Fine Wine Investments?

DunPin

So I've been looking for something new to invest in and it hit me that I love wine so perhaps it is an opportunity for long term investment (from reading it is roughly 10 years before you can start to see any potential return should you come to sell).

I was looking at Berry Bros. & Rudd as a starting point, they say that you need a minimum of £10,000 for a decent start (which for wine sounds reasonable) however where I'm stuck is where I should have a wine merchant and storage (aka an investment plan) or I should go it alone although I'll most likely need to pay for storage (I doubt my house is suitable for such storage).

Any recommendations on whether I should go with a company such as Berry Bros. & Rudd (seem to be the most reputable) or go it alone and pay for storage?

brasso

First of all, I disagree with the advice from Berry's that you need to start with 10K. Where on earth does this figure come from? Totally arbitrary.

Personally, I would go it alone, but you can still buy through Berry's or others and 'go it alone'. You have to buy from somewhere, and I wouldn't consider going to the vineyard gate.

A few points --

It depends entirely on what your intention is. If you are planning to sell some of the wine, then it is very advisable for you to store it in a dedicated temperature-controlled bonded warehouse. Charges usually around 8 to 10 quid a year.

Reason? There is a burgeoning industry in fake fine wine. Think about it. You print some Chateau Lafite labels on your PC, buy some Bordeaux-shape bottles, fill them with any old red wine, cork and capsule them, and off you go. With each authentic version worth many hundreds of pounds, you can understand the temptation. This is happening a lot. particularly in China where the market is expanding rapidly. If you buy and store in a regulated warehouse, you can prove the provenance of the wine which is a massive plus.

As for where you buy, If buying Bordeaux 'en primeur' then Berry Bros are good, Fine & Rare Wines, Farr Vintners.... there are loads of places you can buy. Just Google Bordeaux en primeur. You can buy from One place and ask for delivery to a bonded warehouse of your choice if preferred. Though in reality, most of these places use the big commercial warehouses in any case, so it doesn't matter much.

Forget the 10K figure. Much more important is what you buy and when. If investment is your aim, then quality of the vintage is 100% important. In recent years, 2009, 2008, 2005 were all excellent. I haven't bought recently, so can't tell you about the last couple of years.

But you need to be totally sure that you are buying well, so where you get your information is of key importance. Decanter Magazine is useful, and there are tons of online resources, including paid services like Robert Parker and Jancis Robinson.

Drop me a PM if you want more information. (I am not in the trade, don't worry, but have been a keen buyer in past.)

Beware - there are MANY charlatans and bullsh1tters out there. I might be one myself.

Masomnia

Interesting stuff. I like wine and find it interesting, so I've thought about it but I wouldn't feel confident picking my own vintages etc, I reckon you'd end up putting a good deal of your eggs in one basket.

I was thinking however at looking at tracking the liv-ex index (if that's even possible). Any experience with that?

blueton

Berry Bros. & Rudd are very established. However I would not recommend wine as an investment. They have sales people whose job is to get clients to invest in wine, like a stock broking firm pushing a favoured share. I know the service. Sometimes they push fine French vintages, other times it's all about China and the new rich investing in wine and making their favourite vintages a sure fire investment. Be aware it is very volatile. Also BBR buy and sell clients wines on their own website market place, and their charges and spreads between what clients ask and buy for takes away more of your cash. I bought £15K of highly recommended wines. They fell to £6K in 18 months. Sold at a loss and won't do it again. I would keep clear.

bowlhead99

Your house is not suitable for storage.

1) Typically wines are bought 'in bond' which is basically a scheme where they can be brought into the country and held in a bonded warehouse where no duty or VAT is paid until someone pays the charges to take it out of bond and into general UK circulation for them to drink or sell in their restaurant or wine shop. Dedicated businesses like Octavian will store your wine in or out of bond, and presuming your wine is still under bond you can sell to other people by simply transferring the wine from your name to their name in the same physical warehouse and it doesn't lose its bonded status. If you have taken it out of bond and back to your house, you are then physically holding duty and VAT-paid wine bottles and if a buyer wanted to take them off to USA he would be looking at paying his own import duties and would not want to compensate you for having paid yours.

