Investment Advice

Building a cellar of fine wine

 

 

 

If you don't know where to start, we can help you. Here are our top tips:

 

1. Do you plan to drink these wines over the space of a few years or are you treating this as an investment opportunity? The wines you buy will be different depending on your answer. You may of course wish to do a mixture of both.

 

2. For investment, buy blue chip wines (first and second growth clarets and wines with cult status) . Buy these en primeur when the prices are generally at their lowest and keep for five to ten years or more. If buying older vintages, check the provenance carefully and how the wines have been stored. Ideally the wine should have been moved only once or twice since it left the chateau and not shipped to and fro across the Atlantic! Just as in the stock market, prices fluctuate and you are not guaranteed a return. Track wine prices on the Liv-Ex website.

 

We recommend that you consult an Independent Financial Adviser (IFA) to be sure of your potential liability for Capital Gains Tax and Inheritance Tax. In August 2010, HMRC stated that "Section 160 IHTA1984 states that for Inheritance Tax purposes the value of any property is the price it might reasonably be expected to fetch if sold in the open market at that time. Therefore it is clear that a wine cellar must be valued at its open market value for Inheritance Tax purposes at the time of the relevant occasion of charge." HMRC guidance on Capital Gains Tax relating to fine wine is less clear. Traditionally wine has been viewed as a wasting asset and therefore exempt from CGT. However HMRC Tax Bulletin 42 states that this depends on whether the wine has a predictable life of 50 years or more (which could apply to port and other fortified wines and some fine wines) and a disposal value of £6000 or more per bottle or 'set' (case).

 

3. If you are building a cellar for enjoyment, then consider whether to commit a lump sum to start off and/or save a monthly amount to spread the cost. Work out how many cases you need of red, white, sparkling etc to cover your drinking requirements each year. Make a list of your favourite wines, regions or grape varieties. Stagger your purchases so that the wines are at their peak when you need them. As a guide we would suggest regular monthly payments of £100+.

 

As an example you may want a couple of cases of drinking claret in 8-10 years' time, so we would recommend buying third, fourth or fifth growths or good Cru Bourgeois en primeur from the 2009 vintage when it is released later this year. New World wines and European white wines can generally be purchased within a few years of the intended consumption date, so delay your purchase until there is a really good vintage of Chablis for example.

 

4. For a mixture of both investment and enjoyment, you can buy two cases of a wine, for example Chateau Leoville Barton, and sell one at a later date and hopefully have financed the drinking of the other. Once again, you are not guaranteed to make a profit but when this works it is quite a nice thought that you are drinking such lovely wine either for free or at a much reduced cost.

 

5. Buying well-known chateaux in Bordeaux is fairly straightforward although allocations are getting more difficult as demand grows from the Far East. Finding really good Burgundies (red or white) is trickier and you need expert advice. You can read reviews till the cows come home but there's nothing to beat talking to someone who's actually tasted at the vineyard, so do give us a ring. Our latest Burgundy offer is available to download here.

 

6. A note on Champagne: it pays to buy a few cases of good non-vintage Champagne and cellar them for 3-5 years. The creamy, toasty characters will develop and you will get more value for money. Also by the time you drink them you will have forgotten how much they cost! This is also a good tip if you think there may be a wedding looming...

 

Talk to us for help and advice

 

We can offer you advice tailored to your individual needs. So whether you are starting or expanding a cellar or looking to buy blue chip wines for investment, talk to us. Contact Aidan Bell on 01275 434988 or email aidanbell@dbmwines.co.uk.

 

Protecting your investment

 

Read the Wine & Spirit Trade Association leaflet Investing in Fine Wines.

 

Store your wine with us

 

We have created The WineSafe Ltd solely for the secure storage of your fine wine reserves. WineSafe does not trade in wine, giving you peace of mind while your wine matures gently in perfect cellar conditions. We have selected the renowned underground cellars at Octavian Vaults in Corsham, England for this purpose. Customers' wines are insured at full replacement value and are held separately from Davis Bell McCraith company stock. Please visit the WineSafe website for further details or telephone us for a brochure when we can also answer any questions you may have.

Physically building a cellar in your own home

 

Here are some links to companies that can build a cellar for you or provide racking:

 

Spiral Cellars

Sorrells Wine Racks

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