Wine has matured into an investment commodity in recent years, given increasing world demand for luxury goods and the exclusion of profits from CGT. If those two ingredients appeal then you should consider buying wine.
The winners are those who care which wines they buy and make some degree of specialism in a collection. It’s important to think long term, say 15 years, yet also be prepared to take profits and move on. The best investors are also the best consumers, being well informed on what tastes good, better served with rare wines and not unhappy to drink dead wood.
Though it’s difficult to generalise, the Bordeaux market is slowly recovering from the mistake of 2008 claret and the eventual overpricing of certain trophy wines. As the modern market evolved prices shadowed points, out of 100, given by Robert Parker in the Wine Advocate. Parker was clearly overenthusiastic with his scores for 2008 whose prices rose sharply but have normalised. As a result the Parker effect is diluted. As trophy wines, championed by Chateau Lafite, are usually sold in bundles, traditional markets were, effectively, overpriced on more ordinary lines but underpriced on trophies. Demand from new markets, largely China, pulled the prices of trophies up to unsustainable levels. Demand remains high so these are growing pains in a market that is on course for slow and steady growth. Add to that, the opportunity to benefit from spikes in growth from newfound trophies, and of course no tax on profits, and you have the fundaments of a sound investment over an 8 to 15 year period.
The mature market understands absolute quality and will pay for it. There is less room for pretenders. That has reduced the number of quality wines to such an extent that investment grade stock is hard to come by. After over a year of steady decline the market has turned. The Liv-ex indices below represent a broad picture of the market but, rather as you wouldn’t buy the FTSE, we don’t buy per these indices. The tendency is to achieve a similar pattern but slightly exaggerated.
At The Holland Park Wine Company , our two Masters of Wine can sniff out such quality and supply it.
- Wine Investment is not regulated. Values can go down as well as up
- We have traded successfully in fine wines for 25 years
- No management fees and no compulsion to sell through us
- Stock is fully insured to current market value at London City Bond, Tilbury (LCB TD)
- Buy the best. We recommend wines of true quality as well as luxury brands
- Buy in bond. LCB is a fully bonded warehouse and goods are stored duty free
- Allow 5 to 15 years or more. Wine is not a short term investment