by John Stimpfig

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Do's

Don'ts

However, the market could still be in for a bumpy ride, given the uncertainties of the broader economic landscape. Moreover, the fine wine market's position is unlikely to be eased by next year’s (2009) Bordeaux en primeur campaign which is could be yet another very tough sell for all concerned.

Top Ten Investment Tips

1. Only buy your wines from reputable, well established merchants or suppliers. This particularly applies to en primeur purchases. A small number of merchants have gone bust, leaving consumers unable to get their money back or receive their wine.

2. If you are buying wine from a wine investment company, do not pay an up front commission fee. Some specialist investment companies have been known to charge 25%. Similarly, do not deal with anyone who uses cold calling or strong arm sales tactics. Do not deal with anyone who operates via a PO Box. Be wary of anyone whose prices are too low or too high.

3. Keep your wines in a professionally managed bonded warehouse. This can be done independently through your own account or through your merchant and will ensure that your wines are kept in good condition, which is vital for their resale value. It also means you will avoid paying VAT and Duty when you re-sell your wine. However, do compare storage facilities and prices as they can vary quite significantly.

4. If you are dealing with a wine fund or specialist wine investment company, look at their track record. How have their funds or porftolios performed historically. Also check what charges and commissions are involved.

5. If you are buying independently for a capital return, stick to investment grade, red Bordeaux from the best vintages. Bordeaux makes up over 90% of the wine investment market. Bear in mind that generally, the back vintages offer greater investment potential than more recent vintages. (See Top Ten Investment Brands below.)

6. When you are buying wine for investment (or drinking), always compare prices and shop around. A good way to do this is on www.winesearcher.com

7. Rather than buy a large number of inexpensive cases, it makes more sense to buy a small number of high value wines. Otherwise, annual storage charges will significantly reduce your profits.

8. Generally, wine does not attract capital gains tax as it is considered a wasting asset by the revenue.

9. If you are buying wine, do not invest more than you can afford to lose. Wine has proved to be a resilient asset class over the long term, but recent events have shown that wine prices do go down as well as up. Wine should only represent a small part of your overall investment portfolio.

10. Champagne has provided some very good returns to investors over the last two or three years. At times it has even outperformed top class claret. However, only stick to the top prestige cuvees such as Krug Vintage, Roederer’s Cristal and Dom Perignon. Also bear in mind that some consider Champagne to be a more risky investment compared to red Bordeaux.

The Top Ten Investment Brands

Which wines should you be focusing on for your investment portfolio? One simple and effective way of looking at this question is to consider which wines were most traded in 2008 on the Liv-ex Fine Wine Exchange. This global on-line exchange comprises more than 200 wine trade members and is a invaluable barometer of brand as well as demand and prices. So who were the most sought after labels last year?

As ever, Brand Bordeaux came top of the pile. And as ever, the usual First Growth suspects led the field, with all five Premier Crus coming top of the pile, just as they did in 1855. In 2008 though, Lafite was the leading performer in terms of trade by value. It accounted for an astonishing 17% of all trades on the exchange, five per cent ahead of its nearest rival, Chateau Latour. Moreover, when you factor in that its second wine, Carruades de Lafite, that total rises to more than one fifth.

Underlining Bordeaux’s strength in depth is the fact that it takes nine of the top ten places in the Liv-ex League table, with only Burgundy’s Domaine de la Romanee-Conti sneaking in at number 10.

The top ten traded wines (by value) on the Liv-ex Exchange in 2008

Chateau Lafite-Rothschild

Chateau Latour

Chateau Margaux

Chateau Mouton Rothschild

Chateau Haut-Brion

Carruades de Lafite

Chateau Petrus

Chateau Cheval Blanc

Chateau La Missin Haut-Brion

Domaine de la Romanee-Conti

2005 First Growth Price falls from July to November

Case prices in sterling taken from Liv-ex in December 2008

Swipe to scroll horizontally
ChateauJulyNovember
Ausone2400019500
Cheval Blanc77006,200
Haut-Brion77755650
Lafite85006750
Latour9950750
Mouton56504595
Petrus3600028343

10 great investment wines (including their investment peaks in June 2008

(prices in sterling)

Swipe to scroll horizontally
LabelVintageNov 06June 08Nov 08
Latour1996390059505500
Lafleur1982225002490027500
Mission Haut Brion1982640078006660
Lafite1986502585007800
Lafite1996420074006000
Ausone200098001827015500
Latour198297001450013500
Lafite1995232039003650
Lafleur19901050013,59611,500
Margaux1996364552504794
Margaux1986347940003966

Figures supplied by liv-ex.com

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On other pages:

Part 2:

Why invest in wine?

What are the potential disadvantages of investing in wine?

What is an investment wine?

Which properties and regions to consider

Which vintages?

How much do I need to invest?

Do’s

Don’ts

En primeur vs older vintages

Tricks of the Trade

Where to buy?

Where to sell?

How do I value my cellar

10 great investment wines (and 10 not-so-good)

Contacts

Useful websites

Glossary

Part 3:

Investing in the Rhone (fully updated January 2009)

Part 4:

Wine Investment Archive: 2006-2007

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Decanter Staff
Decanter Staff
Decanter Team

Content written and compiled by the Decanter Team