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Buying Wine

For some wine buffs, buying wine and selling it a few years later at a profit is a crafty way of helping to fund their drinking habits. Well, that's the theory anyway.

On the few occasions that wine hits the news, the story rarely has anything to do with the pleasure that wine offers but its value.

'Record prices paid for magnum of Chateau something-or-other' is the sort of headline we're used to reading, but it isn't often that a bottle of wine makes the front page because it happens to be astonishingly delicious. For people who genuinely love wine - for the pleasure it gives, the fascination it inspires, the quality it adds to our lives - the idea that it's also a commodity that can be used to turn a fast buck seems a little unsettling. More depressing still is the fact that when some dusty bottle of Sauternes dating back to the Napoleonic Wars goes for thousands of pounds at auction it is not because it is a great wine but simply because it is so very rare that some obsessive collector is prepared to pay a ludicrous price for the pleasure of owning it. However, as well as the big-spending collectors, there's also a subset of wine buffs who try to assuage the guilt they feel about spending money on good wine by making their hobby pay.

THE FREE WINE THEORY

The theory goes like this. Each year you buy through a wine merchant a case of wine - usually red Bordeaux or Burgundy - at a preferential rate from a good vintage before it is bottled (known as buying 'en primeur'). When the wine eventually arrives you either leave it in the merchant's cellar or store it in your own. In a few years' time, when the wine has reached maturity you sell half the wine at a profit, which you use to buy some more wine before it is bottled, and drink the rest.

It sounds simple, doesn't it? But just bear in mind the following pitfalls and hidden costs:

The price at which the wine is advertised by the producer looks attractive, but by the time it reaches you or the wine merchant it will have attracted taxes that bump up the price
If you decide to keep the wine on the merchant's premises you will have to pay a storage charge. There's also a possibility that if the merchant goes bust you could lose all your wine
Even if you have enough space with the right conditions for storing wine, there's the chance that it could be stolen or that your cellar could be damaged by a fire or a flood
The wine might fail to fulfil its potential and therefore offer little, if any, return on your investment

Some people further justify buying in this way by pointing out that in some countries the practice can be a very tax-efficient form of investment. However, with so many potential pitfalls and overheads, the risks seem high and the potential returns slim. Remember too that in what are thought to be very good vintages - 2000, for example - competition for wines is intense and so prices rise dramatically and offer very little potential for significant returns for many years to come.

CONSIDER THE ALTERNATIVES

Buying wine en primeur and storing it for a few years is not the only way to get your hands on old vintage wine. By the time you have paid for the wine and all the additional cost of duty and storage (and accounted for the fact that your money has been tied up for a few years) buying older vintages from a wine merchant doesn't seem quite so expensive. Another possibility is to buy old wine at auction - however this is more complicated and there can be greater risks involved. The other advantage to buying wines in this way is that it gives you the option to choose the wine you want to drink - rather than something that you happened to buy a few years before which might not have performed particularly well.


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