Buying wine en primeur has two main advantages. First, if the wine is highly sought after, purchasing it at this stage ensures you secure your allocation. However, for most Bordeaux wines—the primary wines sold this way—this is not typically the case.
The second potential benefit arises when the release price is appealing, which may allow for a lower purchase cost. Unfortunately, recent trends show that producers have been reluctant to allow consumers and the secondary market to retain their margins, leading to a rise in prices. In the past, savvy buyers would often purchase two cases, enjoying one while flipping the other for profit. However, the financial dynamics of this approach may not be as sound as once believed.
Collectors often overlook hidden costs when they sell wines years after acquisition, believing they have made substantial profits. For instance, consider a case bought 15 years ago for £1,200, which is now valued at £2,400 in the current market (including all taxes). While that seems like a success initially, let’s factor in inflation: £1,200 in 2011 equates to £1,897 today, according to the Bank of England’s inflation calculator.
Storage fees should also not be ignored. In the UK, average wine storage costs per 12-bottle case include:
- Corney & Barrow: £18.60
- Berry Bros & Rudd: £17.28
- The Wine Society: £10.28 (insurance included)
- Seckford Wines: £13.20
- Big Yellow: based on storage unit size, but does not include in bond storage.
Assuming an average storage fee of £14 annually over 15 years would add another £210, increasing your initial £1,200 to £2,107—a figure that diminishes perceived profits.
Furthermore, lost opportunity costs could have generated even greater losses had the investment been placed in a low-cost global ETF yielding a conservative 7% per annum. This would turn the initial £1,200 into approximately £3,310 today, meaning the wine investment actually incurs a loss.
To illustrate the point, consider the Bordeaux 2010 vintage, regarded as strong. Wines like Montrose and Haut-Bailly sold for £900 back then, yet today Montrose is priced at £1,650 and Haut-Bailly at £1,200. Without accounting for storage costs, these wines should show significant losses of £833 and £1,283, respectively.
In conclusion, entering the secondary market generally proves to be more beneficial than purchasing en primeur.