Wednesday, 13 March 2013

Wine Investment

The term 'wine investment' has become a more frequent phrase in the last 24 years since I have been in the wine trade. Wine investments are now increasingly popular as other investments have become more diffcult/volatile/risky.
 People work very hard to make wine, then ship wine all around the world to different markets. Inevitably there are many people involved in the process from the vineyard to the dining room table. Agents, importers, distributors, wholesalers, retailers all need to make a living and therefore a margin.  These roles are quite clearly defined and even with modern efforts to make wine more competitively priced and the 'direct sales' model advocated by mail order or internet companies, sometimes it can be difficult to actually make a sensible return of profit. Retailers have large overheads and an uncertain economic climate, whilst wholesalers have slimmer margins and the risk of bad debt as restaurants feel the pinch. Fuel, transport, import taxes and foreign exchange fluctuations can seriously erode margins for distributors and wholesalers.
However amongst all the problems for trading wines there have been some significant financial gains to be made in the fine wine market as wine investment. But beware like all investments there are inherent risks and occasionally peaks and troughs to endure. One immediate advantage if you do lose money with your wine investment is that you still have an asset ( even if it is at a reduced value)........and you can drink it!!!
Chateau Ausone has a very small vineyard and is a Premier Grand Cru Classe (A) in Saint Emilion. But is it a good investment?

There is an increasing amount written about wine investment such as this recent article in The Daily Telegraph. It will be interesting to see whether the fine wine market appreciates by 14% in 2013. The signs are certainly looking good at the moment.

Like any investment there are crucial aspects that need to be implemented in order to achieve the best results. One crucial aspect is genuine market advice. Which Chateau is the next big thing?
Which area is surging forward?
Which are the genuine 'good buys'?
What is the provenance of the wine?
What are sound good long term investments rather than short term spikes?

The potential gain can be significant, whilst everyone should enter any investment with their eyes wide open as there could be a  potential loss. However one significant advantage to wine investment is that the investment is a tangible physical asset rather than a paper share certificate. There is always the consolation that the wine can be enjoyed as a drink.....whether the investment improves or not!!

I have a 'wine investment portfolio' that I have mainly kept for personal a few years time I hope to share some good bottles with friends and family. In recent times I have been checking the value of the portfolio as an investment and tracking each month the value. We are riding a wave at the moment with an increase in value of 3.72% between January and February and an increase of 7.92% between January and March. This is an area that I feel I am very well placed to offer genuine advice, as I have good contacts with the Chateaux in Bordeaux via Bella Wine Tours, and I am the commercial agent for a well established negociant in Bordeaux. I should be able to get the right allocations of the right wines!

No comments: