As I mentioned in my Blog on Friday I recently came across a dodgy deal and promised to warn you about it. With the fine wine market booming there seem to be no end of suspect companies setting up in business and taxing the wallets of would be investors which infuriates me.
Investing in wine is becoming more popular as people realise that fine wine is no longer an alternative investment – indeed recent articles in the press have been advocating that fine wine should be part of your portfolio. However you have to be wary and make sure that if you are parting with your money that you do so wisely and to a company that is trustworthy.
For heaven’s sake DO NOT listen to wine investment companies who cold call you!
This particular deal really annoyed me as the company concerned seems to be legitimate but is operating at rip off levels. I am not going to name names but the company is based in Surrey and Jim Budd (who runs the brilliant site www.investdrinks.org) has already encountered them. Jim writes on the pitfalls of wine investment and keeps a regular eye on suspect companies who are dealing in this world. Check out his Blog here.
This company’s brochure is offering two 2008 wines Mouton and Lafite. It was the prices at which they bought the wines that made me do a double take . . . they were extortionately over priced at purchase price leading me to believe that they either do not know what they are doing buying at those prices . . . or they are being economic with the truth about both the purchase and valuation prices.
They listed the wines as being bought in June 2009. Lafite was purchased at £6800, according to this company it’s current value is £10000 and this represents 47% growth. Mouton was purchased at £6150, current value £9000, representing 46% growth. Pardon???
Now I also bought these wines in June 2009 at £1417 and £1812 respectively and based on today’s Liv-ex valuation the wines are worth £2750 and £5056 a case!!!
The price that this company “say” they bought the wines for means that once you have put their management fee of 15% in top of their valuation figures their unsuspecting customers will have to pay £10350 and £11500 for wines which are worth a fraction of the price!!!
I did a little checking up on this company and what is confusing is that this company seems to have several operations – they were trading under another name in the late 1990s and also have an online wine exchange under another name which dates to 2001. Their current website was set up in May 2008.
I am not an investigative journalist but I do know the wine business well and I smell a rat. I will be forwarding my findings to Jim Budd and will leave him to take up the challenge.
The message that I want to get across is that you must be extremely careful! Companies like this are very misleading and misinformation is dangerous. There are several ways of checking out wine merchants and wine funds – you can check prices at www.wine-searcher.com and www.liv-ex.com and I highly recommend Jim’s site as a method of looking up suspect dealers.