Market volatility, anxiety over sovereign debts and the new age of austerity have led many investors to seek out ‘investments of passion’ – assets that they can see, touch and enjoy, whilst also delivering impressive annual returns, averaging 10-15% for many investors over the years.
Getting involved in the fine wines market is by no means a new thing. Many years before fine wine really became global, buyers often bought more wine than they intended to drink, aiming to sell on the excess at a later date to fund their next purchase.
With investor confidence still in a parlous state, wealth levels continue to rebound and increasingly more people are developing a taste for fine wine collecting. Fine wines increase their value over the long term and wine as an alternative asset class has been gaining ground in recent years, having performed well in comparison to many other markets and even the UK housing market. It is often said that fine wine investments are the last to feel the impact of economic difficulties and the first to show any recovery.
When it comes to the finest wines there is no need to look any further than Bordeaux in South West France. Bordeaux is the planet’s largest source of fine wine and the wines produced in this region are considered by many wine connoisseurs to be the world’s greatest reds.
Poets, philosophers and princes have rhapsodised over the finest Bordeaux reds as the ‘nectar of the gods.’ Their appeal to the English became popular when Henry II acquired Aquitaine as part of Eleanor’s dowry. The love affair with Claret is as ardent today as it was in the 12th Century. Samuel Johnson once said: “he who aspires to be a serious drinker must drink claret.” This, too, applies to serious collectors. It is these top wines from Bordeaux that form the bedrock of a wine marketing opportunity portfolio.
Supply & Demand
History has shown that the finest wines have proved to be safe, long term investments over the past two decades or so and that’s why still today interest in collecting fine wines is constantly increasing. A traditionally low-risk market opportunity, fine wine is a tangible asset and a luxury product that one aspires to own, consume and find out more about. For many, owning wine is much more appealing than owning, for example, gold or diamonds- it often provides a higher return and is far easy to enjoy than other treasured assets. Supply of the most sought after wines is limited and therefore the supply of any particular vintage, say Chateau Margaux, will be steadily diminishing and in the case of some younger vintages is continually improving.
In recent years, an explosion of interest from Asian buyers has caused fine wine prices to rise fast and back in 2010 the price of some of Bordeaux finest reds, such as Châteaux Lafite, had risen twelvefold within in a decade, having achieved near-mythical status in China. Over the past 5 years alone, China’s levels of wine consumption has grown at a compound annual rate of 18% and it has also been predicted that the Russians will consume 5.53 million more cases in 2014 than they did in 2010 .
Demand for the finest wines has never been higher, but supplies are limited and not enough ‘blue chip’ wine is being produced to satisfy the growing international market. As bottles are uncorked and the wines drunk, they become even rarer still, leading to brand obsessed buyers chasing a rapidly decreasing supply of trophy wines.
At VCL Vintners we believe all fine wine should be treated like works of art and therefore all of our wines are transported by and stored at London City Bond’s Vinotheque warehouse in Burton-on-Trent. Established since 1870, LCB is a Revenue & Customs regulated bonded warehouse and has ideal conditions and climate for wine storage, ensuring that our clients wines are able to mature properly. Whilst there, your wines will be exempt from VAT and customs and excise duty and more importantly, unlike many other investment opportunities, fine wines are generally exempt from Capital Gains Tax as they are classed as ‘wasting assets’ – one whose predictable life, from the point of view of the person acquiring it, does not exceed 50 years.
VCL Vintners are not specialist in matters relating to tax. Therefore VCL Vintners recommend that anyone purchasing wines or spirits should seek their own independent professional advice on their particular tax situation and the application of such tax reliefs prior to their purchase.
At VCL Vintners we proudly take an active approach to research and analysis, offering a continually updated insight into the market and market forces. As a result we can regularly provide you with an up-date on market value and information on new wines set to surge, ensuring we are best placed to assist you to take advantage of opportunities when they arise.
Past performance of the wine market is no guide to its performance in the future. The price of wines can go down as well as up. Content and information about the wine market are designed for general use, and so cannot be considered personal to your circumstances or your financial position. This site does not offer advice. If you are unsure about any investment or financial decision, you should seek expert independent advice.