Wine tends to be a good investment choice, as it’s a tangible asset that’s been proven to provide a good return even during periods of instability.
In this post we’ll provide some key things to consider if you want to start wine collecting for investment. Please note that these are only intended to be general guidelines, and they do not constitute financial or investment advice.
Though one area where we can provide expert advice is in regard to getting the right insurance cover for your wine collection. We specialise in helping people protect the items which are valuable to them, whether that’s through a standard home insurance policy or a specialist high net worth insurance policy.
For more information, call us on 0208 290 9086, or email personal@anthonyjones.com.
Do You Have to Pay Capital Gains Tax on Profits from Wine Investments?
HMRC classes wine as a “wasting asset”, which means they class it as a commodity with a limited lifespan. Because of this, you may be exempt from paying capital gains tax on any profits you make from your wine collection. However, this exemption may not apply to fortified or distilled wines, such as port or brandy, or to spirits such as whisky.
How Does the Wine Market Work?
Vantage Market Research recently valued the global wine market at £350 billion. They expect it to grow to over £500 billion by 2030.
There are primary and secondary markets for wine. The primary market refers to the sale of wine to retailers and wholesalers by producers. The secondary market refers to the sale of wine to investors, collectors, and connoisseurs via auction houses, brokers, and specialist merchants.
How to Build Your Wine Collection
Wine investment experts seem to agree that auction houses are the best places to invest in wine, as they offer the widest selection of producers and vintages along with an opportunity to get a competitive price.
Some investors make profits through investing in single bottles of rare or renowned wine. Yet most investors tend to buy cases of wine which they know will “age well”, which they’ll then keep safely in storage until it’s time to resell at a profit.
What Determines the Value of Wine?
- Age – It’s not always the case that “old wine = better wine”. In many cases, it seems you can get the best return on your wine investment through buying wines that will mature in 10 to 20 years.
- Vintage and Reputation – Wine experts and consumers tend to regard certain producers, and certain wines, over others. And for each type of wine, certain vintages may be particularly valuable – that is, the year in which the grapes were harvested.
- Market – Some wines have reliable track records in the secondary market. There appears to be some wines that will always attract a good price at auction houses and wine merchants, whereas others may prove less reliable.
- Quality – A good rule of thumb when investing in wine is to buy something that you’d be happy to drink yourself. This implies that you’ll have done your research, and that you’ll have bought your wine from a reputable and trustworthy merchant. With that in mind, if you want to invest in wine, it pays to get to know a few specialist merchants. Build up some trust, and they’ll eventually be able to advise you on what to buy, and what not to buy.
Storing Your Investment Wine
Some collectors store their investment wine at home. If you want to do this, you’ll have to take care to ensure you can set the right temperature and light levels to keep your wine in good condition. You’ll also have to think about keeping your collection secure from thieves, as well as from fires, floods, and other hazards.
Bear in mind that your standard home insurance policy may not give you the cover you need for your investment wine collection. You may need to get specialist high net worth insurance to give you the cover you need.
Other collectors store their investment wine “in bond”, in specialist government warehouses. These are dedicated duty-free zones that allow you to buy and store wine without worrying about duty or VAT payments. Learn more about government-bonded storage here.
No matter how you choose to store your wine investment, it’s important to catalogue your collection. Read our full guide to cataloguing collections here.
Get Specialist Insurance Cover For Your Investment Wine Collection
At Anthony Jones, we specialise in helping people protect their most valuable items with specialist high net worth insurance policies.
For more information, call us on 0208 290 9086, or email personal@anthonyjones.com.
