Not all wines are created equal. There are some excellent vintages that seem heavenly, and there are others that you might be embarrassed to put on your dinner table. And there are many varieties in between. Unless you are well versed in the aromas and fragrances expected from each fine wine, it can be quite complicated to narrow down your selection. If you are buying for investment rather than for your own table, it can be even riskier. Besides wine merchants to help you make that choice, you can also take a look at the winners of important wine competitions.
International Wine Competitions
A wine competition is a great way to become acquainted with new wines and to see how the experts rate them. Some of the large wine competitions insist on blind tasting, where the name of the wine and the location of its production is withheld. Others wine tastings might give the panel of judges a clue about the region or origins of the wine they are critiquing.
Choosing a Winner
Whatever the protocol, pay close attention to the winners of the competition. At the end of the day, when the tasting is finished and the votes are tallied, you will know which wines were deemed as excellent choices by the professionals in the wine industry. By looking at the lists and scores, you will be privy to not only their favorite wine choices, but also the winery that produced them. If you are in the market to make a purchase, you should feel confident in choosing any one of the medal winning wines.
From a different angle, if you happen to own a few cases of wine that the critics positively reviewed, or was deemed worthy of a medal, you can expect peeked interest in your stock. Sell now for a nice profit on your investment or wait until demand outweighs available stock.
As was recently revealed by a BWC Management and Consulting publication, fine wine investment has been rising in Asia by 40%, compared to only 10% in the rest of the world. Even though there was great expectation for an increase in China’s involvement in the international wine market, these new figures wildly exceeded previous estimates. It all began back in 2009 when the Chinese arranged some highly profitable Sotheby’s auctions that were held in Hong Kong. In accordance with predictions made at that time, China has emerged as an international leader in the fine wine trading. In a few short years the Chinese market has moved up to number five on the global list of wine consumption and imports more wine from Bordeaux than its UK and German counterparts.
Wine Consumption Versus Investment
In those earlier years, wine purchased by the Chinese was predominantly for drinking pleasure. Although that trend has also increased, savvy Asian investors quickly understood the value of safely investing in fine wine. It may have been spurred on by the sale of a litre of Chateau Petrus that brought in £58,000 at the Hong Kong auction, but for whatever reason, the tendency of wealthy Chinese businessmen to safeguard their money by investing in fine wine is now well known. As a matter of fact, they not only invest in wine to versify their financial portfolios, but they also buy it as impressive gifts to give to their appreciative friends. This expensive habit was the focus of an article that came out in an annual report regarding the richest individuals in China. The Chinese Millionaire Wealth Report stated that not only do the Chinese buy the world’s finest vintage for personal pleasure or for investment, but also to gift to their friends.
Low Risk Investment in Fine Wine
The Senior Private Client Portfolio Manager of BWC Management & Consulting, Samuel Cheung is not surprised. According to him, the Chinese simply realised that investment in stocks and shares can be very unstable so they’re taking advantage of the low risk nature of wine investment.
The nature of the tax structure is a huge incentive when investing in fine wine and is one of the reasons that those investments are continually on the rise. According to “Liquid Assets,” published in the NewStatesman, a solid wine investment offers an affordable entry point, which of course is different for every investor. It should also represent sustainable growth in every aspect of the transaction, which includes the retail market, wine consumption and going to auction, which is extremely desirable in the wine market. Additionally, the wine investment should provide a straightforward but flexible and optimised exit plan. With all of these criteria fulfilled, the investor can expect profits exceeding the averages and possibly going way beyond.
Protecting Your Wine Investment
Wine merchants and brokers emphasize that once the wine is purchased it must be stored in bonded warehouses that are regulated by the government. When this is done, the wine will maintain its provenance and meet the qualifications for a purchases that is free of VAT and duties. Besides the monetary value, the specialised wine storage facilities also have the optimum temperature and environment for storing wine until it achieves the ideal maturity and is ready for market.
Wine as a Tax Free Wasting Asset
When the wine is ready, it can be sold according to HMRC’s wasting assets, which will be largely without payment of capital gains taxes. This can be read on Tax Bulletin 42 entitled “Wine and Spirits: The Capital Gains Tax Treatment.” According to the bulletin, a wasting asset is considered to be one with a predictable life span, referring to the time of purchase, of not more than 50 years. If the investor does want to sell a bottle of wine following the 50-year cutoff, it may still be considered tax free if the selling price for the bottle does not exceed £6,000.
So whether you’re a wine connoisseur or a savvy investor, there are great profits to be realised in wine investment.