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WINE


Critics of wine investment claim turning your investment into cash with this kind of asset is a very slow process


every vintage is different. The 2005 vintage in Bordeaux is highly rated while 2006 is generally pretty duff. A good starting point for your research is a fine wine magazine, such as Decanter. You can also find lots of information free on the Liv-ex blog, as well as fine wine merchants’ blogs like Berry Bros & Rudd, and Bordeaux Index. It’s also important to know who ex-lawyer Robert Parker is, if you are considering investing in wine. The American scores the wines of each château in Bordeaux out of 100, and it is one of the most important factors determining selling price. Alternatively, you could save yourself the


hassle of studying the fine wine market and let someone else do the hard work for you. Unfortunately, the image of wine funds has been tarnished by a number of scams as the sector is, as yet, unregulated. Andrew Davison of The Vintage Wine


Fund admits there are “plenty of cowboys – some have been suspended, others continue to bring bad press to our sector”. However, there are a number of highly professional companies, including The Vintage Wine Fund, Wine Asset Managers and The Wine Investment Fund, whose directors have been authorised by the UK Financial Services


Need to know


THE FINE wine market, like the stock market, has its own jargon. What does it all mean?


EN PRIMEUR Wine sold as futures before being bottled. Up to two years later the wine is shipped to the customer or to a warehouse for storage. By paying for the wine upfront, it secures sought-after vintages and it is often – though not always – cheaper than buying it when ready.


IN BOND Fine wines are often sold on an ‘in bond’ basis. This means the quoted price does not include duty or VAT. Duty on a case of wine in the UK is currently £21.72 per twelve-bottle case.


ROBERT PARKER A former lawyer from Baltimore, and now one of the world’s most influential wine critics. His tasting notes and scores out of 100 have had a significant effect on market demand and prices of wine, particularly from Bordeaux.


SUPER SECONDS The best-performing wines ranked as second growths in the 1855 classification of Bordeaux’s left bank.


50 businesslife.co October/November 2011


Authority. The average annual returns of The Wine Investment Fund after all charges since 2003 stands at 14.5 per cent. All wine funds charge management fees


of between 1.5 and 2.5 per cent a year for their services, including storage costs and insurance, which individual investors must cover at about £15 per case per year. There’s also a performance fee when you exit funds, generally after a period of three to five years. Most deduct 20 per cent from the net asset value of the fund before you get your share of the pie, while DIY wine investors can expect to pay a minimum 10 per cent commission to a merchant or as much as 20 per cent to an auction house when the time comes to sell personal stocks. Critics of wine investment claim turning


your investment into cash with this kind of asset is a very slow process. However, this depends on the wine you purchase and the state of the market when you come to sell. As Andrew Main points out: “Liquidity normally always remains in the top châteaux. As with property, location is very important. However at different times various names and years will go in and out of fashion.” Like any asset class, it helps to know what you’re doing when


investing in fine wine. Buy the right thing at the right price and the right time, and there are impressive returns to be made. However, like stocks and shares, it’s a calculated gamble. The Chinese wine bubble could burst, though it shows no signs of slowing yet, pushing fine wines ever higher. Nevertheless, if Bordeaux did a Lehman Brothers, at least you’d have a fine time drowning your sorrows. l


REBECCA GIBB was the Louis Roederer Emerging Wine Writer of 2010


Expert tips


l Shop around and buy from a reputable merchant l Ensure your wines are stored in a temperature-controlled warehouse and in your name, to protect your investment if the company goes out of business. You should also get your investment insured l Opt for 75cl bottles in a six-or 12-bottle case rather than magnums or half bottles


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