interest. But these figures are mostly based on the top 10 Bordeaux Chateau and a few top Champagnes on opening prices of the great vintages only. Buyer beware holds true of buying investment wines as with any other investment.

What makes Fine Wine increase in value?

Investing in fine wines has been around for centuries, often hoarded by collectors and connoisseurs alike.

Those with good knowledge, as I used to do, would purchase twice as much of a particular wine than they required for themselves, selling off highly profitable mature stocks down the line to replenish their cellars with newer vintages, more often with the side benefit of having all of their own drinking wines paid for out of these profits following 5-10 years of investing.

Over the past couple of decades, fine wine has garnered a much wider audience, becoming part of a lifestyle along the lines of fine art, for any of the rich and famous, and maintaining a cellar of fine wines has increasingly been regarded as a necessary accoutrement of success.

Demand for these highly rated wines has risen dramatically and will continue to do so over the long term now with the Asian markets demanding all of the top wines. It seems the Far East has recently become known as the WILD WEST of fine wine, and a strong possibility exists that the fine wine market which has been slowly moving from London to the US over the past decade will suddenly head south to Hong Kong now that they have abolished the 40% import duties.

Russia has been strong recently and Brazil is getting in on the action as is India with so many mega rich individuals in these countries being created. So demand for the top wines will continue to increase over the long term.

Where then and how do I invest in wine?

As with any investment, the quality of the advice you are given is paramount. What, where and when to buy, these together with careful and cost effective management of your portfolio will make the difference between a reasonable or very satisfying return on your money.

Work with brokers who have expertise in the field, there are some traditional UK wine merchants with a wealth of experience, however most of these buy from the same wineries every year, regardless of vintage variation, so be aware, that they all have wines to sell every year in order to maintain their allocations.

It is also worth noting, the better wines with higher ratings do not need to be sold, buyers and brokers clamber for their allocations early on, so you need to be quite aware of the market movements.

What should I buy? How much should I invest? How long will it take?

We recommend a minimum investment of £5000 per annum is a realistic sum to achieve a balanced portfolio; this would be over and above your normal drinking wines. Wine investment is not generally a short-term venture, five to ten years is the average period that we normally recommend you hold onto your investment wines. What to buy for investment is fairly straightforward, the best wines from the best vintages and the best producers at the lowest prices, preferably first offer prices.

A balanced portfolio covers a cross section of different wine regions and countries, spreading the potential risk and rewards. As mentioned earlier, Bordeaux has been the main driver for investment wines historically, and some older top flight wines still look reasonable when compared to more recent vintages and in particular 2005 Bordeaux price levels, but providence is paramount.

When to invest?

When to start investing in wine, anytime is generally a good time to start, however now we have run into potentially the world’s worse recession, surely this is not the time to start?

Actually this is a great time to start, the top wines of 2005 Bordeaux saw massive uplifts over one year, often more than 100% on the opening price, and in certain instances like Ausone 150%, Carruades de Lafite 170% (the second wine of Chateau Lafite) and the most impressive of all, La Mission Haut Brion a massive 220% uplift in less than one year.

These prices have to soften given the economic climate as people try to unload some of these stocks raising desperately needed capital, we believe the bottom of the market will come in early 2010 and these wines will hopefully come off by 20% or more by then. This will be a good time to grab hold of these wines, in the interim, opening prices of great wines from other regions produced in 2007 will be coming to the markets during 2009.


Funding

Having agreed on what amount to invest you will be issued with an invoice and on payment, a selection of wines or advance notice of wines allocated to your bond account. We are able to offer various payment options including deferred payment and monthly direct debits, please contact George Ledger for further details.

Storage

We recommend that all investment wines are purchased by you In Bond and stored in a bonded tax warehouse. This is a storage facility which effectively allows the wines to be stored on entering the country from other countries outside the tax system. Wines lying in bond can be sold in bond and transferred from one account to another within the warehouse where they are lying or to an account at another bonded warehouse in the UK or exported, without having to pay the duty and VAT. The duty and VAT will only be due when and if the wines are removed from bond into free circulation (duty paid) at which point they are ready for delivery to your home for drinking.

Only when the wine is removed into what is called free circulation, will the excise duty, which is approximately £18.50 for a dozen bottle case, and the VAT @ 17.5% on the purchase price become due for payment. For investment purposes it makes sense to leave the wine In Bond and avoid paying these charges for the present.

This has two benefits, firstly there is unequivocal providence with the wine, all serious buyers want this, and secondly, the wine can be sold on in bond to a dealer, broker, merchant or private individual. It is worth noting, when selling at auction; it may be wise to pre-pay the duty and VAT as the auction price will include/exclude VAT at hammer which can have a dramatic effect on your returns, seek advice on each disposal as and when.

Realising returns

Bacchus Vintners will strive to attain the highest prices and returns for their clients by advising the best course of action with each and every individual wine held within the portfolio on a case by case basis. Our goal is simple, provide a service which enables the end client to invest for a period of five years and then to reap the rewards by having the consumption wines paid for out of profits whilst still maintaining the value of the portfolio.

Fair Deal Invest Recommendations

Fine Wine Investments by Bacchus Vintners: http://wineinvestments.fairdealinvest.com/   

Los Pandos Vineyard from Martin & Clews: http://lospandosvineyard.fairdealinvest.com/

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