A Beginner’s Guide to Investing in Fine Wine: Bordeaux, Burgundy, and Beyond
Investing in fine wine, particularly from renowned regions like Bordeaux and Burgundy, has gained traction as a lucrative alternative asset class. With the fine wine market achieving an impressive compound annual growth rate of 8% over the last 15 years, and sectors like Burgundy seeing even higher returns, it’s clear why wine investment appeals to savvy investors.
However, just like any investment, it’s crucial to approach wine investing with a strategic mindset and a solid understanding of the market. This guide will walk you through the essentials of wine investment, from market insights to practical tips on buying, storing and selecting wines with strong investment potential.
Why Invest in Wine?
Investing in wine offers unique advantages, particularly when considering wines from Bordeaux and Burgundy. Unlike traditional assets like stocks or real estate, profits from wine sales are generally exempt from capital gains tax (CGT). This tax efficiency, coupled with wine's historical appreciation in value, makes it an attractive option for diversifying your portfolio. However, as with any investment, wine comes with risks. Market fluctuations can affect the value of your collection, and there’s always the possibility of not recovering your initial investment.
The Wine Market: Bordeaux, Burgundy, and Beyond
The wine market is divided into primary and secondary markets, with Bordeaux and Burgundy being two of the most sought-after regions for investors.
- Primary Market: In this market, wine moves directly from producers to consumers through wholesalers and retailers. While some collectors purchase from this market, most investment-grade wines are found in the secondary market.
- Secondary Market: This is where most wine investments take place. Investors buy and sell wines through merchants, auction houses, online exchanges and brokers. Auction houses, in particular, are reliable sources for authenticating and acquiring fine wines, offering a broad selection of producers and vintages, especially from prestigious regions like Bordeaux and Burgundy.
Choosing the Right Investment Wines
When investing in wines, especially from Bordeaux and Burgundy, consider these key factors:
- Age-Worthiness: Select wines with the potential to improve with age, ideally over a 10 to 20-year period. Wines from Bordeaux and Burgundy are known for their aging potential, often developing complexity and depth that can significantly increase their value.
- Quality: Focus on wines that are highly regarded by critics and consumers. The reputation of the producer is crucial, particularly in regions like Bordeaux and Burgundy, where certain estates have a long history of producing investment-grade wines.
- Marketability: Ensure the wine has a strong track record in the secondary market. Bordeaux and Burgundy wines with proven resale success are more likely to yield profitable returns.
Practical Tips for Buying and Storing Investment Wines
- Buy from Reputable Merchants: Establishing a relationship with trusted wine merchants is essential. At Friarwood, we help investors pick wines with strong potential for appreciation. We can also assist in building a diversified wine portfolio and sourcing collectible wines from our prestigious producers.
- Consider Storage: Proper storage is key to maintaining the value of your wine investment. Wines, particularly from Bordeaux and Burgundy, should be stored away from heat and sunlight in a temperature-controlled environment. Storing wines ‘in bond’ allows you to defer duty and VAT until the point of sale, ensuring the wines remain in pristine condition.
Building a Diversified Wine Portfolio
A successful wine investment portfolio should include a range of wines from different regions, vintages, and styles:
- Age Diversity: Incorporate both younger wines that will appreciate over time and older wines that are ready for market, allowing for staggered returns.
- Regional Diversity: While Bordeaux and Burgundy are staples in any wine investment portfolio, consider adding wines from other emerging regions. Diversification reduces risk and increases the potential for higher returns.
Featured Wines
1. Masseto
2. Ornellaia
3. Sassicaia - we have the 2011 and 2014 vintage in stock
4. Tignanello
5. Beychevelle - we have the 2010 vintage in stock.
Will Friarwood offer advice on which wines are likely to perform well?
At Friarwood, we are committed to helping you navigate the world of wine investment. While we can't guarantee future performance, we offer insights based on market trends and past data, recommending wines as long-term investments—ideally held for 15 years or more. Our expert guidance will steer you toward regions with historically stable value growth and low-risk potential.
Whether you're just starting or expanding your portfolio, we focus on quality above all, working with prestigious and emerging producers to secure collectible wines at the best value. Let us help you make informed decisions that align with your financial goals, ensuring your wine investments are both rewarding and enjoyable.
