How to protect yourself from being a victim of wine investment?

28-May-2015

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Investing in fine wine can be a profitable, safe and long-term type of investment. However, it does feature some drawbacks you should be aware of. The more you know about wines the better chances you have to witness great returns. Unfortunately, because we’re talking about an investment there’s a level of risk involved that traders ought to know more about. The market is not just competitive but also tricky. Rogue wine traders and fake merchants are everywhere; and believe it or not, they have smart tools meant to persuade investors to buy bad wine.

If you really like wine as a beverage and you’d like investing in wine business, it is important to deal with reputable merchants and trustworthy traders. Here are some guidelines to help you steer clear of scams.

Learn more about selecting the right merchant

It is imperative that you hire an honest, trustworthy wine merchant to help you with the initial investment. An expert is like an open look; he should have an impressive resume, prior experience and a successful track record of completed deals thus far. Getting into the wine business can be extremely challenging when you know very little about the product itself. Before hiring someone to offer advice you should perform a thorough research of that company or merchant.

Investors are not advised to purchase wine directly from people who claim they hold precious vintages. What if they’re just trying to scam you? Thanks to advanced technology, forging a precious wine bottle is now extremely easy. After checking more wine companies, call in advance and make an appointment. They should welcome you into their physical office and not just claim they have some someplace at the other end of the world.

Know as much as possible about the product

When a wine lover is looking to invest in wine, he must learn to let his personal feelings aside. The type of product you enjoy drinking the most may not be suitable for an investment. Only specific types have high chances of increasing in value and delivering a profit. The industry can be challenging and even a bit tricky. Only an expert can advise you when you should buy. Have a closer look online and look for more information on market prospects.

Start with Liv-ex to assess the indexes, and then feel free to assess other wine blogs for a clearer perspective of the industry. Provenance and quality are fundamental aspects when looking to invest in wine. To make sure you stay away from scams, never deal with individuals when trading and always consults with a professional first.

Availability and overall wine condition

Wine investors should have realistic expectations. For their investment to pay off, they must do their due diligence first. Check for availability and make sure that you spend money on wines with a proven track record. This is one of the safest ways of seeing returns. Your product should come in a sealed case (or more sealed cases). It shouldn’t be mixed with other types of wine, and it must be available in original wooden boxes.

If your wine merchant notices that something is wrong you should listen and cancel the purchase right away. We mentioned that forging bottles and labels is extremely easy these days; only an expert can prevent a bad deal from closing.

Value your investment

Storing your wine in proper conditions is vital to its appreciation in time. Investors have more options available; they can opt for in bond storage to avoid paying VAT taxes or they can opt for professional storage in climate-controlled cellars. There’s a third option available, although you are not advised to consider it unless you’re a wine guru – self-storage.

As far as wine fraud prospects are concerned, investors are advised to take caution every time they choose to purchase a bottle or even a whole case. If you happen to be a rookie investor, stick to the classics. Bordeaux wines are the best; they’re known to increase in value over time, and they have the lowest chances of depreciating. Furthermore, because Bordeaux is a region where the supply diminishes annually, the value of these wines will increase greatly as the demand goes up too.

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