Please Recommend me an experienced wine brokerage

Dear Community,

as my preview post on wine focus, I was thinking to get more information from the wine forum as well.

I’ve been building a portfolio in the last few years complete with South East Asia stocks (which has had ups and downs), CIS in Oil drilling (which has been pretty successful) and now that my annual royalties have kicked in I am looking to find something a little bit less rocky.

It has recently come to my attention that Wine Investment as not lost investor money ever and also been the overall best investment in the last 10 years. Is this correct?

Can anyone recommend a contact or as had a good experience with wine investment?

Thanks again
Mercy

I have never read any serious analysis who would suggest wine to be a good investment. Even if one chose only to buy first growth Bordeaux that Parker rated 95 or above in only the best vintages and on futures right after release, I expect one's return after possible first year run-ups could be matched or beaten by about any one of 10 different investment instruments, including bonds. Everybody has stories, me included, of wines bought whose prices have increased by multiples of 10, but those stories have to be put in the context of all the wines that have over 10 or 20 years really only beaten inflation by a few percentage points.

Just as a hypothetical. Imagine you bought a $20 bottle of wine. Increase its price by a very moderate 3% compound interest and add a way underestimated $1 a year storage cost and after 10 years the bottle would be worth something just under $40. That is what most of your investments would look like. You can do considerably better.

[David M. Bueker]

A friend of mine invested heavily in first growth Bordeaux in the 1995 vintage. He did it for the purposes of speculation and ended up pretty much just getting his initial money back.

As with Jonathan I don't think it is a good idea.

I hate to suggest that you ask this question elsewhere but you are likely to find more info on this type of question over on E-bob. As I understand it the real drawbacks are that there is really very few investment wines out there, the market is small and you may not be able to sell when you want/need, and that you can only sell through a few venues most of which charge you a fee to do so.

The wine market is now at an all time high (insofar as famous, expensive wines are concerned). So, yes, in the past 5 - 10 years they have increased in value quite a bit. But now? I mean, if you bought Microsoft early on, you did well. Now, the gains are likely to be quite modest comparatively.

I'm with Jonathan L and others. Certainly there are plenty of collectible wines that have skyrocketed in value. However, it's quite hard to tell in advance which ones those will be. Most 2005 Bordeaux have lately seemed to drop back to close to release prices. Sure if you bought Jayer Cros P. in 80s or 82 Mouton at release, you did great! But other wines- not so much. And as noted wine (to maintain value) needs more expense than something like stocks.

Even more importantly, as Paul points out, "past performance is not indicative of future results." There's a very real chance that one would be buying at the top of the market. I sadly know people who bought houses in late 2006 because of past value increases. Ouch!

If your interest is investment, there are wine funds, mostly based in London.

Mercedez
I've worked in and around the insurance industry in Uk for a good few years now. I can recall the bad old days where past performance was used as a surrogate for future potential.

Investments tend to be cyclical and if something has outperformed the market for the last 10 years (and with wine, it depends what wine you chose, something beyond some of the most scurrilous marketing material), then I'd suggest there to be a decent risk of one of the following:
- Others with better knowledge of the scene will already be mining this opportunity better than a newcomer can
- The investment has already made it's best returns, the clever ones have recognised it and moved out, leaving the latecomers to chase these historic returns.

If you like and enjoy wine, then why not take a small punt, knowing the worst case scenario is that you can 'waste' this asset over a lovely meal and in good company. If wine isn't your thing, then what makes you confident it will be you and not the experienced trader selling you the wine that will make the money out of the deal?

regards

Ian

I have been thinking this year of buying two cases of the Bordeaux I wish to keep. Specifically I have been thinking of doubling up on Pontet Canet and Lynch Bages from the 2009 en premiur campaign. Rather than make money per se, I would like to reduce the cost of the wine I wish to hold. If I had brought two of each of those names from the 2005 campaign and then sold one, my cost of the remaining case I wish to hold would be half the initial price. If I get it wrong, I can always drink my mistake which is more than I can say for some stock I have purchased over the years.

On a more serious note, I am guessing a good vintage such as 2009 coming off the reduced prices from 2008 may mean I can seriously reduce my holding cost. I am hoping putting up the 2009 prices by 50% or more in these time may prove difficult which means in a few years there may be some good profits off the 2009 vintage. I would be doing it however just to make a profit. One has to be prepared to consume one's mistakes.

An European perspective here. Except by buying, storing and selling in bond or by being ITB, I don't see how to avoid the VAT (Value Added Tax) trap on a wine investment. This means that the tax free price of the wine has to increase by the VAT rate (21% here in Belgium) plus auctioneers' commissions, excise, etc. before the investor beaks even.

Also if one is ITB or the tax man deems one's wine activity large enough to be equivalent to ITB, the profits are taxable.

Tim

Can you buy wine ITB in Belgium? One thing I have been thinking of doing this year is buying my 09 in Europe and storing in bond. We currently have an effective tax on wine of close to 40% in Australia!! I am guessing in the near future it will be halved as it is currently taxed on a value basis rather than volume. There is however a move to tax on a volume based. Hence if I buy in Europe and wait, I can save a serious amount of tax. If you can buy ITB in Belgium, are you able to post some reputable merchants. I have been following European prices on winesearcher and Belgium is nearly as cheap as France but more willing to trade in English, a problem the French have when dealing with international request.

Mark

Tim

Can you buy wine ITB in Belgium? One thing I have been thinking of doing this year is buying my 09 in Europe and storing in bond. We currently have an effective tax on wine of close to 40% in Australia!! I am guessing in the near future it will be halved as it is currently taxed on a value basis rather than volume. There is however a move to tax on a volume based. Hence if I buy in Europe and wait, I can save a serious amount of tax. If you can buy ITB in Belgium, are you able to post some reputable merchants. I have been following European prices on winesearcher and Belgium is nearly as cheap as France but more willing to trade in English, a problem the French have when dealing with international request.

Mark

Mark, I've never heard on anyone buying in bond in Belgium. It should be technically possible but I don't know if there exist proper wine storage facilities like London City Bond. My guess is that 99% of wine imported into Belgium is consumed locally or in the Netherlands so in bond facilities are unlikely to be much required. Some London auctioneers have recently been plundering the treasures in Belgian private cellars but in bond in Belgium is unlikely to be required for these. I'll make some enquiries.

One person I know who is stocking wine at home for investment also has a VAT number for an occasional wine business. I guess that he may use this to recover VAT on some of his wine investment.

I think that a Bordeaux merchant like Millésima might have in bond facilities and would certainly do business in English if you can put up with the high prices.

PS I have found this doing a Google http://collard.be/wp/english/

Tim

Thanks for that. It is most appreciated. The tax down here makes top wines prohibitively expensive. Eventually the situation must change hence it is better to buy in Europe and wait for a law change.

Mark