Translated material
How to make money on wine?
You can not just drink wine, you can invest in it and make a profit. How does it work in Russia and in the world?
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Is it possible to make money on wine brought from vacation? How do wine exchanges work and why are wine futures needed? How do you know which wine is worth investing in and how quickly you can make a profit? And what does Russian legislation say about all this?
At the “ Better Here ” meeting of entrepreneurs on April 23, wine expert Victoria Mustyatsa told how to profitably invest money in wine. "Paper" publishes notes from Victoria's lecture.
Is it possible to invest in wine in Russia too?
— In Russia there are some peculiarities of alcohol circulation, which leaves an imprint on our investment efforts. There is a EGAIS system that records all alcohol that is imported into or exported from the Russian Federation. And she is completely clumsy. This is a mandatory program for everyone - both retail and wholesale outlets, and it is quite expensive. But EGAIS is not as scary as a license. How does investing in wine work in the world: you can buy a lot or a little wine, good or bad, through different channels and sources, and then resell it. This is prohibited by law in Russia. If you buy wine as an individual, you have to drink it, do whatever you want with it, but you don't have the right to sell it. Therefore, we actually do not have a secondary alcohol market. You can only resell it if you have a liquor license. But it is very expensive - and this is a question of both price and additional security measures, primarily of a technical nature (Unified State Automated Information System, availability of a warehouse, etc.).How to invest in wine in Russia?
— In Russia, to invest in wine, you must either be a very large player in the market, or invest in wine for your own consumption and pleasure. The second is not as stupid as it seems, especially if you love and prefer status wine - one that is quoted, in demand, quite expensive and usually with a limited release volume. If you consume such wines, then investing in them at a certain time in order to save your own expenses in the future (not overpay, for example) is also an investment, only it ends with your own consumption.How to invest in wine abroad?
— If you have the opportunity to store wine abroad, then you are an ordinary official investor. You can cross the border of the Russian Federation with this wine, but subject to import duties. You can bring four bottles of wine (three liters of alcoholic beverages). If you carry two more liters in excess of this norm, you pay ten euros. Large quantities are considered commercial quantities and you will have to pay 20% of the declared value. If the wines are not very expensive, this is not so scary. But if we are talking about a bottle for 300–500 euros, then 20% is a significant amount (60–100 euros). It is important that, taking into account our legislation, you will not be able to resell this wine in Russia without an alcohol license.What are wine funds and how are they structured?
— The first of three possible investment channels is wine funds. Usually you place money in a certain area, and you have a threshold for entering the market - you can pay no less than a certain amount. In wine this is usually from 10 thousand pounds. The algorithm is this: you knock on the door of a wine fund, say that you want to be a contributor, and place money for a certain period. There have been changes in the global market in recent years as some funds have exited. This was due to proven or unproven fraud. Wine is a specific product, very subjective, as it is judged on the basis of pleasure. Experts are very important in this market. And some funds have closed because peer review was questioned.How do wine exchanges work?
— The second way to invest in wine is to go to the wine exchange. First of all, these are various Internet platforms. For example, London International Vintners Exchange, Berry Bros. & Rudd, The Knight Frank Fine Wine Icons Index, Fine Wine Index. In Russia, you can formally buy wine on the company’s website. How to import it and store it is the second question. But you can buy it without leaving your home. And the volumes may be different. These can be trading companies in Holland, Germany, England - and you can buy one bottle from them. Why do you need this? If your margin is 20 euros, then it’s easier to buy this wine in a store, but if we’re talking about a box of status wine, that’s a different matter. On a wine exchange you work through a broker, you have a certain intermediary who helps you. At the same time, you can do everything on the Internet. You leave the wine in special storage facilities at the exchanges themselves: your bottle just sits there and you can resell it. Each wine exchange has its own index, the most famous is the Liv-ex Fine Wine 100 Index.What are wine futures?
— Wine futures work like this: you invest money now to benefit from wines in the future. There are auctions where wines are sold while still young, you taste them, pay for them, but you cannot drink them until after two years. You buy wine in advance, sometimes even by subscription - this is practiced in America. The right of turn can be resold. The further you are from the birth of a wine, the more expensive it is. In some cases, this issue is related not only to price, but also to the possibility of obtaining a wine of a certain name. Burgundy has a quota on specific wines, and the closer to the time of release you can afford to buy it, the greater the chances of it being sold to you.Is it possible to buy wine for investment yourself?
— Another way to invest in wine is to purchase it yourself. For example, while on vacation in Italy, you stop at a wine shop and simply pick up some wine. You can take three bottles, or you can buy a whole collection, leave it somewhere in Europe, and then slowly transport it to Russia on your own or through friends. If you buy wine yourself, you can stop by the chateau and buy it there. But, for example, in Bordeaux or Burgundy they won’t just sell you wine - they have their own distribution system, and they will only give you the wine to try. But there are other regions where some wines can be purchased directly from the producer.How do you assess the investment potential of wine?
— There is such a thing as the age of wine. There are young wines that smell bright, but very simple. There is a period of development when the wine matures, and a period of decline when the wine dies. A wine's potential is a measure of how long the wine will live. It is initially either present or not, and depends on the variety and location of the grapes. There are few wines that are designed to be drunk young. For example, pinot grigio - you need to drink it here and now, there is no point in aging it. These wines are fruity and light. But there are other wines, such as Rieslings. There is no point in drinking them young, but in the fifth or sixth year they become very interesting, their tannins are smoothed out. They can last 15–20 years. You can buy wine of different ages. If you buy wine at a time when it can and should be drunk, you are purchasing it with added value. If you have the opportunity to buy wine as young as possible, you will get it cheaper. At the same time, a number of high-status regions - such as Bordeaux, Burgundy, Rioja, Piedmont - have legally established regulations. When you see the word Reserva on a bottle, it means the wine has been aged in both barrel and bottle. This is how regions limit the entry to the market of wines that can be very prickly at a young age. They turn out to be expensive, but more noble and smooth.So which wine should you invest in?
— Regardless of whether the wine is a status wine or an average one, we first of all talk about the grape variety, where it grows, the level of the winery and marketing. There is a cohort of the most famous wines - these are Burgundy wines. There is first class Bordeaux - the top five wines in the province - and cheaper Bordeaux. In some cases Champagne. The peculiarity of Champagne is that the vineyards there are not expanding, they are naturally limited, and the demand for them is increasing. In Italy, these are Barolo and Barbaresco wines from the province of Piedmont, as well as Tuscany. In Spain these are Rioja and Ribera del Duero. American wines have also become very popular lately.How soon can you make a profit?
— On average, the payback period is 3–5 years. Investments in wine are distinguished by the fact that they are quite long-term. In order to lock in a certain profit, you need to wait at least three years, but the longer the better. If you invested money through funds, you need to understand that you will not get it back quickly, since you cannot withdraw your deposit before a certain time.