It seems that the hottest topic for the media at the moment when it comes to fine wine is the issue of whether regulation is required. As we start a new financial year, many investors are being warned off wine following the recent revelation that over 50 wine investment companies have collapsed in the last four years as featured in the Sunday Times and BBC Radio 4 in recent days.
Our industry has had its reputation tarnished by a number of reckless companies who have muddied the process and not provided enough security or transparency to protect investors. According to industry commentator Jim Budd, investors have lost £150-200 million on mis-sales and fraud in wine over the past two decades.
What recent press coverage has failed to do however is concentrate on what must be done to rectify these problems moving forwards and what is being done to tackle the problem right now rather than simply focus on the mistakes that have happened in the past.
We must start with, at the very least, a standard of good practice for those who introduce fine wine as an investment commodity to consumers. At Vin-X we have a number of measures in place that, we believe, if adopted as industry standard could significantly reduce the risk of fraud and mis-selling for investors.
These measures include: the independent auditing of wine to verify the wines bought by clients and held in storage, the recording of all telephone conversations, a seven day cooling off period after sale, a guarantee that wine sold is owned by the organisation, i.e. there is a right of ownership title to be transferred to the investor, the provision of reference details and certificates of ownership of wine, the ability for clients to see and move their wine and the guarantee that wine secured en primeur (i.e. before bottling) is sourced from approved suppliers only who are fully insured. We are also launching road shows this year to help educate IFAs about wine investment to ensure they too give the best possible advice to their clients.
You might ask why I am so keen to lead the charge on some type of regulation after the demise of a former subsidiary company of mine. The answer is simple, whilst I have first-hand knowledge of FSA regulation and its many pitfalls, it is not applicable to wine investment. Yet having no regulation in the wine industry is a clear negative as I have highlighted throughout this piece. With this in mind, self-regulation is the clear option moving forwards to satisfy all the investor needs for protection.
Moving forwards there are steps being taken by Vin-X and other wine investment companies to form an association or system of self-regulation for the industry to improve standards and we hope to announce more detail on this over the coming months.
The key thing to get across in this blog is that consumers should not be fearful of investing wine. The recent publicity has shone a spotlight on instances of poor practice in the industry. These practices are not common, are unforgivable and should rightly be condemned.
However this should not besmirch the industry as a whole. The majority of the companies offering advice on investment in fine wine have proper measures in place to make the entire experience as safe as possible for investors and there is now a movement to make these even more so. The market is very much a buyers one at the moment, and there are some interesting opportunities post the 2011 price correction.