Fine wine is proving itself to be an increasingly popular investment choice for the wealthy. Following the recent economic downturn and subsequent losses on global stock markets, together with falling property prices, more and more people are looking for less risky alternatives. And what could be more enjoyable than investing in something that not only gives you good financial returns, but can also become an enjoyable and rewarding hobby!
According to Decanter.com, for a wine to be considered good investment material, it should first and foremost have an instantly recognisable label or a brand with a long track record of quality. Some of the most popular names include Lafite Rochschild, Latour, Margaux, Haut Brion and Petrus. The vast majority of good investment wines come from the Bordeaux region of France (90%), and will be highly priced. (Beware anyone selling wine too cheaply.) It is recommended that you buy as expensive a wine as you can afford, choosing fewer bottles of a higher priced wine over more bottles of cheaper wine.
As with any investment, the more knowledge you have about the product, the better equipped you are to make good decisions. Therefore a good place to start is the Liv-ex Fine Wine Exchange (The London International Vinters Exchange), which offers an excellent source of financial trading information. Wine investment is largely unregulated, so it is also advisable to stick with reputable merchants or suppliers.
Confident investors can buy directly from auction or from a merchant or broker. However, newer investors to the fine wine market would do better to buy through a fund or wine investment company, where others’ expertise can be relied upon.
A significant attraction of fine wine investment is the fact that it is considered a wasting asset by the Inland Revenue. This means that it does not attract capital gains tax. Moreover, if you store your wine in a bonded warehouse, you avoid paying VAT and duty when you resell.
In contrast to more traditional stocks and shares, perhaps the best part about investing in fine wine is the fact that whatever happens to prices, you always know that, even in the worst case scenario, you have some extremely good wine to enjoy and share with friends and family. You may want to have your Vinturi wine aerator handy, to ensure that you experience the full richness of the wine in all its complexity.