2) If the wine bottles have been knocking around your house, the buyer doesn't want to take the risk that they could have been stored in sub-optimal conditions like a loft that gets hot in summer and freezes in winter, or in a fridge that keeps them cold and vibrating. And he doesn't want to come to your house to get them. Whereas if they have been bought en primeur and delivered to Octavian (just an example, I have used them but have no affiliation), then BBR or any number of individuals or wine businesses can just take them off your hands without them being physically moved. I mean they might collect and move them on to their own cellars to save storage charges but the transaction can happen seamlessly from your perspective and you don't need to take a day off work to move them yourself or wait for someone to collect.

BBR are reputable but there are various other players in the market. If you went it alone you would have the opportunity to buy from different suppliers and if BBR wanted 1350 for a particular case while someone else would sell it for 1300 you've already saved enough for a few years storage. You would then only be buying from BBR in the situations where they want 1350 and everyone else wants 1400. But perhaps both of them would want to charge you for transporting the wines to your one consolidated warehouse of choice instead of them leaving them in their own vaults.

If you want this to be a more passive investment rather than becoming an active trader, for ease of paperwork and not wanting to deal with multiple sellers and storage and transport etc, it would make sense to use one supplier but whether that is 'value for money' is in the eye of the beholder.

For your research there are various sites listing known wine scams or whatever, there's another thread on this board with some links. Various merchants offer investment services, for example Albany Vintners seem to have APM Wine Investments although you wouldn't know it to look at each site, but they have the same registered address.

robtgossard

Hmmm….. investing in wine, sounds very interesting. Though I have come across news like, ‘Goldman Accepted 15,000 Bottles of Fine Wine as Loan Collateral’ I’m fairly new to the idea of investing in fine wine. Guess it is like investing in commodities like gold and silver.
The latest breaking news in the investment arena is the spot price of gold hitting a new low which is followed by a buying frenzy.

brasso

blueton wrote: »

Berry Bros. & Rudd are very established. However I would not recommend wine as an investment. They have sales people whose job is to get clients to invest in wine, like a stock broking firm pushing a favoured share. I know the service. Sometimes they push fine French vintages, other times it's all about China and the new rich investing in wine and making their favourite vintages a sure fire investment. Be aware it is very volatile. Also BBR buy and sell clients wines on their own website market place, and their charges and spreads between what clients ask and buy for takes away more of your cash. I bought £15K of highly recommended wines. They fell to £6K in 18 months. Sold at a loss and won't do it again. I would keep clear.

I'm sorry you had a bad experience, Blueton. This hammers home the point that you really need to be totally confident in what you are buying.

Personally, I would not join any scheme of any kind, and I would not allow myself to be 'sold at'. I do my research, decide what I want, then research where I can buy and for how much.

You don;t say what you bought, but I would never buy mature wine for investment, and I would never buy wine from another individual.

There is only one way to invest in wine IMO. You buy it very young, usually before it has even been bottled, then you wait.

DunPin

I thought I got back to this earlier, my apologies.

After looking around and researching I have come to the conclusion that this is not the best investment for me as I'd be incredibly tempted to drink it all

Thank you for the advice anyway guys and perhaps in the future I may come back to it so it has been incredibly useful but for right now, it isn't for me due to the aforementioned reason

Masomnia

Have to admit, I always feel a bit relieved when people decide not to go ahead with niche investments after reading on here.

Better to be out of an investment and wish you were in, than be in one and wish you were out!

Porcupine

Invest Drinks is the usual website mentioned here in discussions about wine investment.

racing_blue

Masomnia wrote: »

Better to be out of an investment and wish you were in, than be in one and wish you were out!

Amen to that 1001 times