% Increase for 1st Growths Vinatges (2000-2011) from Release Prices to 2013 Market Price
The principles benefits of Wine Investments are:
Like the Fine Art market, Antique Market or the Luxury Goods Market, fine wine is well placed to benefit from growing demand for premium and prestige products worldwide. Prices of the most desirable fine wines have appreciated significantly in the last several years. However, the essential dynamic of growing international demand and finite supply makes the prospects for future growth very strong.
Fine wine has a long history of near-zero correlation with major debt and equity markets. As such,wine investment can provide diversification benefits to a conventional investment portfolio. Moreover, fine wine prices have an enviable track-record of minimal price volatility.
If managed correctly fine wine can be a highly tax efficient asset. UK tax law considers wine a ‘wasting asset' and therefore not subject to CGT. It is also considered a ‘chattel' and is therefore preferentially treated with regards to Inheritance tax. Fine Wines are generally stored in UK Government bonded warehouses and as such benefit from being VAT and Duty free.
Low Fee Base
BWC charges a competitive management fee of 3% per year for 5 years in advance (total of 15%) which covers administration, handling fees and bond transfers, storage and insurance for 5 years. We also charge 5% commission on profits only.
In comparison, auction houses charge 25% plus VAT (10% on sellers' and 15% on buyers') and major wine traders usually price in an equivalent way.
A particular quality of fine wine is that it improves with keeping. So whilst wine does not produce a dividend stream it tends to appreciate in value regardless of the broader market situation.
The fine wine market is experiencing a period of significant change as institutional investors begin to join the market in a concerted fashion. The growing interest in alternative investments will support this process for a significant period to come. This dynamic should serve to further improve both the transparency and stability of prices.
Wine is a physical asset which may appeal to certain investors. Even the most sceptical may be reassured that they can ultimately consume their investment!