WHY IS WINE A GOOD INVESTMENT CHOICE?
It comes down to the simple concept of supply and demand, when demand outstrips supply there is a pressure on prices. Historically this price reaction was unforeseen, a bonus to those who could afford to buy and drink particularly well made and enjoyable wines, and they liked to keep it that way. As they consumed their favourite vintages and bottles started to disappear the value of their big house cellars increased steadily. The market has evolved significantly…
WHAT DRIVES DEMAND, DRINKERS, COLLECTORS OR BOTH?
The idea that bottles get drunk and this reduces the availability, is of course still an important driver of prices upwards, but the market is much more mature these days.
Fine Wine is a luxury, lifestyle product. There has been a real surge of interest over the past couple of decades, as new wealthy international clients enter the marketplace, looking to extend their experiences and knowledge, desperate to get their hands on rare and interesting bottles to add to their collection, and to open with friends and family at special events or to mark that special occasion in style with the perfect bottle.
Great winemakers are legends in the making, recognised internationally as iconic figures, able to conjure wines with remarkable, even outlandish flavours, from their often tiny vineyards. These bottles are destined to be increasingly collectable, opened by proud owners for their excited tasters. This phenomena has and will continue to increase the release prices of new vintages often well beyond general inflationary conditions. And of course in turn this impacts of the prices of bottled vintages.
Wine journalism plays its part too. Now not dominated by the recently retired enigma ‘Robert Parker’, there are several key names and websites to keep account of. Neil Martin – Vinous.com is generally favoured for Bordeaux analysis but a balanced view including Jane Anson – Decanter.com, Lisa Perrotti Brown – The Wine Advocate, James Suckling – jamessucking.com amongst others is the preferred way of assessing a wines potential today. Allen Meadows – Burghound, prevails in Burgundy as you might guess. Reviews and scores from these great palates, good or bad create turbulence. The 100 point score the holy grail which can send demand skywards.
As well as being an excellent investment, fine wine is a blend of Science,Geography and Art. You will never stop learning and enjoying.
WHAT RESTRICTS SUPPLY?
Unfortunately like great painters great winemaker’s works will not be created beyond the few years they are entrusted to care for these magnificent and ancient vineyard plots, productions from which, are naturally restricted by unique geological and climatic conditions. Each year there will never be more than a few hundred bottles of Domaine Faiveley’s great Burgundy ‘Musigny’, or Bordeaux’s ‘Chateau Le Pin’.
Incumbent cellar masters might not take up the reins expediently, or may not have that extra little bit of magic. Hence the playing field is not completely even and chateaux and domaines often have their moment in the sun to be derailed by a new wiz kid or maverick.
Wine is regarded as a wasting asset and as such is not subject to capital gains tax, so you can, and clients often do, consciously or unconsciously, buy more than they need, confident in the knowledge that they can offload a few cases at a tidy profit without upsetting the accountant.
This is an idealism which attracts investors like a magnet. Storage of wines in ‘Bonded Warehouses’, are outside of the tax system, which means fortunately that punitive VAT will not be involved in buying or selling transactions.
DO I NEED TO BE KNOWLEDGEABLE ABOUT WINE TO INVEST?
WHY CHOOSE N&P?
We are a family run business and great relationships are the heart of our ethos. For us wine is a real passion which has been passed down through four generations. We have many clients who buy from us each year, building their portfolios, they come to us for advice and guidance on which wines to select to ensure they will make the best decisions for their individual situation. With over 80 years of combined experience at senior levels you are sure to get the highest quality advice and guidance.
Ultimately our buying decisions are the key to ours and our client’s success. We have been dealing with wine producers all over the world for many years and our experts make annual trips to Bordeaux to taste the new ‘En Primeur’ vintages in the spring, as well as regular trips to Burgundy and Champagne. This first-hand tasting experience gives our clients a great opportunity to gain information about the new vintages before they are released onto the open market.
As with the tangible investments our clients are buying, we are more than just a virtual website with a smart address. We have been working from our 16th Century shop offices and cellars for over 70 years. Come and visit us and talk to us face to face, or come to one of our dozens of annual events, some held in our 17th Century Wine Cellars, to learn a little bit more about what you are buying.
HOW MUCH SHOULD I INVEST?
In order to get set up with a balanced portfolio, we would suggest an initial investment of around £5,000. This would give you the best chance to start to see a return within a relatively short period of time.
We have customers who invest in a case of wine each year for their children, to build up a collection which they will have access to in the future; perhaps to help with their first house purchase. We also have customers who buy their collection in one investment and then leave it to rise in value.
We believe that a diverse range of wines from key, experienced, and well known producers generally results in a sound portfolio which will bring about good, strong yields.
WHAT KIND OF TIMEFRAME AM I LOOKING AT?
When buying and selling wines it is possible to make a profit in a short period of time, however generally it should be seen as a medium to long term investment. A time frame of 5 years plus should be considered when planning your venture. This will give time for the market to alter and the prices to increase, as mentioned above rarity drives the prices up – the longer you hold your wine, the rarer it will become which in turn will escalate the rate of the increase in value.
