Why should people invest in fine wine?
Fine wine is one of the most exciting investment classes of recent years, with global demand continuing to grow for a select category of rare wines from the most exclusive wine regions. Over the past 25 years, fine wine investments have out-performed other traditional investment vehicles, including the FTSE 100. From 2001 to 2011 (December to December), the Liv-Ex Fine Wine 100 Index delivered an ROI of 202.13%. In addition to the financial benefits, investing in fine wine is an exciting lifestyle that enables wine connoisseurs and wine enthusiasts to combine their love of wine with their interests in investing.
What are the risks of investing in fine wine?
As with any investment, there is a risk of loss as well as the possibility of gain. Fine wine prices can go down as well as up, and past results are no guarantee of future performance. Wine can be damaged or spoiled (although insurance can be purchased to eliminate this risk). Investors whose home country is outside the Euro zone also face currency risk as they will be investing in a foreign currency.
Which wines do you recommend for your clients to invest in?
We help our clients build a customized portfolio of wines based on historic trends and our expert analysis of potential for future growth in the value of the wines. Generally most of our clients’ wine portfolios come from the Bordeaux region from the “Bordeaux Big 8,” the most prestigious and historically renowned Chateaux of France’s wine making tradition.
Who owns the wine after it is purchased?
The client owns the wine. THE WINE INVESTORS acts as an authorized purchasing and selling agent, but the wine is always owned and registered in the client’s own name.
Where are the wines stored?
Our clients’ wines are stored in a secure, temperature and humidity-controlled bonded warehouse in Bordeaux. The storage conditions are optimal for preserving the integrity and quality of our clients’ wines until such time as the wines can be sold or consumed.
Can clients get access to their wines at any time?
Yes. Clients can have their wines shipped to them anywhere in the world at any time. However, depending on your tax jurisdiction, you might owe Value Added Tax (VAT) upon taking your wines out of the bonded storage facility.
How does the fine wine investment market work?
Investment grade wines are classified by winery (or label), vintage (the year that the wine was produced) and wine score (a numerical value assigned to measure the quality of the wine. The more prestigious the label, the better rated the vintage, and the higher the wine score, the more valuable the wine becomes as an investment.
How is investment grade wine sold?
Fine wine is sold in cases of 6 or 12 bottles. The most prestigious wines usually cost several thousand Euros per case.
Which wine regions are most prestigious?
Bordeaux is a wine region near the Atlantic coast of Southern France, home to the most renowned and sought-after fine wines. Just as stock market investors look for “blue chip” stocks to be reliable for future growth, the Bordeaux “Big 8” chateaux are recognized for their long track record of bottling the most excellent wines. The most expensive vintages often prove to be the best investments, because there is such a high demand for the absolute top-quality wines. While there are no “sure thing” investments, the Bordeaux “Big 8” tend to be the most reliable fine wines for attracting global demand. These are the widely recognized brand names of the fine wine world.
Who determines a wine score?
The global wine market largely moves in response to the wine ratings determined by Wine Advocate magazine and Robert Parker, the world’s most influential wine critic. Mr. Parker devised the system of giving wines a score on scale of 1-100. Any wine that receives a Parker score of 90-95 points is considered “Outstanding,” and a wine with a score of 96-100 is considered “Classic.”
How are fine wines classified?
Since 1855, Bordeaux wines have been classified according to a standard system of five ranks. The “first growths” (“Premier crus”) are the best quality wines, followed by the “second growths.” Then come the third, fourth and fifth growths (in decreasing order of quality). First growth wines command the highest prices and tend to take longer to mature. It often takes 15-20 years for a first growth wine to mature into its prime condition for drinking and reach its peak value. This means that some first growth wines need to be held for many years to achieve the optimum investment returns. (Although just like with any other investments, there is an amount of “churn” that goes on as investors buy and sell various wines to earn cash, take profits and balance their portfolios.)
What investment timeline or investment horizon should wine investors use?
Fine wine tends to have a longer investment horizon because prices can plateau and there are transaction costs involved with buying, selling and storing investment grade wines. In general, wine investors should be prepared to hold their wines for at least 5 years or longer to ensure optimum chances for profitable sales. We work with each client to develop a wine portfolio based on the client’s unique investment horizon and investment preferences, based on our analysis of market trends and potential for return on investment.