There are many factors that ensure the selection of wine for investment fits the needs of the individual buyer. It is important to make sure the wine purchase meets the investor’s goals in terms of price, turnaround time and finances. For someone who is purchasing wine as an investment for the first time, one of the big questions is how much to buy. Is it important to buy an entire case, or will only a few bottles suffice? Should they be from the same select vintage or is it better to go with a wider variety? While buyers may have different reasons and criteria for investment, there are some basic points to consider.
Wine in Demand
A reputable wine estate is a good place to start, and the safest choice is a wine that will be in demand at resale. Prestige wines, such as Grand Cru Burgundy or fine Bordeaux, fit that bill well. They are usually sold in wooden cases of six bottles each. With these wines, it is best to buy the whole case. Assuming that the starting prices for these bottles of wine could be around £400, entering the market with a case or two could set a buyer back somewhere around £3,000 – £8,000 not taking into account commissions or storage fees.
Buying Through a Wine Auction Site
Some wine exchanges insist on orders of complete cases, but auction sites are a bit more lenient in that sense. They offer sets of three, which allows buyers to order three bottles, six bottles or twelve. Buying multiple bottles gives the investor a chance to start a collection of verticals of individual wines.
There is one more choice, which is to buy thirteen bottles. This means twelve can be stored as an investment and with one left to give as a gift or to open at home.
In terms of alternative investments for 2014, fine wine from Bordeaux, France can be a safe bet. Tried and true, it continues to represent a stable investment that will bring steady profits to the savvy investor. Don’t get me wrong—I do not mean to say that every wine investment is advisable or can be considered safe and risk-free. There are a few crucial points to keep in mind when stepping outside the traditional stock markets or conservative financial investments. They are very simple, but worth remembering.
- Think for the long term. Every fine wine has an ideal storage time, where it sits to mature and develop the most desirable characteristics. Don’t rush it! Understand the shelf life of each wine that you buy for investment purposes and store it according to its own specifications. Wait until it has reached its peak to sell for top dollar.
- For solid investments with the least risk, buy the finest vintages from the most respected châteaux in Bordeaux. This limits your search to a few dozen châteaux and makes the wine selection process much easier. While some wines will increase in profit more than others, it would be hard to go wrong with stock from one of the well-established estates.
- Keep your wine investment tax free by following the specific criteria for wasting assets. It not only needs to have a shelf life of less than 50 years, but there are other rules concerning limited partnerships. Here you should check with tax authorities or use the services of an experienced broker.
- After you buy it, keep it safe! To maintain its value while it is aging, wine needs to be kept under carefully monitored conditions. When the time is ripe for you to sell your stock, your storage records will be very important, so this is not a place where you should skimp. Make sure that your investment is stored in a bonded warehouse with insurance coverage at replacement value to cover any possible damage or theft.
These four steps are only the beginning, but using them as a guideline to safe investing will help you limit risk while increasing profits on your investment.