We’ll drink to that: wines can earn you small fortune
Date: 01/01/08 - Source: The Herald
Investors with a nose for a good buy are toasting their fortunes after proving that a good wine can go up as well as down.
Auction house figures have shown a year of soaring profits for buyers who know their plonk from their Pomerol and can put their money where their mouths are.
In some cases, the money made on cases of upmarket claret have more than trebled in the last three years, comfortably outstripping average increases in property prices of around 20% in the same period.
This compares with house price inflation, which has slowed to an estimated 6.9% during 2007 and is predicted to be just 1.8 to 2.0% in 2008.
Like any investment, wine comes with risks attached - apart from the temptation to liquidate your assets over a good meal, you have to be savvy enough to pick the right vintage in the first place.
For example, a case of 1996 Chateau Pichon Longueville bought for £414 in 2005 lost money in the first 12 months and recovered in 2007, but only to £483 a case - a mere 15% return.
Yet a case of another red Bordeaux, the 1995 Chateau Leoville Barton, cost less, £368 a case, in 2005 but has just been sold at auction for more, £529, making it well worth going into the red for at 44% profit.
Going more upmarket in the first place can make the biggest profits of all if the choice is right, say wine experts.
A case of Petrus, the expensive wine popular in Gordon Ramsay and other Michelin-starred restaurants - and the name on some legendary trophy lunch bills - would have cost around £13,800 in 2005 for a case of the 1982 vintage.
That may seem a lot for 12 bottles of claret but a year later it was already worth £25,400 a case and by the end of this year even Ramsay would have been lost for words when a case was sold at auction for £43,700.
Damian Tillson, deputy director at Sotheby's, said: "As far as potential investment is concerned, the best advice is usually to go for the very best wines from the very best years.
"First growths from 1982, 1990, 1996 and 2000 have all shown good returns over the last few years.
"Moreover, the added advantage for investors is that wine is currently classified as a wasting asset' and therefore is not subject to capital gains tax."
A wasting asset means it is not seen as lasting forever. Although prices of the finest claret - wine from the Bordeaux region of France - have done spectacularly, not every region has done as well and there are plenty of risks.
Some other wines have seen prices plummet because they do not mature as well as predicted in the first place.