Mr Della Casa points out that investing in a fund has advantages. The open-ended Wine Investment fund has run for 10 years. It invests in just 35 Bordeaux chateau (out of 10,000) and is looking for the highest return for the lowest risk. The team, which has an investment rather than wine background, manages areas such as liquidity risk and will sell wines that have moved to higher valuations.
The group also offers EIS structures, which can help with capital gains tax (CGT) and inheritance tax planning. Mr Della Casa says: “Wine is among the lowest risk asset classes. Volatility on an ongoing basis is lower than asset classes such as shares or commodities. Our fund has given an average return of 10 per cent per year for 10 years.”
That said, Mr Tipping believes there may be CGT advantages to holding direct over a fund. Wine is considered a ‘wasting asset’ for CGT purposes and is exempt, whereas profits made on a fund may still be liable. Berry Brothers & Rudd only offers direct holdings in wines and offers a cellar plan, starting at £250 per month.
There are also alternative direct offerings now available. The website WineOwners.com acts as a platform for wine buyers and wine sellers to trade. For individuals, it operates as a standard equity or bond platform might, providing information on wine, current pricing and reviews.
Nick Martin, founder, says: “Some have seen they can make money out of wine, others may be buying some to drink.”
He says that Bordeaux is still the most readily traded wine, with the greatest liquidity, but Burgundy has done well recently because of its relative scarcity and there are other small producers in Piedmont that have also got a very strong following.
Wine will never be a core holding, but as a diversifying asset, it has good credentials. And if investors buy direct and it doesn’t work out, it can always be served with next year’s Christmas lunch.
Cherry Reynard is a freelance journalist
