Get our top 10 wine investment tips to make the most of investing in fine wine as it continues to deliver growth and stability in one of the most volatile economic periods. If you are looking to protect your cash, fine wine has demonstrated its exceptional capacity to store value and act as an effective hedge against inflation.
Top 10 Wine Investment Tips
Be clear about your wine investment goals
How much are you looking to invest, over what time period, what are your target returns and what is your attitude to risk? Ideally, you should discuss these with your fine wine expert as this will influence the selection of wines to be included in your wine investment portfolio.
Invest in wine with a realistic timeframe to optimise returns
Fine wine is a very stable, tangible asset with low-risk performance that does not directly correlate with more volatile financial markets. Investment wines are also created to improve as they age over several years or decades. As they approach and enter their drinking windows, they are likely to become rarer and more valuable. As a result, you should plan to hold your wine investment for the medium to long term, i.e. over a minimum three to five years, to enjoy the best possible returns.
Select the best possible wines for growth and liquidity
Blue-chip investment wines with excellent provenance have a track record of delivering strong growth and trading activity in the secondary market to allow you to buy and sell efficiently in a timeframe to suit you. Consider the price being asked and that there is sufficient growth potential to suit your investment requirements.
Diversify your fine wine portfolio to manage risk and maximise gains
As you structure an investment portfolio to take advantage of differing returns profiles varying assets offer, you should take a similar approach to your wine collection. Performance varies as market trends evolve and a rounded wine investment portfolio should include labels and vintages from different regions.
Investors can select from the more established and active secondary markets of Bordeaux, Burgundy, Champagne and Tuscany and then diversify with key wines from Rhone, Piedmont, California, Australia and Spain to take advantage of growth in demand and price.
Certain vintages achieve a higher overall quality score across a region than others and these are referred to as Prime vintages. A more average quality scored vintage is termed a Mid-vintage, and lower than average score, an Off-vintage. A Prime vintage often bestows a premium to all wine produced that year and this can be apparent in the first release prices. However, Mid and Off vintage wines with the same quality score as their Prime vintage equivalent can offer value and an important opportunity for growth.
Monitor critics’ scores of investment wines
A small number of internationally renowned wine critics have the potential to influence fine wine prices. Robert Parker Jnr retired in 2019 but wines that were awarded perfect Parker 100-point scores are still highly sought after. The other key critics wine investors should be aware of are Neal Martin, Antonio Galloni, James Suckling, Jancis Robinson MW, Lisa Perrotti-Brown MW, Jeanie Cho-Lee MW and the Wine Advocate critics.
Critics generally publish their quality scores on wines at en primeur tastings the Spring after the vintage harvest, when wines go into bottle two to three years later, and at ten-year anniversary tastings. Interim tastings can also boost investment wine profiles and values throughout their life cycle.
Wine investment storage and insurance
Ensure that your wine is correctly stored, ideally in a specialist bonded storage facility that guarantees the optimum temperature and humidity conditions to protect the quality and future value of your wine. Storing in a bonded ‘tax warehouse facility’ also means that you can enjoy ‘off-shore’ tax benefits, with Duty and VAT fees not triggered until the wine is removed from bond. Wine investors have no need to move their wine out of a bonded storage account and these charges may never apply to them.
It is important to insure your valuable wine investment to replacement value.
Stay informed about the market and your wine’s performance
The fine wine market is more transparent than ever before with more information accessible via the internet. You can do your own research and your fine wine expert should keep you informed about the value of your investment wines and factors that influence performance. They should also guide you on key opportunities in the market and when to buy and sell to get the best possible returns. See Vin-X Reports and Guides for the latest wine investment market information.
Understand the tax treatment of fine wine
As with all your investments, take advice from a tax specialist or financial advisor on how wine investment will fit into your tax planning. One of the key benefits of investing in fine wine is that generally any profits made do not attract Capital Gains Tax due to the categorisation of ‘Wasting Asset’ by HMRC. See our Tax and Fine Wine Report for more information about the tax advantages of investing in fine wine.
Is investing in 'en primeur' wine appropriate for you?
Buying ‘en primeur’ wines can be likened to buying ‘wine futures’. Bordeaux first came up with the principle of selling wine whilst still ‘in barrel’ making first release allocations originally to trade only. The market has evolved to allow investors to acquire ‘en primeur’ positions whereby you acquire the equivalent of a number of bottles of wine. This position can be traded in the market, but investors are more likely to own the wine until after it is bottled and shipped into the owner’s storage account. See more detail on the benefits and risks of buying en primeur wines here.
Be fraud aware
Make sure you work with a reputable fine wine investment expert or merchant you can trust to guide you to enjoy the benefits of this rewarding asset. Vin-X has market-leading systems to protect fine wine investors and is a member of the Wine Investment Association.
For more information on investing in fine wine contact us and speak to a member of our expert team on 0203 384 2262.