Have you thought of investing in wines?

Wine merchants such as Bibendum, Farr Vintners, Justerini & Brooks and Berry Bros & Rudd have connoisseurs touring vineyards to seek out potential future winners. They often buy the wine before it is even bottled – known as ‘En Primeur’ – at least a couple of years before it hits shop shelves.   After buying wine on your behalf they typically take a 10 per cent commission when you sell. Investment wine is usually ‘bonded’ and stored in a special warehouse where there is no VAT or duty to be paid (in UK).

A wine index has been launched to help customers enjoy a wider range of great tasting investments - including champagne. The Liv-ex Fine Wine 1000 Index – following a thousand top tipples from around the world – was launched last month. It calculates that over the past five years total returns have been 37 per cent. More traditional wines have risen 24 per cent.  The snob appeal of luxury brands means someone will always want to impress with a bottle of Lafite. But prices of Premier Crus have been pushed up to such a high level by international demand, including new Chinese consumers, that investors are now looking at other markets.

These are some of the wines that have achieved record prices:

- 1978 Romanee-Conti. Case of 12 bottles of this pinot noir Burgundy,  sold for £286,000 at a Christie’s auction in Hong Kong in November 2013. 

- 1869 Château Lafite-Rothschild. Three bottles of 1869 Lafite sold at Sotheby’s for £146,232 each in 2010. Rothschild bought the château in 1868.

- 1787 Château Lafite. A bottle of Bordeaux sold for £105,000 in 1985. Reportedly belonged to third president of the United States Thomas Jefferson. 

- 1945 Château Mouton-Rothschild. Claret given 100 marks by critic Robert Parker. Six-magnum case sold for £182,700 at Christie’s in 2006.

 

In the UK, It typically costs £15 a year to have 12 bottles bonded in a temperature-controlled warehouse, which includes insurance. Most wines are stored for at least ten years. Wine is seen as a ‘wasting asset’ by Revenue & Customs and escapes capital gains tax.

It’s best to leave it to the experts when investing. One investor says: ‘I am no connoisseur, but I enjoy a good wine, and this makes it more interesting as an investment. What also appeals is that it is a finite commodity – as once drunk a bottle cannot be replaced. It makes a great wine even more rare and therefore attractive as a valuable investment.’

Minimum investment for The Wine Investment Fund ( an unregulated collective investment scheme where investors pool their money to buy Bordeaux wines.) is £10,000. There is an initial charge of 5 per cent plus a 1.5 per cent annual management fee. Since its launch in early 2004 the fund has turned £10,000 into £23,300 – more than doubling returns over a decade – with annualised returns of 8.9 per cent to the end of last year.

Wine investments need to be treated with caution. As it’s an unregulated market.