Farr Vintners Wine Investment

Post on: 7 Июнь, 2015 No Comment

Introduction

The concept of wine as an investment has taken on a completely new meaning in recent years. Traditionally, wine investment was low-key — something that people merely dabbled in, buying a couple of cases of a wine and hoping to sell one to fund the drinking of the other.

Nowadays things are a little different. With the arrival of several new and important markets (China in particular), and regular coverage throughout the press, wine investment has to be taken a great deal more seriously, with cases of First Growths that once cost 1000 on release just a few years ago, now selling for considerably more.

Investment Policy

The fine wine industry is not regulated, and Farr Vintners is not a financial institution. As such, we do not give financial advice or any guarantees about the potential increase in a wines value.

Farr Vintners is one of the worlds leading wine merchants, and as such we are qualified to give information regarding vintages and wines, their quality and prevailing market conditions. This information is based upon our knowledge, acquired from over 30 years of trading, and our daily dealings in the global wine market. Using our knowledge of this market, we can provide valuations for wines and, in conjunction with past performance of wines, we can give you our informed opinion as to whether a wine may have the ability to accrue value.

Farr Vintners does not charge a management fee and there are no hidden fees involved. The only money that you will pay is your purchase price and any storage fees applicable (see below). When you come to sell your wines, you are not tied to selling through us, although we will make you as competitive an offer as possible.

Wines can go down, as well as up in value, and there are many things that can influence these price movements. We would urge you to read around the subject fully before making a decision, and our staff are available to answer any questions that you may have.

For specific financial advice, the tax implications or other financial element of wine investment, it is important to speak to an accredited financial advisor.

Key Points

Correct Wines

Always get advice on the specifics of the wine/vintage from an established merchant with a good reputation. Many wines that you may think will do well possibly have no history of having traded at a profit. Farr Vintners can provide you with information on previous performance, current market situations and vintage details. With 30 years in the trade and established as one of the largest fine wine merchants in the world, we are well placed to help you.

Provenance is King

Only buy wines in their original cases, in good condition and that have good provenance. Reputable merchants will be able to tell you about the provenance of specific wines. Farr Vintners will only recommend wines that have excellent provenance. We have strict buying and stock admission systems, ensuring all our wines meet these requirements.

In Bond

Make sure that you do not unnecessarily pay tax (duty and VAT) buy your wines under bond (ex-UK duty and VAT) and sell them under bond. A wines resale value is not increased if the tax has already been paid. As one of the largest fine wine wholesalers in the world, the vast majority of the cases that we offer are sold under bond.

Storage

Make sure that once paid for, the wine you have bought is stored in a professional storage facility and is registered in your name. Also make sure that the wine is insured. All of our wines, including wines held on behalf of our customers, are stored at Octavians underground storage facility in Wiltshire. Octavian, part of the CERT Group, is the UKs premier bonded wine warehousing company, offering ideal conditions for storage. We employ a team of 20 staff who control all wines bought and sold by Farr Vintners. Our current storage charge is a very competitive 9.00 per case (or part case) per year (or part year), plus VAT. This includes insurance at replacement value. As a customer, you are also able to view your portfolio via our website (including en primeur wines), along with purchase prices and current market values (where we have those wines for sale). A case refers to 9 litres of wine (so 12 bottles, 6 magnums, 24 halves).

Investment Term

Wine is a wasting asset, and therefore supply/demand economics suggest that the longer a wine is held, the more valuable it should become. We suggest that you should not purchase wines for investment unless you are prepared to wait for a minimum of 5 years. The market may well allow returns to be seen within 5 years, but a good rule-of-thumb is to have a minimum term of 5 years in your mind when venturing into wine investment.

Why Invest in Wine?

The Market

Currently, the fine wine market is witnessing unprecedented demand, driven mainly from relatively new markets becoming involved in drinking and investment, especially that of China (and Asia more generally). Recently, the correct wines that have proven track records in accruing value have performed, comparatively, very well against more traditional investments.

When its gone, its gone

Great wines have limited production a chateau cannot produce more of an older vintage, that is simply not possible. Therefore if a wine is traded and consumed over several years, yet demand remains constant or grows, the net result is that the price should rise. Scarcity is a key factor affecting price.

Physically Available

Fine wine is unlike a stock or share there is a tangible asset that sits in a warehouse, legally in your name.

The In Bond Element

The fact that currently, fine wine can be bought and sold exclusive of UK duty and VAT, is an attractive element to any potential investor. Add to this the fact that wine is classed as a wasting asset when it comes to Capital Gains tax, and the advantages over other more traditional investments become clearer. For clarity on all tax related matters, we would strongly advise speaking to a financial advisor, as Farr Vintners is not a financial institution and therefore cannot give financial advice.

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What are the risks of investing in wine?

Investment Term

Despite a recent trend (thanks to the volume of demand from Asia) for some wines to accrue value quickly, one should be realistic about wine as an investment. A realistic minimum term of 5 years should be observed, and because wine is a finite product, the longer one leaves it, the more (potentially) the return could be.

Lack of Regulation

The fine wine market is not regulated, and because of this, there are many potential pitfalls, mainly stemming from bad advice and incorrect pricing. These problems are counterbalanced if you take advice from established merchants and do your research.

The Nature of Investment

Any investment has the potential to lose money as well as make money. Fine wine is no different, and despite the fine wine market being relatively well insulated from the macro economy compared to other investments, the possibility of losing money is a real one and should not be ignored.

What is my next step?

If you have read the information on this page and you would like to find out more, wed encourage you to contact us here at Farr Vintners. As one of the worlds leading fine wine wholesalers, we are renowned for being very competitive on pricing, as well as being experts in our field. Whilst we appreciate that there are other options out there, we believe that we offer an unrivalled service when it comes to buying, selling and managing fine wine.

Please contact us for further information

Telephone — +44 (0) 20 7821 2000