Wine is not just the in drink with the in crowd. It’s also an haute new investment.
In Paul Torday’s aptly named novel, The Irresistible Inheritance of Wilberforce: A Novel in Four Vintages, the anti hero Wilberforce inherits, in a sense, a massive collection of French Wine, after purchasing the estate of his now dead mentor, Francis Black. Wilberforce sets about consuming as much wine as he can in as short a time as possible, with suitably disastrous consequences. It’s unlikely that living in urban India such a windfall is likely to accrue to any one of us. Devoid of such an expectation, the only option open to you is to build your own collection of wine.
If you’re investing in wine then you’re either doing it because you love wine and are keen to buy it early on the cheap or because you’re an astute financial investor who sees wine as a profitable asset class to invest in and reap some handsome returns. Or you could have your wine and drink it too. Invest in a few cases of wine now, and when they come of age, keep some for your consumption, and sell the others, so that you can reinvest the proceeds in more wine.
Of course, if you’re in India, it’s easier said than done to invest in wine. Most investment grade wine comes from either major wine regions in the old world — Bordeaux, Burgundy, Champagne, etc. — or from select wineries in the New World. Investing in wine is very much like investing in a flat. You don’t invest in it when it’s ready, but a few years before that, so that you gain from the appreciation. And needless to say, investment grade wine is not available in India but only overseas. In fact, in France, there’s a special term used — ‘en primeur’ — which literally means wine futures, and refers to the practice of buying wine before it’s bottled and released into the market.
Wine, like art, is considered in financial jargon as an ‘alternate’ asset class, separate from traditional assets such as stocks, real estate or gold. It is, therefore, more likely to appeal as an investment to someone who actually understands or at least likes to drink wine. Agrees Siddharth Rastogi, Vice-President, Private Wealth at Ambit Capital, “To invest in wine, the individual should have a liking and understanding of wine. I seriously doubt that someone who doesn’t drink wine will invest in it as an asset class or for the purpose of diversification.”
Assuming, therefore, that you do tick all the right boxes — you like your wine and you have some spare change lying around — how do you actually go about it? The Indian government allows an investment of up to USD 75,000 in a year, and that allows you to invest this money in an investment brokerage or a wine fund (a mutual fund for wine).
Be warned, if you choose to repatriate your proceeds to India when you choose to exit your investment, you will be taxed at normal rates. This is, however, a liquid asset — in all senses of the term — and there are those investors who may also choose to repatriate the wine back to India, and given the potential quantities, it’s unlikely to be declared — which is why I found it hard to get an investor to speak on record.
We spoke to Robin Khanna, CEO of Bordeaux Traders, a Vienna-based investment brokerage, with about 50 Indian customers. Robin says that 95 per cent of their customers are investing in wines for returns and high capital appreciation. He suggests a minimum investment of Rs.10 to 15 lakh and a holding period of three to five years. “Chateau Lafite Rothschild, Chateau Petrus, Chateau Latour, Chateau Le Pin and Chateau Cheval Blanc, to name a few, are all investment wines, which have been demanding the highest prices paid for fine wines in the world consistently for decades,” says Khanna.
Adds Simon Cant, Asian Brand Ambassador for Penfold’s wines, “There are wines outside the ‘Old World’ of wine that have had consistent appreciation over a period of time; with Penfold’s, one of the companies that is leading the charge.”
Cant does, however, play devil’s advocate, saying, “Investment in wine skews the global wine market for the people who really just want to enjoy wine, bearing in mind that wine is made to be drunk not traded. When a winemaker sets about to craft a wine, be it a wholly new creation or the continuum of a well-established wine house, the thought of how the said wine will appreciate in value does not even enter their mind.”
Cant also believes that for an Indian investor, wine is an investment fraught with risk, “due to a dodgy supply chain, which can by no means guarantee that the wine reaches you in the same state it left the cellar it was stored in, and a quagmire of regulations and duties, which will inflate the cost.”
These are real risks, along with the risk of wine falling out of fashion. The surge in wine demand from China, for example, drove up the prices of some of the best wines of Bordeaux from 2003 to 2012. However, as the Chinese economy has faced its own share of issues, along with active discouragement of the gifting of expensive bottles of alcohol, wine prices have come down.
Serious wine requires serious storage, which pays attention to temperature, humidity and vibration, among other things. And daytime temperatures in most Indian cities make storage more difficult, unless of course you choose to invest in a refrigerated wine cabinet. I understand that some wine lovers are now incorporating wine cellars as a part of the building plans for their summer homes in the hill stations of India.
Confused? Well, I will conclude with this piece of advice: if you have expensive tastes in wine, and the ability to back it up, then you should definitely be investing in wine, but primarily I would suggest from the point of view of your own personal pleasure, rather than pure monetary gain.
The writer is co-founder & CEO of Tulleeho, a beverage education and training firm and of www.tulleeho.com