INTOXICATING POSSIBILITIES

UNDER-SUPPLY VERSUS THIRSTY DEMAND MEANS THAT A CONSIDERED INVESTMENT IN FINE WINE SHOULD PAY DIVIDENDS INVESTING IN WINE can be a smart move. With the right advice it’s possible to achieve the holy grail of a self-financing cellar or secure an investment that should deliver excellent returns. What’s more, wine is considered a perishable item (within 50 years) by the tax man, so is exempt from capital gains tax. And, in the highly improbable event that the bottom does fall out of the market, you can at least console yourself with the thought of some fine drinking through the lean times. The fine wine market looks set to remain bullish, driven by increasing global demand by the wealthy classes in places as diverse as China, Russia and Brazil, who continue to develop a taste for quality wines. With production of quality wines typically limited by strict laws, it’s a case of under-supply versus growing thirsty demand. And, of course, bottles are uncorked and drunk, meaning that the global stock of any given vintage from a great estate becomes increasingly rare. Unless you’re a serious wine buff, advice on what to buy is essential. The typical way of buying on an investment basis is “en primeur”, primarily centred on Bordeaux. This is a speculative futures market where wines are bought before they are bottled, at a price set by the producer against the perceived quality of the vintage. Having bought your wine, it’s then shipped 18 months later. You either pay duty (currently £15.49 a case) and VAT by taking delivery of the wines, or store them in a customs bonded warehouse and pay these taxes at some stage in the future – or avoid them altogether by selling on. The perishable nature of the goods means that provenance is important when it comes to resale value at auction or through a broker. It’s usual to store the wines either with the merchant you bought through or at an independent, specialist cellar. Charges are about £8 a year per 12-bottle case. Wine merchants mail out details of en primeur offers, so have yourself placed on the mailing lists. They’ll be able to advise on what will suit your budget. Auction houses, such as Sotheby’s (www.sotheby.co.uk) and Christie’s (www.christies.com), and wine brokers, such as the London-based Farr Vintners (www.farr-vintners.com), also offer free valuation services. Big names cost money but these are most likely to improve with long-term cellaring and give the best returns. To self-finance a cellar, buying two cases of a young wine (from the latest vintage released and often, if not yet bottled, bought en primeur) and then selling one on when mature to finance the next double purchase, will involve choosing wines you want to drink. But for the sake of a purely financial investment, it’s worth only cellaring highly sought after wines with a proven track record. The First Growth reds of Bordeaux (a handful of exalted Bordeaux names including Lafite, Cheval Blanc and Petrus), along with a few carefully chosen “super second” wines (red Bordeaux rated just below First Growth status, such as Cos d’Estournel and Ducru-Beaucaillou), are perfect for serious investment, along with certain Burgundy estates, vintage ports, the best sweet wines of Sauternes and a handful of top producers in the Rhône. Beyond this, the great German Rieslings, dry and sweet, the best wines from Piedmont and Tuscany in Italy, a few of Spain’s top-quality wines from Rioja, Ribera del Duero and Priorato, and the top, cultish Californian reds such as Harlan Estate or Australia’s Grange can also repay several years cellaring. If you’re thinking of taking the plunge, remember that wine producers are human and complaints about over-priced en primeur offers abound, especially following the greatest vintages in regions such as Bordeaux. If you can afford Le Pin or Cheval Blanc from the excellent 1995 vintage then fine. But you can also guarantee that another good but perhaps less-hyped vintage will be along soon and the wines, if initially more fairly priced, may also deliver good returns. As with any investment, wine is a gamble, but that’s half the fun. The other half is snaffling the odd bottle to see how that investment is coming along.

WINE DEALERS

UNITED KINGDOM ■ Berry Bros & Rudd: +44 (0)870 900 4300; www.bbr.com ■ Corney & Barrow: +44 (0)20 7265 2400; www.corneyandbarrow.com ■ Montrachet Fine Wine: +44 (0)20 7928 1990; www.montrachetwine.com DUBLIN ■ Mitchell & Son: +353 1 230 2301; www.mitchellandson.com PARIS ■ Lavinia (also Barcelona): +33 (0) 142 97 20 20; www.lavinia.com ■ Les Caves Taillevent: +33 (0) 145 61 14 09; www.taillevent.com CHICAGO ■ The Chicago Wine Company: +1 847 647 8789; www.tcwc.com COPENHAGEN ■ Kjaer & Sommerfeldt: +45 (0) 3393 3444; www.kogs.dk

VIEW FROM THE EXPERT

JOSS FOWLER, FINE WINE DEPARTMENT, BERRY BROS & RUDD ■ Wine is a good investment as part of a broader portfolio, but I’d never advise putting everything into wine. ■ Always begin with your own research into wines, vintages and merchants. ■ Always use a reputable merchant and compare prices. ■ The biggest price rises are generally focused on the top wines from top vintages and this means Bordeaux First Growths. ■ Don’t be blinded by figures of ludicrous returns from, say 1982 Cheval Blanc or Le Pin. A more realistic return of 10% (yearly gain) is more likely from good vintages of a more affordable wine such as Lynch-Bages.