One poor year isn't the end of wine investment
Despite the worst harvest in a generation, there's still lots of money to be made in this liquid investment, says Julian Knight
Saturday 09 November 2013
There is a global wine shortage according to analysts at Morgan Stanley, and 2013 has been as poor a harvest as in living memory.
It seems it is long time since the heyday for investors in this most liquid of assets.
Back in 2011, buoyed by huge interest in fine-wine investing in China and hot on the heels of two of the best vintages of the past century, prices surged. The release prices of the 2009 and 2010 vintages broke all records as growers restricted supply and cashed-in
Then the market went pop as interest cooled in the far east and the harvests and wine quality turned for the worse. Prices of key investment wines tumbled by around a quarter.
And the 2013 harvest, which was several weeks late due to inclement weather in the early summer, doesn't promise a respite. "This is likely to be one of the most-disappointing vintages of recent times.
Production is down in the main vineyards of Bordeaux due to hail in May, and although this will restrict availability, I still think that en primeur prices [when wine is sold in the barrel before it is bottled] will not be as keenly priced as they ought to be. This makes it a doubtful investment," said Nick Martin, founder of wine owners, fine wine investment managers.
However, all is not doom and gloom. Although prices of some more recent vintages may have some way still to fall, there are, according to industry experts, some vintages which represent better value.
"There are still opportunities to be found in those vintages that are drinking well at the moment, e.g. 1996 and 1998 in particular," Jon Barr, director of investment experts EFWines said. "Looking outside Bordeaux, we have found increased interest in champagne and Italian wines – it is no coincidence that the most sought after Italian wines (the 'super Tuscans') are based on the fabled Bordeaux-blend, i.e. Bordeaux style and quality at a lower price."
For those looking to invest in wine – and the long-term returns can compare favourably with shares and certainly savings accounts – the key it seems is to diversify and keep an eye on storage costs.
"Many start with a couple of thousand pounds, but to be diversified and be buying at a high enough level to potentially make a profit you need to be spending upwards of £5,000-£10,000," Mr Martin said.
"Just be aware that all wine needs to be held in a bonded warehouse or investors won't know its provenance.
"If you buy too many cases at 200 a case, then annual storage costs per annum will be £10 per case and £15 for delivery – over a five-year period a good £70 for one case.
"It's best to look at medium to higher-value cases so as not to see too much of the value of your investment swallowed up in such fees," he explained.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Mark Dampier: Don't panic. Canny investors sit tight when the stock market falls
Shareholders can hold a company to account
Derek Pain: Dividends ease the suffering in a moribund stock market
Questions of Cash: Payment woes with Barclays overshadow Cornish holiday
Bank-beating exchange rates on your international payments
- 1 Russell Brand says he will 'probably' give up acting to focus on his revolution
- 2 Watch what happened when food critics were unknowingly served McDonald's
- 3 David Beckham's Haig Club whisky is exactly what’s wrong with the Highlands
- 4 Queen's first tweet: Reply telling Her Majesty to 'f*** off' broadcast on BBC News
- 5 #AskNigelFarage: Twitter starts hilarious Q&A for Ukip leader
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Tony Blair 'says Ed Miliband will lose 2015 general election'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Putin: The US is to blame for almost all the world's major conflicts
Poppy Appeal 2014: This is why I won't be wearing a red poppy this year
iJobs Money & Business
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
Day In a Page
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village