Buying wine: as an investment plan, it’s a corker
Christmas seems like a good time to invest in wine — then you might have some ready for next year, too. In these days of record low interest rates, wine is a genuine investment opportunity and one of several alternative investment ideas that is growing in popularity.
Unlike other investments, if the price doesn’t rise as much as you’d hoped, you can at least drown your sorrows by drinking it.
So how can you invest in wine?
Two options: buying a case or more of wine from a wine merchant and getting him to store it, or buying into a fine-wine fund. Either way, remember that this investment is unregulated — some wine merchants and wine funds are (much) better than others, so ask around and don’t be duped by rogue traders. Many will want you to pick their wines as part of your investment.
The historic big name merchants include Berry Bros & Rudd (bbr.com) and Bordeaux Index (bordeauxindex.com). If you have found your own merchant and getting them to store it, check it out on Companies House to ensure it’s been around a while and is reputable, with a good history of filing accounts.
Wine merchants will store your cases for you at the right temperature, which might not be the case in your own kitchen - but will charge fees, normally between £10 and £20 a year, for the privilege. Get it stored in a bonded warehouse, which means investors do not have to pay duty or VAT on their cases of wine.
If, however, the investor decides to drink their investment rather than sell it on for profit, VAT (at 20 per cent) and duty (rates vary but come in at about £23 for a case of still wine with 5.5-15 per cent alcohol content) has to be paid.
If you’re keen to pick your own investment tipple, do your research before you buy. Most wine houses and merchants publish research notes on their vintages whilst the fine wine exchange Liv-ex (liv-ex.com) also publishes wine prices. Most first-time investors will opt for Bordeaux - perennially popular, especially amongst the burgeoning Asian market - and it’s traditionally provided strong returns.
If all that sounds like too much hard work, considering opting for a fine wine investment fund. Again you’ll have to carry out research here. So go for a well-rated, established fund. Investors did lose out when the recession struck and many fine wine investment funds went broke.
Choose a manager with a solid track record and investigate claims on past returns to make sure they’re true. You could ask to see a fund’s wine warehouses. Most will have minimum investments - at the Wine Investment Fund, for example (wineinvestmentfund.com/fund-details/index.aspx) it’s £10,000 running for five years.
Fees include a 5 per cent subscription fee on sign-up and an annual 1.5 per cent management charge. When the investment matures, a 20 per cent performance fee is charged on returns. Its past performances are listed on its website.