Investing in wine – it’s a vintage risk

by , Money Editor Money 23 April 2012
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While Brits love to glug vino, many are being tempted to bank on the red stuff for a better return on their money. But beware, this alternative investment could leave you reaching for the bottle in despair.

Wine pouring

There’s no doubt about it, British people like a drink. In 2008, Britons drank 813 million bottles of wine – that’s over 13 bottles per person. But what about investing in them, rather than drinking them?

Looking for a decent return on your money has been a struggle for millions of consumers over the past five years. As savings rates have dwindled, stock markets have flatlined.

In the search for a boost to your earnings, you might be tempted to look for something a bit quirkier to bag a windfall. And wine has proved to withstand the financial crisis with aplomb.

Why invest in wine?

According to the Liv-ex Fine Wine Index (which measures the value of the top 100 most sought after fine wines), top chateaus like Latour, Lafite Rothschild and Haut Brion gave a return of 115% between 2006 and 2011. In contrast, the FTSE 100 stock market index has lost 16% over the same period.

However, the BBC recently reported that people investing in wine had lost as much as £100m in bust wine investment companies.

Tempted by the phenomenal increase in value of the most expensive wines in the world, not to mention record sales of individual bottles – the 1811 Chateau d’Yquem sold for £75,000 in Christies last year – investors have been pouring their money into wine.

But an insolvency practitioner who spoke to the BBC stated that she had seen more than 50 wine firms collapse in the last four years alone.

Are there legitimate ways to invest in wine?

There are, of course, reputable companies that allow you to invest in wine. Some of these have a long history as vintners and also have strict policies in place to make sure your money is invested in the actual bottles of wine, meaning that they’ll remain yours even if a company goes to the wall.

But it is still a risky way to invest. You’re afforded no protection under the Financial Services Authority’s regulations, meaning that you can’t claim on the UK’s compensation scheme. And because wine firms are unregulated, they aren’t strictly monitored to insure that they’re appropriately looking after your money.

In this low-interest environment, have you been tempted to look into wine investments, or other alternatives, to get a better return? And have you ever had your fingers burned by an oaky bottle of red?

Would you invest in wine?

No - the risks and lack of protection put me off (80%, 140 Votes)

Maybe - only if it was with a reputable firm I could trust (15%, 27 Votes)

Yes - the potential returns are too tempting to miss (5%, 9 Votes)

Total Voters: 176

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6 comments

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Phil

Some friends of mine got caught in one of these scams some years ago. Having bought the wine you can’t just take it home and stash it in the cupboard under the stairs, oh no, it has to kept in carefully controlled conditions in a secure storage facility for which of course there’s an annual fee. Apart from the fact that even the experts can’t predict which wines will become “classics” and thus demand high prices 10 or 20 years down the line the storage costs soon outran any potential profit.

I suppose they did have the pleasure of drinking it in the end but I am surprised to see it still happening.

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pizzamaster1

I don` t know if is anybody aut there, that could adwise me in regard of selling about 25 bottle of Italian and French vintage wines from 1967,to1981.The wine has been collect ower the years,by myself,and as i have been stopped to drink (blood pression)i thought,that maeby there is sombody aut there that wuold like to have a plesure of a good bottle of wine,as it wuold be a sacriledge if the same wuold be drank,from a profane with aut to any knowdlege of it……..Anybody?

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Sophie Gilbert

You only live once, you can’t take it with you, carpe diem and all that sort of thing. Buy good wine if you can afford it and enjoy it here and now. Here’s to living, cheers!

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richard

My brother tried this – but enjoyed the good wines far too much to store them for any length of time – I’m almost the same – I LOVE £100 plus a bottle 12 star brandies – I buy one then succumb to temptation almost instantly and drink it with friends.

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Simon

Wine can be a good and tax efficient way of investing subject to two important considerations
1. Only buy through an established and reputable wine merchant, who can give much better advice than some of these so called wine investment companies
2. Look upon it as a medium to long term investment, not as a way of making a quick profit.

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loskie

I have purchased a few individual bottles of small limited release whiskies. Some of these seem to be good investment although i have not sold any yet. One Ardbeg bought at the distillery in 2002 for £79 recently sold at Auction for £400 and we have a few more similar. A nice thing to collect and the investment side is only a bonus to me not counted on.

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