Wine investment to gain with inflation, tax hikes, and Brexit delays

In 2019, inflation can cause an increase in the price of wine, as per the announcement made by Chancellor Philip Hammond, who suggested the industry may face delays in supplies over Brexit. In the case of a no-deal, the EU supplies can delay causing a hike in price. The price of bottles increased by 30p since the Brexit vote. 

In February 2019, the taxes will increase to 7p for still wine and 9p for sparkling. There are other reasons for the increase in price - inflation, pound rise and increase in import costs in the last two years.  In autumn 2017, fine wine was reported to be one of the top-performing luxury investment options by the Knight Frank Luxury Index.  

It was 25 per cent up where no other asset was able to gain double-digit growth. Investment-grade wine is not an ordinary supermarket bottle. These are rare, and 60 cents are produced in the Bordeaux region. 40 per cent includes produce from Burgundy, USA, Italy, Champagne, and 2 per cent are supplied by Australia, Spain, and Germany. 

99 per cent of the wine consumed in the UK is imported, and companies are preparing for Brexit no-deal delay by stockpiling. UK consumes over 55 per cent of wines from the EU; in return, 45 per cent of spirits from the UK is sent to the EU. 

Earlier, Spain was the key supplier, but new suppliers can be South Africa, Argentina, and Chile.  Also, there are risks of an increase in price over tax hikes.

Wine Investment Strategies 

A collection of wine bottles, which can become expensive in the future, may require a higher investment at the start. The portfolio should include certain key elements to achieve the growth aims.  Buyers can invest through funds where they are provided with the list of top ones to invest in and store for the desired duration. 

The bottles are handled and stored as per provenance, and it is generally stored in bonded warehouses supported by temperature control mechanisms and systems to regulate environmental factors. Such investment also includes associated costs - insurance, storage and auctions costs.

There are a limited number of unique bottles produced each year, and only a few winemakers are able to produce the ones with the right combination of ingredients. The value enhances with low supply. 

These are mostly medium to long-term strategies where five year holding period may be fixed, but returns are not always guaranteed as the price of bottle brands fluctuates in markets.  

Investors can get small batches of cult wines which are high-quality rare bottles found by a small group of owners called wine enthusiasts. The famous cult wines example includes the Screaming Eagle, which can fetch over $2500 to $5000 a case at auctions.

Investors can get En Primeur, which is a relatively low-cost purchase. The wine's future options can be sold at a future date. Beware of frauds in such investment where the investors may be provided with documents related to their purchases but may fail to deliver the bottles. 

To find out more about wine investment, check 99 Alternatives at (http://www.99alternatives.com).