We know that investing in fine wine can be a lucrative affair because collecting fine wine for enjoyment and investing is precisely why the ideal wine company was created. We have been helping our collectors invest and sell wine for many years.
USING FINE WINE TO INCREASE YOUR INVESTMENT PORTFOLIO
Having a significant wine collection can be a very smart choice for an investment, and a wine collector in the US discovered just how wise that decision was when they secured a £100,000 loan against a portion of their fine wine collection.
This reportedly included a case of Romanee Conti 1990 (approx £16,000 per bottle) and Petrus 1982 valued at £42,000 at the time, and the wines were kept at their bonded warehouse, as is the case with the majority of fine wine collections.
WHY STORE WINE AT A BONDED WAREHOUSE?
Storing wine of investment calibre is incredibly important, not just for security but also for the environment the wine is stored in. There is another reason to store wine in a bonded warehouse, and that is because it is tax efficient.
Unless the wine physically leaves the storage facility, it will not be taxed. Therefore, wine can be purchased, stored, and traded without ever leaving the warehouse and without tax being due.
A ‘bonded’ warehouse enjoys the privileges set by the HM Revenue and Customs, enabling wine collectors and investors to store their fine wine under ‘bond’, which defers the payment of excise duty and VAT until removed by someone.
Withing wine collection and investment, the wine stock itself does not tend to move; it simply changes ownership, making it an even more stable investment for those looking to diversify their portfolio.
The ownership was moved to Suros Capital but not the physical product. So the collector retained their investment but was able to release some of the capital to make further investments and increase their wine collection portfolio.
THE FINE WINE MARKET IS INCREDIBLY ROBUST
Where other stocks rise and fall, the fine wine market is generally far more stable. The 2021 Knight Frank records 13% average one-year growth in fine wine and 127% across ten years. Wine trading reportedly reached record levels in 2020, with Liv-ex 100 reaching its highest level since 2011 in January 2021.
The Knight Frank luxury investment report shows the key drivers in 2020 were rare older vintages such as the Super Tuscans averaging an 18% uplift and champagne up 14%. While the classics of Burgandy and Bordeaux saw increases of 11.5% and 5.8%, respectively.
There has never been a better time to start collecting wine as an investment and use this luxury market to diversify your investment portfolio.