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your purchase. For example, fine wine
should be in unmixed, sealed cases in
the original wooden box. It should not
have been repackaged in any way.
How you store and manage your wine
investment is crucial to its future value.
Whilst you can keep fine wine in your
own cellar, wine bought for investment
is usually stored professionally, either
in your own warehouse account or in
a merchant’s customer reserves. Wine
for investment is usually held ‘in bond’,
meaning that it is free from UK excise
duty and VAT while it remains there.
Access.
Wine held in your own
account gives you complete control over
it. If you are storing wine in a merchant’s
customer reserves, ensure these are
clearly identified, stored separately
from the company’s own stock and will
not be moved without your agreement.
Insurance
. Your wine should be
insured to at least to the value of
the original purchase price. Be clear
as to whether you will get a refund
from your merchant if a producer
fails to supply the wine as arranged.
Correct storage facilities
. Your
wine must be stored in a secure
warehouse with appropriate
temperature and humidity levels.
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Consequently, using the right bonded
warehouse and insurance providers
is of paramount importance.
RISK OF FRAUD AND
COUNTERFEIT WINES
The reason for the guidance
published by the Metropolitan Police
is that, unfortunately, as with many
investment sectors, there are rogue
wine traders who are intent on
conning people out of their money.
One such example is the case of Rudy
Kurniawan, who cheated collectors
out of millions of dollars selling fake
vintages and who was subsequently
jailed for 10 years in 2014 in the USA.
He was also ordered to pay $28.4
million in restitution to his victims,
and another $20 million as part of
a forfeiture agreement after mixing
old wine with newer vintages in his
kitchen before passing them off as
more expensive wines. In 2006 alone,
it is believed he manufactured up to
12,000 bottles of fake vintages. He is,
however, the first person ever to be
jailed for selling fake wines in the USA.
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One piece of advice from the police is
that, if you buy wine before it is bottled
and released to the market en primeur,
- it is especially important to deal with a
reputable company. Given en primeur
wine is usually delivered 2-3 years
after the vintage, it can be particularly
open to exploitation by fraudsters.
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In an effort to defeat the counterfeit
trade, a number of the most desirable
wine brands have taken measures such
as introducing the Prooftag system,
which has been adopted by some
producers, including all the wines of
Château Lafite-Rothschild (beginning
with the 2009 vintage), a technology
on all bottles that means they can be
traced and validated upon request.
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Other aids to assist are websites
such as Wineauthentication.com, a
website created by collector Russell
Frye that provides the latest news and
information that includes a section on
the most recent counterfeits reported.
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Nevertheless, with too many cowboys
offering wine investment services, the
Spectator recommends that it’s best
to do your own research and choose
an established merchant or broker. It
lists Berry Brothers & Rudd, Corney &
Barrow, Farr Vintners, Bordeaux Index
and Cult Wines as all being names that
have earned the trust of investors.
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SPECIALIST KNOWLEDGE,
EXPERTISE AND
MARKET ACCESS
This report and particularly this section,
reflects the statement of Peter Meltzer,
auction correspondent for Wine
Spectator magazine, that wine isn’t an
investment for the unprepared. “The
market is thinly traded compared with
stocks. Bottles need to be handled
carefully and stored properly to avoid
breakage or spoiling. Collectors who
aren’t familiar with vintages, varietals
and appellations could find themselves
saddled with a product that’s much
less desirable than they’d expected”
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.
Greg Davies, Head of Behavioural
Finance at Barclays Wealth and
Investment Management, says
potential investors need to look
beyond the headlines before diving
into investments of passion.
“People often think these types of
investments are more transparent
and less complicated than traditional
investments. In reality, they are
generally less regulated, and can
be illiquid, expensive to trade and
sometimes actually more difficult to
understand unless you have a high
level of expertise or inside knowledge,”
he says.
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Nevertheless, he feels that
fine wine can be one of the more
liquid and transparent investments
of passion. That statement is backed
up by Andrew della Casa, Director
of The Wine Investment Fund.
Liv-ex feels that investors should
approach fine wine investment
with their eyes wide open and do
their own research
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and this should
include using robust advice: a broker
or a fund manager should have a
strong trading history and expertise.
Investors are entitled to find out if the
business is profitable, well-established,
who the directors are and what
experience they have in fine wine.
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Such expertise is essential for buyers to
avoid over paying for or under selling
their wine, not diversifying their wine
portfolio sufficiently, under insuring, not
having sufficient proof of provenance
or choosing wines whose popularity
is waning, reducing liquidity. Working
with a trusted/experienced broker
can also provide access to markets
that small buyers would otherwise be
unaware of, and buying power (and
the associated discounts) that may not
otherwise be within the reach of small
investors making small purchases.
Finally, since there are significant
potential tax advantages to fine wine
investing, good tax advice is also a must.
“With too many cowboys offering wine investment services, it’s best to do your own research and
choose an established merchant or broker”
Christopher Silvester, The Spectator
