Investing in Fine Wine
The idea of building a cellar for future financial gains is by no means a new phenomenon but has picked up a great deal of interest in recent years. Many clients use wine investment as a means of diversifying their portfolio and enjoy the idea of having a physical asset in their name rather than shares on paper. Another strong advantage of investing in wine is the growing international demand that doesn’t rely on a single market for returns. This has made wine a far more consistent asset class with average growth of 13-15% cumulatively per annum over the last twenty years.
How does wine investment work?
Wine investment works on decreasing supply and increasing demand. Great vintages from top regions such as Bordeaux and Burgundy are being bought and consumed leaving diminishing amounts of great vintage wine available. The increasing demand for luxury products such as fine wine in emerging BRIC (Brazil, Russia, India and China) countries has boosted the steady trend of buying in traditional economies such as Europe and North America. Now that fine wine has truly become a world-wide passion, the pressure on existing supply continues to increase.
Buying the best possible wines at the best possible prices
Top wines such as Grand Cru Classé as defined from the 1855 Bordeaux Classification system and top red Burgundies are the investor’s wines of choice. There is not a wide array of wines to choose from and indeed you will hear the same names coming up when discussing investment-grade cases: Ch Mouton Rothschild, Ch Lafite, Ch Latour, Ch Cos d’Estournel, Ch Lynch Bages and from Burgundy Domaine Romanée Conti and a few select others. Other regions to consider are Italy’s Barolo, Brunello and top Tuscan regions as well as a few select New World producers.
Provenance and Storage
Buying from trusted merchants and building a relationship with them is essential. When buying for investment you must ensure the wines you buy are in excellent condition and in original cases. The status of investment-grade wine should always be “under bond” therefore exclusive of VAT and held in a secure, bonded storage facility.
All wines bought from Terroirs Ltd are stored in Revenue Bonded Warehouse Masterlink Logistics storage facility Unit 19 Park West Nangor Rd. Dublin 12.
There is no maximum on buying wine but we recommend a minimum of €5-10,000 euro to start building a reasonably-sized portfolio. This amount will allow you to have a more flexible, balanced selection of wines which can help in maximising your potential returns. The wines that are of high enough quality to have investment potential start at around €1,000 per case of twelve bottles and can go up to over €80,000 per case.
Wine investment and taxes
All wines bought for investment are stored under bond, meaning the duty and VAT is suspended and not paid on purchase or sale. We recommend that prior to investing in wine you do speak to an IFA – Independent Financial Advisor as we are not a financial institution and do not give financial advice. We do not offer any guarantees of a wine’s potential future growth however we can advise on a wine’s suitability to building an investment portfolio. Wine investment like any other asset class can go down as well as up in value.
Wine investment should be looked at as a medium to long term potential gain (five to ten years).
Only buy from trusted and well-established wine merchants and never be drawn in by cold callers.
Buy at the level of risk you are comfortable with as there are low, medium and high risk investment cases which all offer varying levels of potential return.
Buy cases under bond whose provenance is guaranteed and keep them stored under bond with a professional facility such as Revenue Bonded Warehouse storage facility Masterlink Logistics
Diversify your portfolio. Trends can come and go and having all your holdings in one or two wines is a risky strategy.
If you would like to find out more about our wine investment or to have an initial discussion, we’d encourage you to contact Seán Gilley at Terroirs.
Tel: 01 667 1311
Fax: 01 667 1312
From all other countries
Tel: 00 353 1 667 1311
Fax: 00 353 1 667 1312
103 Morehampton Road
Dublin D04 NX27