Wine Investment | Practicalities
PROVENANCE & CONDITION
In a growing global market place, these are important considerations to ensure your investment is safe guarded. Purchasing wines that are in pristine condition is essential, which makes provenance key. Goedhuis gives you that assurance. As we have some of the best relationships in the market, not only directly with the growers but also with trusted suppliers, we ensure that we are among the first to see the best offers coming to the market.
A wine stored under bond in pristine condition in its original packaging will command the full market price. Any of the following can reduce the price: duty paid status, damaged or poor condition labels, or US strip labels. Certain top producers are seeking to guarantee authenticity with various anti-fraud technologies such as Prooftag or eProvenance.
Correct storage of wines is paramount: wines stored in bond are not liable for duty and VAT and upon liquidation, in bond wines are preferred by buyers when taking provenance into account.
Investment grade wine should always be stored in professional storage, in a temperature-controlled bonded warehouse. At Goedhuis we are partnered with Private Reserves Ltd., an independent wine storage company set up in 1988 for the sole purpose of storing fine wines in the best and most secure conditions in the UK. Your wines are also insured to full market value. Storage charges are currently £13.50 per case 12 bottles per annum and £6.75 per six bottles. For more information please visit the Private Reserves website.
LEVEL OF INVESTMENT
As prices for the best wines rise, so too the cost of entry. Buy at the level of risk you are comfortable with as there are low, medium and high-risk strategies with wines. The wines that are of high enough quality to have investment potential, start at around £1,000 per case rising to more than £50,000 per case. As with any investment the key is to work with a sum you can afford. You can start with as little as £5,000 but serious investors can enter the market with £500k+ giving your portfolio flexibility with a balanced selection of wines, increasing the potential for better returns. It is always best to view your portfolio with a sum of money that can work for you, as like any investment wine can go down as well as up.
LENGTH OF INVESTMENT
Notwithstanding the underlying supply and demand driver, it is reasonable to expect fluctuations in market prices. For this reason, we would recommend a medium to long term hold period (eight to ten years plus), allowing time to ride out any potential downturns.
COST OF INVESTMENT
The only costs, other than the cost of the wine itself, are storage charges and commission on sale.
Private Reserves charge £13.50 per case of 12 bottles and £6.75 per six pack per annum, which includes insurance cover under Octavian’s All Risks Policy. In the rare event a case of wine is damaged or lost, it will be replaced. Where replacement is not possible you will receive full market value for the wine. For more information please visit the Private Reserves website.
Any wine bought for investment should be professionally stored under bond, meaning the duty and VAT is suspended and not paid on purchase or sale. Only if you take your wine out of ‘bond’ for delivery are you then subject to paying these taxes. According to HMRC, wine is considered a “wasting asset” as it has no useful life beyond 50 years and therefore any bought and accumulated by private individuals is not subject to Capital Gains Tax. (We recommend that prior to investing in wine you visit www.hmrc.gov.uk and/or speak to an Independent Financial Advisor)
You can view your reserves list on the Private Reserves website at any time, valuations based on the Liv-Ex Market Price (the lowest price of a wine listed by "tier 1" wine merchants and brokers, a group of around 50 top wine companies throughout Europe, including Goedhuis & Co, that actually hold and own stock) with tasting notes where available.
A more precise valuation can be requested from Goedhuis & Co at any time however, we recommend a biannual valuation. On occasion if there is demand for a wine in your portfolio, we will enquire whether you wish to sell. Throughout the course of your investment you are able to speak directly with your account manager.
Goedhuis have a dedicated broking team to help our clients maximize sales of their wines. The commission rate for sales is 10%.