Maximize your Wine Investment’s Value

April 06, 2013

Smart investors looking for a reliable way to diversify their portfolios are increasingly turning to fine wine. With annual returns averaging 10-15% over an impressive sixty-year period, this luxurious item offers strong reassurance of a great return on your capital.

Fine wine is considered a stable, low-risk choice for investors, and a major reason for this is its physical nature. Because wine is a tangible asset, its price—in common with other commodities that can be seen, measured and touched—tends to rise with inflation. However, because wine is fragile, it cannot simply be placed in any old room after purchase and forgotten about. Fine wine is one of the few commodities that can improve with age, but in the wrong environment it can also deteriorate. If you want to reap the rewards of your wine’s full investment potential, it is absolutely critical to ensure that it’s scrupulously stored and maintained.

Just how much value the wine-trading community places on high-quality storage was brought into the spotlight by Chateau Latour’s recent withdrawal from the en-primeur (wine futures) market. Latour’s decision to step away from en-primeur selling was largely motivated by a wish to secure the very best possible provenance for their brand. Latour’s Premier Cru will now only be released for sale once bottled, and at the ideal time for drinking. By retaining control of the entire production and maturation process, the chateau will be able to guarantee that their already celebrated wine has been nurtured in optimum conditions throughout its development, allowing it to reach a state of perfection.

Latour’s bold move reveals their complete confidence in the ability of perfect provenance to sell. The message for investors is clear: to gain maximum resale value for your wine, store it in a facility renowned for its expertise—a name that will inspire buyers with confidence.

So what are the best storage options for wine investors? Well firstly, choosing to store your wines in the UK gives you the credibility of the government-regulated ‘in-bond’ system. In a nutshell, it is possible to buy wine in the UK before it has officially ‘landed’ in the country and had VAT tax paid on it. To remain ‘in bond’ a wine must be stored in one of a very few specialist facilities. The audit trail that accompanies in-bond wine (ensuring that VAT will eventually be paid) provides solid proof that a wine has been stored in quality-preserving conditions since the beginning of its life.

In contrast, in the US you may only buy wine once all the import taxes have been paid. There is no equivalent system of documentation to UK in-bond, meaning you have to rely solely on the reputation of a storage establishment as evidence that a wine has been properly maintained. Another drawback of storing wines in the US is the vast distance a wine will have travelled from its chateau of origin, risking damage in the process. The much shorter distance between European wine producers and the UK minimizes this risk.

So where precisely should you store wine in England? There are two superior options, which will also give you access to the renowned international trading platform Liv-ex, as well as the highly liquid UK market—the largest secondary market for fine wine in the world. London City Bond is the oldest bonded warehouse, dating back to before 1870. But the facility with an unparalleled reputation, considered to be the greatest wine storehouse in existence, is Corsham Cellars in Wiltshire. Unlike LCB, Corsham’s storage is located 100 feet below the ground, safe from the potentially damaging vibration of delivery trucks and general traffic. Corsham’s reputation for excellence is so strong that investors have entrusted $1.5 billion worth of stock to their care.

As well as eliminating the adverse effects of vibration and light, storage at Corsham Cellars controls temperature and humidity levels to create the ideal conditions for wine preservation. Housing your investment in these highly-sought after conditions is surely the best way to assure the world that your wine remains in pristine condition.

For more information on the benefits of Corsham Cellars and UK wine investment, visit www.octavianvaults.co.uk





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