Investing in wine and whisky is popular with high net worth, but the barriers to entry are falling as more people seek tangible investments.
Over the last 15 years, wine has offered an average return of 13.6% which makes it one of the most interesting and secure alternative investments available. Of course, you still need to pick wisely with wines from Bordeaux, Burgoyne, California, Italy and Australia performing best.
Several companies offer advice, storage and even breakage insurance for your investment and generally, you need to look at three years or more to see a reasonable return.
The other benefit of investing in wine and whisky is that they are tangible, so you can always drink them if the return is not as expected as enjoy a fine vintage that you have nurtured over time.
The best advice to follow is to pick vintages that have performed well in the past. Wine investment is quite conservative and follows traditional known varietals. Though there's nothing to stop you from reaping greater rewards experimenting with new up and coming brands in the hope of higher returns.
A single vintage bottle of wine can sell from anything between £10,000 to £500,000. Many UHNW invest in wines so it is still relatively untouched by the general public which means it is more recession-resistant with lower volatility than stocks and shares. It is a well-known fact that more wine is consumed during a recession making it one of the safer alternative investments.
Wines that have done well in the past include Cabernet Sauvignon's like Screaming Eagle, Grand Cru wines like Lafite-Rothschild plus the well known Italian Barolo and Brunello wines. Dom Perignon is also a perennial top performer. If you're keen to see bigger returns look at wines from Argentina like Bodega Chacra and other less well known countries. And remember it's not about the price of the bottle but the percentage a vintage will go up. So a lower-priced vintage that is successful may go up 300%, you just need to buy more bottles to make a mint.
And there is no capital gains tax.
You can buy direct at auctions, but some platforms offer wine investment for those that don't want to store wines themselves such as Vinovest, Cult Wines, Rally Rd, Wine Investment, Berry Bros. & Rudd and Corney & Barrow. Check the cost of storage and the commission they charge as some will ask for as high as 10% of the eventual sale.
Lastly, it is easier to sell well known French wines, so keep that in mind. In the end, you'll always get some return on a bottle, even if it goes down a little. And if it goes up, well, then keep one bottle back to celebrate.