Words: Richard Holmes
Whether you’re a wine-lover or not, fine wine is a good diversifier in any investment portfolio, believes Ken Kinsey-Quick, founder, Fine Diamond Fine Wine Investments.
“Top wines, stored properly, can yield a return of 15% to16%, year-on-year, which is phenomenal compared to other asset classes,” adds Roland Peens, managing director of respected wine merchants Wine Cellar.
But investing in wine isn’t about stashing a few good bottles in the bottom of your linen cupboard. The secondary market in South Africa is small, and “in South Africa we’ve never really had a culture of cellaring wine for the long term”, says Roland. “Also, the wine hasn’t been of the quality needed for investment.”
All the more reason to seek out expert advice, for the right selection of wines and proper cellaring are crucial to realising value in the future.
“As a wine brokerage we get offered fine wines on a daily basis, but nine out of 10 times we’ll turn them away because they haven’t been stored properly,” says Roland.
Along with bespoke investments, Wine Cellar’s solution is to offer unitised collections of carefully selected wines that are matured in professional cellars, with market prices tracked to give an accurate valuation of each investor’s portfolio. Wines can be sold at any time, or accessed for one’s private collection.
Fine Diamond offers a different investment avenue. Investors purchase shares in a private company, with a minimum investment of R100,000. Those investments are then used to purchase a portfolio of wines for the company, which are cellared in bonded London warehouses. Fine Diamond invests roughly one-third in South African wines, and the remainder in international producers, predominantly age-worthy Bordeaux.
When investors want to exit the company, “their shares can be sold to existing shareholders as well as new shareholders,” says Ken. “Alternatively, their share of the wine holdings can be sold on the open market, or the wines claimed for their own cellar.”
While returns are subject to the whims of the market, Ken says current investors have already seen an 11% return in the past six months, largely thanks to holding a substantial amount of Kanonkop’s Paul Sauer 2015, which received a 100-point rating last year.
Perhaps it’s the year to take a whirl – and a swirl – in the world of fine wine investing?