Top Ten Wine Investment Tips

Recently I was asked if Ditton Wine Traders "do" wine investment. The short answer was no, but we can give you some advice. When drafting the advice for this potential, first time investor in the fine wine market, I came to the conclusion that there are a lot of companies around that offer fancy brochures and services and undoubtedly do a very good job. The flipside of this is that you do pay for that. And in the end, you don't really need that. What you do need is some basic advice that will allow you to select the right wines and avoid some of the pitfalls.

Fine Wine Prices – latest news

Last Saturday, Christie’s held its first Hong Kong wine auction since 2001. After a series of disappointing results in recent auctions by other houses, it’s good to see that demand is still there. Christie’s fetched US $ 4m on a pre-sale estimate of US $ 3.2m with 94% of lots sold. That is a very encouraging result, no doubt helped by some very rare vintages of Latour, ex cellar, bought by Francois Pinault in 1993.

New VAT and duty rates

In a bid to boost demand, the Chancellor of the British Government has temporarily lowered the VAT rate from 17.5% to 15%. This of course only applies to duty paid wine. Whilst the drop in the VAT rate might help to increase demand for other goods, it won’t do any good for wine, champagne and port, as the excise duty rates are simultaniously increased as per below:

Duty per 9 litres:
 

Red & white wine
£18.88

Champagne
£24.19

Port
£25.18

Hong Kong, Beaune and the BBC

On their news website, the BBC have placed this article. We have been commenting on the recent price fall several times in this blog, so it comes as a bit of non-news. In the article though, Berry's uses the example of Lafite Rothschild 2005 falling in price from the high of gbp 10,000 to gbp 7,500. Interestingly, you can pick up this wine from Ditton Wine Traders for gbp 6,500 – proving our point that our prices are very difficult to beat.

Prices seem to bottom out

There are more and more signs that the recent, steep fall in prices is starting to halt. Whilst volume of trade in especially October was low, we see that more and more buyers are bargain hunting at the new prices levels. Where 2 weeks ago stock was being offered cheaply without finding a buyer, we now see more and more of the same stock being snapped up and even slightly increasing in price again. There's an interesting article on this in Decanter, with views from various people in the trade.

Market update

To add some more background to yesterday's blog entry, Decanter have asked Liv-ex to comment on price developments. Here's what they say: "Fine wine prices hit new low". Interestingly, Liv-ex see that prices have more or less stabilized in the last 2 weeks, after the very steep drop in October. Personally, I think we have not seen the bottom quite yet although we can't be too far off. The latest auction by Hart, Davis Hart in Chicago, on November 1st, shows encouraging sell through rates, with only 8 lots out of 1,128 remaining unsold.

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