Fine wines can make a low-risk, long-term investment. Just as with other investments, there are people who are only interested in separating you from your money. If you are a wine lover, someone starting out in wine collecting or someone seeking to diversity your portfolio into non-traditional investments, here are some tips to keep your investment safe and secure.
Start With a Reliable Merchant
Before you start spending your money to build an investment in wine, make sure you are dealing with a vendor who is known and reliable. You want to find someone with a solid track record and a reputation for above-the-board dealing. If you are purchasing wine before it is packaged and released to the marketplace, it’s doubly important to know with whom you are doing business. Since “en primeur” wine is usually committed 2 – 3 years after vintage, it leaves the field wide open to swindlers.
Investigate the company to make sure it is well established. Find out who the corporate principals are and what practical knowledge they have had in wine investments. Established companies in the UK will be found on the registration with Companies House and you can also verify the balance sheet there.
Does the company have a legitimate street address for the head office? It is easy to come up with addresses that include PO boxes or even physical locations that are empty lots. Think about using Google Street Maps to get a view of the company’s headquarters. Obviously, if the location is close, it pays to make a personal visit to the spot. Don’t be overly concerned about offers coming unsolicited in the mail — be cautious though. While many legitimate companies do send out unsolicited pamphlets and slicks, it’s also an easy way for fraudsters to troll for potential victims. Remember the old adage, “If it sounds too good to be true, it probably is.” Take particular caution to check out the bona fides of companies with whom you are unfamiliar that make proposals with offers of investment.
Know What You Are Buying
Before turning over your money, make sure you understand precisely what wine you are buying and double check to see if you’re making a solid use of your money. Of the thousands of wines produced each year, only a certain few will accrue in value. Wines that will see their value increase, tend to be more expensive as well. What can you do to protect yourself? Consider these tips:
Do your research. Make sure you are buying the proper product at the proper prices. Using the internet is a great way to compare prices as is seeking another opinion on your investment.
Quality. This is central to the potential value of your investment. Make sure you know the background of the wine you are choosing and be sure to know it comes from a reliable source.
Condition. Get details and information about anything that could affect the value of your investment. Just as an example, fine wine should be unmixed and in sealed cases in the genuine wooden container. Investment wine should never have been repackaged.
En Primeur Prices. Wait until the prices are published before purchasing en primeur. Traders worthy of your trust will not try to sell you en primeur before the producers have shared the release prices.
Availability. Find out if the seller has the wine already in stock or if it will have to be ordered from the producer. Be clear about when your wine will be delivered to you or to your account.
Investing in outstanding wines can be a rewarding experience as long as due diligence is conducted. Using a little common sense — along with seeking advice and guidance — your investment could grow and reward you and your heirs for years to come.