I was reading in the press the other day about a company in London called Woolf Sung. They’re a wine merchant that specializes in, amongst other things, fine wine investment. Things have been going pretty for these guys, and fair play to them, and they’re now looking for money to expand their operation. Fair play to them, but it did raise the murky topic of investing in fine wine back into my head!
I work for a Bordeaux brokerage, so naturally the idea of the investment potential of the wines we sell is never far away. We source and sell wines from £10 a bottle to £5000 a bottle. Some of these are the most talked about and sought after wines in the world, and the prices people are willing to pay for them do sometimes go up. And there’s your return! Simple, right?
I’d always add the cautionary tale. Wine is what’s called an “illiquid investment in an alternative asset class.” What does that mean?
An illiquid investment is one where the market does not trade that often, and price information and discovery is not always easy. Problem is the only time you actually know the value of anything is when a trade happens. One person buys and one person sells, and that’s the current price of the asset. It doesn’t trade that often, and sometimes it’s not always what you want to hear!
This cautionary tale isn’t to put people off investing in wine. Do it right and the returns (tax free at that) can be very attractive. But don’t go into it blind. Ask advice from wine and investment professionals before you do it.
I’m actually both (I thank you!), and I will always be there to help track our clients’ portfolios for them. But I’m not going to stick it in small print, here it is in capitals: VALUE ON INVESTMENTS CAN GO DOWN AS WELL AS UP! This isn’t to put you off, this just to keep your eyes open!
At least with wine, if the price goes down, you can still crack open the bottle and enjoy the luscious liquid inside!
I work as the UK Director for 20h33, a specialist Bordeaux brokerage, have a look what we’re up to at www.20h33.co.uk