Investing in wine is all the rage — and it can even be done at home
| Text : Liana Cafolla | Photo : www.thinkstockphotos.com |
As an alternative, occasionally self-sustaining investment, wine is on the rise. Like art, wine is a tangible asset that investors can see with their own eyes and physically enjoy from time to time — assuming you’re willing to let your investment returns slide in favour of cracking open a bottle with friends.
Benjamin Curtis, assistant vice president of wine investment brokerage Premium Liquid Assets works with private investors on every step of the way, from A all the way to Z. “We buy it, insure it, store it and liquidate it for the client when the time comes.” Premium deals with Bordeaux wines on almost 85 percent of investments; Bordeaux being what Curtis refers to as the “blue chips” of the wine world. The prime first growth wines from Lafite, Latour, Margaux, Haut-Brion, Mouton Rothschild are so prized precisely because the French government has seen to it that production is limited, and wineries can’t simply plant more vines to increase yields. Bordeaux accounts for a scant 80,000 cases of the world’s total production of 4 billion.
So how rich do you have to be to invest in wine? “That’s the misconception about wine investment. A lot of people believe that it’s going to cost you millions and millions to get involved,” Curtis explains. “Really, for as little as HK$100,000 you get start yourself a mini-portfolio and build up to what your comfortable with.” And notably, wine investment sees quicker returns than some others. Curtis recommends holding on to your cases for three to five years though there are exceptions to the rule. 2008 vintages have already started selling in the secondary market — and the wine isn’t even in the bottles yet.
If you want to start investing there are basically two options: You can deal with a brokerage like Premium, or try doing it yourself — sort of a DIY of wine futures. “You can deal with it yourself, no problem at all. There are thousands of merchants out there that are quite willing to sell you wine. What makes us different is that we have an exit strategy. We offer a fully packaged service.”
Selling to an end user is when investors see their returns, and those usually go to brokers like Premium, independent retailers, auction houses and so on. In the meantime, however, the vital issue of where you store it becomes the primary concern.
If you have a large number of bottles or cases, Curtis recommends a reputable storage facility, such as Crown Wine Cellars, part of the Crown Worldwide Group (www.crownwinecellars.com). But what if you want something closer to home, even if it means making room in small, warm Hong Kong flats? “The best way to store the wine would be in one of the many wine fridges available, if the numbers are small,” Curtis says. Horizon Plaza in Ap Lei Chau is a good place to start. Home wine cellars come in a broad range of sizes and styles, and fitting one into a corner in your apartment isn’t out of the question. Just bear in mind that temptation can overcome us all from time to time. “Drinking your investment is probably a bad idea,” cautions Curtis with a laugh. Also ensure your at-home cellar functions at a standard that won’t allow the value of your wine to diminish further than it has to.
Wine is made to be enjoyed, and to that end, wine investments can be circular. Curtis relays a story about a client that doubles up on his investments, opening one case for pleasure and paying for it with the profits from the other. There may be no coming out ahead, but it’s certainly a tasty break-even situation.
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