Within Europe wine investment is perhaps largely a British disease. Which is fortunate as recently there has been a seeming unending stream of bad news for investors.
For a start despite claims from some companies of big profits from wine investments every year, the reality is rather different. If you had bought a case of 2005 Château Lafite in June 2010 you could well find your wallet thinned by nearly 50%.
A case of Lafite (12 bottles), which in June 2010 would have cost £10,000, can now be purchased for just £5750 – – down by £4250. Add to this the cost of storage: £60 over four years and if the wine is with a wine investment management company that charges an annual management fee – say 1.75% – then £10,000 in June 2010 has become £4898. Not a great investment by any stretch of the imagination!
The last few months has seen a succession of ‘wine investment’ companies going bust. These include European Fine Wines Ltd, En Primeur Ltd, Encarta Ltd and Canary Wharf Vintners Ltd. All these have gone down leaving investors out of pocket to varying degrees.
The latest scandal involves Premier Cru Fine Wine Investments Ltd, which is in the process of passing their clients’ portfolio over to Cult Wines Ltd. Unfortunately the stricken company appears to have had little concern for their clients and their pension hopes. Premier Cru clients are being switched to Cult Wines Ltd and are expected now to pay 5% of their portfolio’s value to Cult Wines Ltd – a very high management fee for years one and two.
Also Premier Cru clients are now finding that there are ‘shortages’ in their wine portfolios. It is not yet clear whether this is down to incompetent administration, whether Premier Cru’s management pillaged their clients’ portfolios or whether it is a mix of the two. Amazingly the shortage from good vintages like 2009 are being made up by Cult Wines Ltd with 2013 en primeurs, arguably one of the worst Bordeaux vintages of recent times.
The lesson appears to be either avoid wine investment or if you do decide to go for wine investment make sure that your wines are stored in your own account so that you cannot be passed over to another company with little option to refuse. With your own account you won’t suddenly find there are ‘shortages’.