For many years the fine wine investment market has been held back by issues surrounding fraud and unscrupulous practitioners, leading to damaged confidence in specialist firms and in wine as an asset class.
Many have long called for robust self-regulation to finally address the issue of fraud, while providing the industry with a real platform for growth. The Wine Investment Association will hopefully do just that, identifying fraudulent companies. What’s more, the City of London police-led National Fraud Intelligence Bureau has partnered with the WIA to combat fraud, offering real protection to investors.
The WIA will set the standards for best practice for the industry, will prohibit high-pressure selling and will require its members to operate robust systems and controls to prevent fraud, and to perform highly ethical practices across all areas of their business.
Fine wine investment is a growing industry. Currently valued at US$4bn globally, historically the sector has enjoyed strong long-term growth performance and has outperformed almost every financial index in the last three decades.
The potential is clearly there and it’s not unreasonable to predict UK investment levels to double as private investors become more assured as they gain the confidence that they can buy safely and trade profitably from their investments.
Yet, the shadow of fraud can loom over fine wine investment. As recently as November, police in China discovered a 10,000 bottle haul of counterfeit Chateau Lafite Rothschild wine which, if real, would have been worth up to £10m. The Chinese market is strong and growing steadily, but fraud can hang over the market. The WIA aims to be a global body that will bring safety to investors around the world.
Of course, as with any investment, you can’t guarantee the level of return. By investing with a WIA member firm, what you can guarantee is that your wine exists, it is correctly stored and recorded and that you are the registered owner of the wines. All WIA firms must complete a comprehensive audit, carried out by independent auditors, before they can be awarded member status to prove to the police and to the WIA that they are honest, reputable practitioners.
We want the WIA kitemark to be the definitive indicator that the investor can rely on, a stamp of approval that the company is a safe and trustworthy organisation. It’s clear that the industry has needed to take major steps to eradicate fraud and inadequate management, and protecting investors. The WIA will go a long way to doing so.
Peter Shakeshaft is chairman of wine investment specialist Vin-X
For more information please visit The Wine Investment Association