Investing in wine
The boffins within the wine industry reckon the best wine can see returns of up to 35% a year from some rare bottles of wine. Like any other investment wines can drop in value, but at least you can drink the loss away. Less rare wines will have returns at 10% to 15%, although the Dencater wine index only grew 14% in the eight years from 1996 to 2005.
The demand for fine wine exceeds the supply and is strictly controlled by the industry. No invester in the world will sell direct to the public, so you have to buy through a merchant to protect the trade. The best ones tend to be the most visible and well known. Your broker will be your mentor, so choose the one you feel most comfortable with and research the company.
Whether you simply handing over the cash or want to spend hours discussing tannins and vintages, brokers should not charge you a consultation or buying fee. They wil only take around 10% commission when you come to sell.
The Top wines
The usual investment unit is one case of 12 bottles. If you’ve got ?1,000, buy two ?500 cases rather than five at ?200. It makes sense less is more with wine. Since 1855, Bordeaux wines have been classified into five ranks. The cr?me de la cr?me are the first rank, closely followed by the super seconds; further down come the third, fourth and fifth growths. The better the wine, the longer it takes for the flavors to mature and develop: first growths will take 13 to 20 years. Just as your first stock market investments are likely to be FTSE 100, your first wine investments should be Bordeaux. This is the seat of the finest red wines and has a track record for bottling the most outstanding produce in the world. There is also limited supply and high demand for the really top-notch stuff, which is what makes it an investment. Rare bottles of wine will sell for thousands of pounds at auctions.
