Wine, Collect or Invest?

When the ‘Wine Bug’ strikes there is often a natural instinct to get carried away, thinking that every bottle you buy is going to sit quietly in you cellar, appreciate in value by 20% per annum, and reap a healthy return in 10 years time. The reality however can be very different. Getting a bit carried away is okay if you are a wine collector. Your sole purpose is to age the wines and appreciate them as they evolve in the bottle finally reaching their peak when, potentially you may have something that is a very special, possibly rare and hopefully worth more than you would dream of spending on a bottle of wine at that time, in short wine appreciation. An investor on the other hand does as the title suggest, invests in wine with a view to selling it when the market for the wine is potentially at its peak, in short wine value appreciation. 

Both concepts have their pitfalls. The collector can become guilty of ‘over collecting’ and stockpiling more wine than they can possibly drink and the investor can simply make bad investments i.e. buy the wrong wine, or maybe the right wine at the wrong time, from the wrong source and at the wrong price.

This does not mean that collectors don’t make mistakes and end up with ‘dead’ wines in their cellars and it is not often you will hear a wine collector boasting about the great wines they purchased and carefully nurtured but then never got around to drinking until the wine was well past it best. You will also rarely hear them admit to buying overpriced, over hyped wines that did not live up to expectations.

Can I make money?

Making money on wine is no different than making money on any other investment be it the stock market, real estate or fine art. What makes an investment in wine an attractive prospect is that you are not liable for tax on profits from your investment as wine is regarded as a wasting asset and as such attracts no Capital Gains Tax. Obviously here in Jersey we do not have any Capital Gains Tax, but for our UK counterparts or colleagues, investing in wine can offer even more benefit. As Fine Wine increases in quality with age, it is not surprising that it has regularly outperformed other investments and has increased, on average, by between 12% and 15% per annum over a ten-year period.

Which wines should I invest in?

For both collectors and investors it is normally a safe bet to purchase the ‘top’ wine of the time, which at present include many classified Bordeaux Châteaux, top Burgundian and Côtes du Rhone producers, dessert wine from the top producers such as Château d’Yquem, Vintage Port and a small selection of some of the best New World offerings including the likes of Penfold’s Grange. These wines however will be the hardest to come by, will demand ‘top dollar’ prices but may not offer as large a percentage profit gain when sold in the future. The highest percentage profit gains may be made on the wine produced by an ‘up-and-coming’ star that, when purchased, is only just hitting the limelight and could therefore be purchased at a reasonable price. Over the ensuing years the producer consistently over-performs, making his wine extremely desirable, collectable and older vintages, that are highly rated, very valuable.

Who is to know which wines will be in high demand in 5 to 10 years time? Firstly you need to find a competent, reputable wine merchant, your advisor, who can guide you, in his opinion, to the wines of the future, ensuring that they are only purchased through the top houses and negociants and that you do not end up with your wines, sitting in a warehouse in France, in the hands of a French receiver. He must also ensure that you have a diverse portfolio and are not top-heavy with any one type of wine or vintage that might suddenly decline in value.

However the biggest challenge when attempting to succeed as a wine investor is this…you must be prepared to sell! It is so often the case with would be wine investors that when the right time comes to sell their prized possessions they are loathe to part with them, feeling that no amount of money can make up for the feeling that a complete stranger, somewhere in the world is drinking a wine that they have lovingly ‘brought up’ and nurtured like a child.

Care and Storage

Once you have decided which wines to purchase, you need to ensure that your wine is stored in as near perfect condition as possible. There is nothing worse than dreaming every day of your ‘soon to be’ windfall only to find, when you drink or attempt to sell the wines in 5 or 10 years time that they have not been stored, as you were led to believe, in cellar conditions, but were left, corks up, by the entrance to a warehouse, open to all the elements and are completely ruined! This can also be a downfall of purchasing wines from auction or private sale, who knows where they might have spent the last decade.

Our Temperature Controlled Wine Storage Facility

Finally, like investing in the stock market, you need to be prepared to lose some money. So my advice, always keep something in your cellar to soothe those unfortunate moments!


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Neil Pinel
Managing Director of Dunell's Premier Wines