Wine investing: will you end up with profits or plonk?

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Nowadays however, the wine market has changed vividly.  The investment market for wine is less gentlemanly and more profit driven. Specialist Wine Merchant Pete Goss of Richard Dawes Fine Wine says, “The main driving force of the rapid growth has been the huge demand from Asia… Asian markets tend not to be driven by speculators, but by drinkers. As more of the top wines are consumed earlier and earlier, stocks are declining at a faster pace. We are seeing more interest from China, where there are an almost unlimited number of wealthy buyers, especially for premium Bordeaux. Auctions in Hong Kong fetch prices well above the UK market.”

Prices of the most popular wines soared by around 250pc between 2003-2011. The economic downturn had a huge impact on this however, which according to Mr Goss, was delayed. “There was a delay with wine, which continued to rise in price as we went into the financial crisis. But eventually the downturn did have an effect.”

Between 2008-2012, the number of wine scams had increased dramatically, costing private wine investors £100m. This got the attention of the Financial Conduct Authority, who prevented promoting collective funds that were built around unit trusts. This involved wine.

Pete Goss recommends starting to invest in wine with a budget of £2,000 as a minimum figure. “Over the past two years customers have chosen to diversify the wine in their portfolio. While many used to be 100pc invested in Bordeaux, now there is also a strong focus on burgundy, prestige Cuvee champagne and top ‘super Tuscans’, such as Sassicaia and Ornellaia.” The best wines to invest in however are not usually that expensive. The owner of Wineowners.com, Nick Martin said his site users owned wine worth £1,000-£2m.

Matthew Rhys-Evans is a user of Wineowners.com and says, “My wife and I bought and renovated a property in Italy and started a more serious and appreciative way of looking at wine, surrounded by vineyards and getting to grips with Italian wines. I began buying cases from producers and storing them, possibly to drink at some point in the future, but also thinking of wine as an asset.

With the website, Mr Rhy-Evans can access information on his holdings in the wine investment trade and can use the site to research wine info and pricing.

Information supplied by the website include when the wine is best to drink as well as the comments of critics who have tested a particular wine.

He stated: “I take a DIY approach… The adage was that you buy and store a few cases, drink one or two and sell the rest to pay for more. I don’t know if that still holds true. I buy certain wines to drink and others as investments. For drinking, I will buy wine from anywhere. But as an investment I only buy Bordeaux and Italian wines. It is daunting to start, as there is so much expertise out there, but fundamentally it’s about enjoyment. It’s impossible not to enjoy a glass of good wine.”

Buying wine as an investment?

To consider investing in wine, it is imperative that you are clued up on the industry and the wines themselves.

There are a number of websites out there aimed at small time buyers  that can be used to check the average market prices. Using this, you can evaluate whether you are getting a good deal or not. This helps you to value your own foothold in the market or simply the wine you own.

Liv-Ex is an online environment created for professional wine merchants. Here, the prices of most fine wines can be checked & compared. The website offers a subscription service for £5.99 a month; which provides the user with unlimited price checks. A free option is available, but you must put up with a limited number of price checks.

Wineowners.com is a similar platform to Liv-Ex, intended directly for private wine investors. This website however allows you to track the value of the wine you own in real time. It is based on real auction prices and gives the user a great idea of where they stand.