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10 Golden Rules of Wine Investment

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Written by:
Ed Wells
Published:
07 Jul 2017
10 Golden Rules of Wine Investment
Chateau Cos d'Estournel
With the Bordeaux En Primeur market about to flex its muscles again in April and a growing number of poorly remunerated investors looking for alternative markets it's worth considering some pros and cons of the fine wine investment market with these easy to follow guidelines for beginners.

Wine Investment 

10 Point Guide
By Ed Wells

1 .Don’t confuse collecting with investing.
If you are looking to build a portfolio for investment the specific style/flavour profile of the wine is unimportant. Put simply you may dislike Aussie reds but if you are offered some 1st release Penfolds Grange from a strong vintage you would be wise to take it. So leave you prejudices at the (cellar) door and stick to facts.

2. Buy Less not More.
Storage fees (fixed) withstanding, the better performing (blue-chip) do not come cheap. Although there are examples of cheaper wines escalating in value a lot of frogs need to be kissed to find a prince. It’s better to head to the Prince Party to begin with! The wines which tripled and quadrupled in the noughties were mainly considered very expensive at their point of release.

3. Cultivate a relationship with a small number of trusted sources.
Even with a war-chest of £2k per month (£24k pa) you remain relatively small-fry in the big league of wine investing. A strong relationship with 2 or 3 providers may elevate you to a stronger position. Equally they should be prepared to comment on purchases/offers from elsewhere, as long as you okay this in advance. Do not use companies without a strong trading history – no matter how robust or convincing they appear. I cannot emphasise this enough – the industry is largely unregulated littered with rogues.

4. En Primeur remains a strong option
Though not as strong as it was it still offers good benefits. However, don’t lose track that it is ONLY worth purchasing En Primeur if you are either able to either get in at a discounted rate (aka Release or 2nd Tranche Price) or you are obtaining access to wines you won’t be able to obtain later on. Ideally both.

5. Consider older wines (with caution).
Without doubt older wines can offer good investment potential. However, consider their provenance and condition. Equally has duty & VAT already been paid? If you can snap them up by being in a strong financial position is it worth flipping them? How much longer will they remain desirable? Watch out for fakes!

6. Diversify…a little.
Diversification is on occasion cited as a strong investment tactic. It is certainly a cautious one. It is worth remembering that wine is a small market and a conservative one at that. The best investment wines are top Bordeaux and have been for decades. However, there are gems to be found a number of significant areas: Burgundy, Rhone, Tuscany, Piedmont, California. Probably worth avoiding those ten cases of Bulgarian Tempranillo because of its ‘emerging markets’ status.

7. Always manage your own storage – under bond.
Unless you have decided to use only 1 company, such as BBR, Farr or F&R it is wiser to manage and organise your own UB storage through a single trusted provider. This means you can easily and quickly move products and you are not at risk of 3rd party failure. NB, make sure the bond company are also solvent and robust. Make sure these wines are valued (accurately) and insured.

8. Do follow Robert Parker. Points mean prizes!
Wine is unique in having one all-powerful critic still influencing the market more than any others combined. If you don’t believe this, go find a cheap Parker Wine with a high score. Others are influential, but usually less so.

9. Selling price isn’t buying price.
If the market is selling a wine at around £1000 per case IB it is likely that you will offered £800-£850 if you wish to sell. Most of your purchases will have to weather a period when you are ‘catching up’ with the market. Be prepared to play the long game.

10. Enjoy.
Hopefully you are involved in wine investing because you can afford it and it is an attractive alternative to traditional investments. Stick to the rules outlined above and you will not regret your venture in to “liquid assets”.
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