Is Wine a Good Investment?
Wine has shown time and again that it can compete as an investment with more well-known options, such as the FTSE 100 and Gold. Over the last five years the ‘Liv-Ex Fine Wine Investables’ index, which tracks 200 top Bordeaux Chateaux, has seen a 21% increase. Over the same time, Gold has lost 19% and the FTSE 100 has seen a 19% increase.
How much should I invest in wine?
While there is no set amount to begin an investment and with cases beginning at £250 per 6 bottles, the returns need to be worthwhile in offsetting storage charges and exit fees, while also competing with other options. We therefore recommend looking at between £5,000 and £10,000 as a minimum to allow a variety of options when selecting wines for your portfolio. Our Cellar Plan offers customers a great way in to wine investment without the prohibitive upfront costs.
For how long do I need to invest?
Although there will probably be opportunities to sell parts of your collection early on, looking at a whole collection we recommend a minimum outlook of eight to 10 years. This allows the wines to reach drinking maturity; often closely aligned to consumption, therefore rarity and value on the market.
Which wines make the best investment and why?
The current market makes it difficult to look past the traditional ‘blue chip’ wines of Bordeaux. Prices are as low as they have been for years and we are beginning to see an upturn in the market. While other regions show promise, it’s likely the prices of top Chateaux in Bordeaux will move closer to their historic highs more quickly than emerging regions create new highs. We would recommend a higher allocation to Bordeaux with emerging regions making the remainder. Top wines from mediocre vintages, and mediocre wines from top vintages.
Why should I invest with Davy’s?
We are one of Britain’s oldest wine and spirit merchants, established in 1870. Today, members of the Davy family continue to own and manage this family-run wine merchant. We believe that the wealth of experience and knowledge we have in wine puts us in a prime position to be able to advise on the correct wines to add to your cellar.
How will it perform?
As with any investment, prices can move down as well as up. Some wines will perform better than others and there may be opportunities to realise returns earlier than expected. On average, we would expect a return of 15% over the life of your cellar.
What are the risks?
The biggest risk to investing in wine is that for whatever reason, be it a revised critic score, or market conditions turning, wines in your cellar may see a drop off in demand, which could lead to market value falling. Wine Investment can become riskier when purchasing wines through merchants without an established reputation for a variety of reasons. Buying En Primeur often means that you won’t receive any physical stock for at least a year after purchase – in the past, buyers have been victims of fraud when stock never materialises long after being paid for.
How long does wine last?
Some wines can last for centuries, while others need drinking within the first six months of their lives. When looking at an investment in wine, it is vital that the right wines with a long enough lifespan are chosen.
Is wine investment exempt from capital gains tax?
As wine is legally classified as a wasting asset, in some circumstances, your investment can be exempt from capital gains tax – we are unable to advise further on this and recommend speaking to a financial adviser.
Do I buy my wines excluding duty & VAT?
Most of the wines we offer for an investment cellar will be offered ‘under bond’. This means you will be purchasing without paying the duty & VAT. You are also able to sell your wines under bond, meaning you never pay duty & VAT if the wines are kept in bonded storage. Only once the wines are taken out of bond, for delivery for example, will they incur duty & VAT charges. We would highly recommend keeping all wine bought for investment under bond, as the value can decrease significantly once the duty & VAT are paid.
Where and how is my wine stored?
We store our bonded wines with specialist wine storage facility, London City Bond. Charges are competitive at £10.95 per case of 12 bottles, or 9 litres ex VAT. These charges are reduced for our Cellar Plan members.
Is it easy to sell, and are there charges to do so?
Davy’s can list your wine for sale on our Fine Wine list as well as on the trading platform Liv-Ex. Upon a complete sale, you will receive the listing price less 10% commission. Where wines are listed at ‘market price’, they tend to sell quickly, however, no guarantees can be made. You are welcome to sell to any other buyer but will need to pay delivery and handling charges to their warehouse or other address.
For more information about wine as an investment, or to start a portfolio, please contact us on 020 8 858 6011 or email [email protected]
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