Feb 14 2010
Wine Investment: Advice
Wine investors ought to often rely on expert assistance when venturing into investing in fine wines, since only 1% of wine produced is of investment quality. One of the golden rules of wine investment is to acquire the greatest wines from the greatest vintages. Typically limited in quantities, they are usually in powerful demand. Such wines should, under present market conditions, improve in price of between 50-100% prior to reaching full financial and physical maturity. The crme de la crme from any best vintage could increase even more.
Bordeaux makes up over 90% of the wine investment industry, with first growth clarets like Lafite, Latour, Margaux and Haut Brion considered top-of-the-range, followed by Cheval Blanc, Petrus, Le Pin and Ausone. To get the most effective returns, most wine investments must be regarded in the medium to long-term, with a minimum of five years. The finest wine investment returns are to be had over a 10- to 15-year period.
For a top quality investment the wine must have a combination of brand repute, positive critical comment and a powerful demand profile. Records going back about 250 years, show that fine wine has remained one of the steadiest forms of investment in the world, normally unaffected by stock market fluctuations and interest rate changes.
Wine investment typical returns
Fine wine investment has outperformed the FTSE 100 and the Dow Jones, offering significant returns without the volatility of the stock market for the last 25 years. The wine investment market has remained largely immune from the credit crunch, creating opportunities for great profits. Wine is an easily transferable asset; there is an established fine wine market and a thriving auction market.
On the other hand, it would be nave to think that every wine investment is likely to generate anywhere near that level of return. Issues such as management fees for wine investment funds should be taken into consideration, as should the storage costs if wine is purchased privately. The common return from investing in fine wine from great vintages is about 15%. To make the most from your wine investment portfolio, we recommend a minimum of 2 to 10 years. Short term investing, of 2 to 3 years can bring healthy profits but anything less than 2 years is very risky and the returns aren’t worthwhile.
Buying wine ‘En Primeur’
Wine futures (also known as “En Primeur”) refers to purchasing wine after it is produced, but prior to it is bottled. This involves purchasing the wine within the summer following the harvest but not actually receiving it for another 18 months. While there’s no guarantee, historically, the prices almost constantly increase over this period. Wine investment isn’t typically a short-term investment which could be realized at any time.
Keep your wines in a professionally managed bonded warehouse. This can be done independently through your own account or through your merchant and will ensure that your wines are kept in good condition, which is vital for their resale value. It also means you will avoid paying VAT and Duty when you re-sell your wine. Rather than buy a large number of inexpensive cases, it makes more sense to buy a small number of high value wines. Serious wine collectors should consider insuring their wine. If you store your wines at wine storage facilities, such places will generally have insurance arrangements in place. For a small collection, not too expensive and primarily for consumption, insure your wines under your homeowners’ policy.
For more information on wine investment expert advice, buying wine futures En Primeur and selecting the best vintages, visit Profiters to maximise your wine investment returns.