WHAT ARE THE RISKS?
Wine investment is historically less volatile and more predictable that many other traditional investments, such as stocks and shares. However risk cannot be entirely eliminated, and as a responsible company with over 220 years of integrity, we have to point out that wines prices can fluctuate, and do from time to time go down.
There have been difficult periods when world crises have detrimentally impacted the wine market, but the resilience is well documented. You only have to see how prices responded after the financial crisis of 2008, and how they have remained buoyant during the most recent and current crisis ‘Covid 19’.
Our job is to minimise risk by choosing the best possible wines for your portfolio, and that is what we strive for and continue to achieve for our clients.
If you have any concerns about potentially investing in wine, please give us a call or send an email and we will be happy to reassure you and answer any questions you may have.
WHAT WILL HAPPEN TO THE WINE I BUY?
When you have decided to invest and we have worked out a suitable selection, we will set up the portfolio and send you the appropriate invoice.
The portfolio details will be emailed (or sent out by post if preferred) to you listing the wines, which will now have been entered into N&P’s Client Reserves at our bonded storage warehouse. They will lie here unmoved until you ask us to sell them for you, transfer them to your external storage or if you are inclined, have them delivered at home – to drink!
We will stay in close contact with you to keep you informed of current values, and be sure to let you know about any interesting new releases and further investment opportunities. However, we are not in any way pressure salesmen, and we won’t make endless phone calls to you.
We are of course charged to store and insure ours and your wines in the bonded warehouse, and we do pass this nominal charge onto our clients – we will outline these charges when we set up your portfolio.
Some wine investment companies charge annual management fees, usually a percentage of the dynamic investment value. We do not enter into this sometimes penalising arrangement, we want to keep your portfolio in as profitable state as possible. We believe you are likely to work more closely with us if you see positive results, and above all transparency.
One of the key variables that affects the condition of wine is the way in which it is stored, this is vital. If kept in unsuitable conditions the wine can spoil and the flavour will be affected. So it really is imperative that any wine you buy is stored correctly. It should be kept in dark conditions, away from any direct sunlight at an ideal, steady temperature of 55°-65°F. The bottles should be kept in a horizontal position to prevent the corks from drying out and letting oxygen come into contact with the wine. They should not be moved too frequently, and should be kept in their original cases wherever possible. We have professional wine storage facilities at a number of locations to keep your bottles safe and secure, and to ensure that they are kept at optimum temperatures. These are run by experts who understand the needs of wine, and your case(s) will be labelled and stored under your name within our account.
We can also transfer any physical wines over to your account or to different locations, if you have your own storage that you would prefer to use. The wines are kept ‘In Bond’ which means that providing you leave them in storage you do not have to pay Duty or VAT – if you decide down the line that you would like to take delivery, we can arrange this, duty and VAT on the purchase price will be payable before the wine is shipped.
SELLING YOUR WINES
We will most likely recommend that you sell certain cases of wine to make way for something which, in our opinion offers a better potential return. In most relations this is done by council, however we do have clients who give us carte blanche to trade their wines to optimise the strength of their investment.
You may at some point want to sell a part of or your entire portfolio. There are several ways to achieve this and our wine investment service includes an effective solution for you. We have an inexhaustive database of clients looking to buy great wines, we can offer you the chance to sell your wines on a competitive commission basis.
We have had the pleasure of working closely with many customers over the years, and we have made many great friends. We pride ourselves on offering a friendly, approachable service which puts you, our client at the center of our operations.
Here are just a few of their experiences:
“I have relied on the advice from the same N&P team for some 26 years now, you just cannot easily replicate that sort of experience in the wine market. With a deep history behind them, I have no hesitation to put my trust and money in the teams hands.” – M. P, Nickolls & Perks customer.
“I have been buying wine from Nickolls and Perks for both drinking and investment for more than 10 years and hope to continue to do so for many years to come. Their costs for both wine and wine storage are very competitive and they provide a very knowledgeable, friendly, helpful and responsive service for clients and nothing is too much trouble. Even if a wine is not listed on their website they can generally source it for you.” – C, D, Nickolls & Perks customer.
“I have been a customer of Nickolls and Perks for around 30 years. I am not local to the Stourbridge area and picked them by chance out of the wine press. I feel as though I am a friend of the company. The personal attention they give, whether choosing investment wines or something to drink is, in my view, exceptional. They respond quickly to requests for ideas – a Christmas selection, a good malt, a special cognac. Every request is individually handled and I am yet to fault their counsel. They have sold and stored my wines for years, reinvested wisely on my behalf and handled every transaction efficiently. I cannot recommend them highly enough.” – J. W, Nickolls & Perks customer.
If you are interested in investing through us then please get in touch, we will be happy to offer advice or answer any questions you may have. We understand investing can be a nerve wracking experience, we will do everything we can to help.