Wines are for drinking and, with care, investing
Grand cru wines are only really available for those with deep pockets but there are ways for more modest buyers to get returns over time
Investors keep an eye on the French CAC 40 index to see how the stock market is going... but many are now also keeping an eye on the WineDex100 index for prices of the top wines from Bordeaux, Burgundy and the Rhône.
The key aim with any cave is to buy wines that will mature and provide enjoyment for the future when the wine is ‘ready’. Investors see it the same way and wine helps them to have a diversified portfolio. If it can also be quaffed should times get harder then wine could fit the bill especially as prices for the top 100 grands crus have risen by 146% since 2009.
Companies such as Cavissima, Patriwine and U’Wine will recommend and buy wines and either deliver to the buyer or store it safely for both the wine and the investment to mature.
For anyone with a €10,000 to €50,000 budget they will create a personal ‘cave en ligne’ of wines to be kept for a minimum of 20 years to mature and then sell, drink or pass to family.
In theory, it should be sold at a profit but all markets have cycles, all sales need buyers and not all wines are in demand at any one time. It is an investment to be taken seriously.
Tales of returns of 8% a year and higher should be taken with a pinch of salt as storage, insurance and management fees eat into gains and even grand cru Bordeaux historically only increase by about 4% a year.
Investors should also remember the taxman. From this year capital gains tax can be levied at up to 36.2% (19% tax and 17.2% social charges) although a discount of 5% builds up after two years meaning by 22 years it is exempt of CGT.
As with any investment, the Autorité des Marchés Financiers (AMF) financial industry watchdog keeps an eye on the companies involved and any offering investment advice must be registered to operate legally.
The AMF site at abe-infoservice.fr specifically warns investors looking at wine placements and others to be vigilant, inform themselves on the company and read documentation closely.
It has a liste noire which can be checked at tinyurl.com/yayq4cyy – as the AMF’s role is wide this also includes companies investing in gold and diamonds, forestry and manuscripts. It sent out warnings last December to six wine investment companies to get in line.