Meet Sonal Holland- an award-winning wine broadcaster, wine educator, wine consultor, wine judge, wine investment advisor and India’s first and only Master of Wine. She’s one among the 370 people in the world to hold this prestigious title making her the ‘go-to’ person to understand everything there is to know about this sparkling asset!
This week MissManage had an interesting chat with her about the exclusive world of ‘fine wine’ investments:
MM: Tell us a little bit about what you do
SH: Academically I’m a Master of Wine- a title from U.K.’s Institute of Master of Wine which is considered one of the top accolades in the wine world. The title gives me the necessary credentials to hold authority over the wine industry in India. And professionally I am involved in a host of activities that promote the Indian wine culture, a concept which is still new and nascent here
MM: Do people really invest in wine? How does it work?
SH: When it comes to investments wine might not be your first choice. But it is still considered an investment by the world’s top 1-2% of the population while the others prefer sticking to the traditional stocks and bonds. It all depends on a person’s degree of disposable income, the more they have the more they can afford to diversify their money into alternative investments such as art, wine, jewellery etc. And this isn’t just the case in India, even in the world’s most developed markets such as China, Europe, and U.S. only the billionaires and millionaires look at wine as an investment tool.
MM: How does wine compare to traditional investments?
SH: Unlike traditional investments wine requires a huge initial investment (Approximately Rs. 10 lakhs or 10,000 pounds for a case). That’s why only high net worth individuals invest in wine. Secondly, wine is an illiquid asset i.e. it’s not easy to sell like stocks and bonds for immediate cash. Thirdly, one must remain invested for at least 5 years to make some returns after considering additional costs such as insurance, brokerage and storage. Lastly, it’s a risky investment as one cannot predict the movements of the market which are purely driven by demand and sometimes you may even lose money. Example: In 2011 there was a Bordeaux bubble burst due to declining demand for wine in China and it brought down the value of some of the most expensive wines to almost half.
MM: What are a few pointers to keep in mind when investing in wine?
SH: To be a hardcore investor in fine wines one needs to go deep into it.
- Have enough contacts in the wine world.
- Go through an established merchant (Avery or Berry Brothers) who can help you move through the wine markets & give advice without making money off you.
- Do lots of research.
- Compare prices across all platforms, at times the same wine may be quoted at different prices at different places.
- Avoid buying wine online, speak to someone and then place the order.
- Provenance is very important with wine investments, find out where the wine is from
- Buy the wine in its original wooden crate OWC rather than loose bottles. Crates sell at a better rate than bottles.
- Buy the wine at the rate closest to its original value i.e. as closest to its release date.
So the more you delay your purchase the more you’re likely to lose out on profits. But getting access to the first tranche isn’t easy for first-time investors. That’s why going through a good merchant is important.
MM: What are the hidden expenses you’re incurring while investing in wine? Insurance, brokerage, etc. Are the returns good after considering all of these
SH: Wine as an investment has no hidden costs it’s pretty straightforward. Let me tell you how the process works if you’re buying wine from a merchant they will charge you 10%-12% as margin. To be able to recover this with a decent profit one needs to wait for at least 5-10 years. Sometimes even more. My personal example: I invested in the 2009 and 2010 Bordeaux vintage which is by far the most attractive wines to invest in akin to the blue chip stocks of the fine wines world. But after 2011 the wine markets crashed bringing down the value of these wines by even more than half. After 7 years when markets recovered by 2015-2016 I was still making a loss after taking into account brokerage costs.
Wine also has a storage cost which is approximately around 10.5-11.5 pounds per case (i.e. 1 pound/bottle). So if you have 200 bottles you’d end up paying 200 pounds per year!
MM: What are the things to be kept in mind while storing fine wine? What documents are required to maintain wine as an asset/investment?
SH: Whenever you buy wine for investment purpose don’t ship them to India. The minute you do this it will lose its value. Nobody wants to buy a bottle when it hits Indian seas, it’s too difficult to reroute this. Ideally, keep them stored overseas in a place that has secondary markets such as Hong Kong
or London. I store it in London City Bond. These store your wine under optimum conditions such as humidity control, temperature control, dark lighting, essentially under conditions needed for ageing your wine. And, like I mentioned the annual charge for this facility is 10.5-11.5 pounds/case, which is worth it because it comes with insurance at replacement value.
Lastly when the merchant issues your certificate make sure to take and keep this certificate safely with you.
MM: Wine collecting – investment or hobby?
SH: Id’ say its part hobby part investment. Let’s say I have stored my 1998 Lefite in London and decide to check up on it when I’m visiting the city. I might even get tempted to bring back 1-2 bottles home to drink it. Even if I had bought the 1998 Lefite at 8000 pounds and hypothetically it rises to 12000 I’d still be making a profit on selling the remaining 10. In fact I’d be covering the cost and drinking those bottles for free. Besides most wine investors come with the attitude that in the worst case situation if their investment doesn’t make them a profit they’d drink it
MM: Do wine collectors really sell their wine for a profit? How does that work?
SH: Not all wines can sell, only those that are investment worthy can be sold. These investment grade wines are just the world’s top 1-2% wine (Example: The wines from Bordeaux) that have an ageing potential of over 100 years. They are hugely sort over by investors and are called as fine wine. They’re bought with the intention of reselling at a higher price in the future. The remaining 98% of the wines in the world are just for consumption and have no value compared to their peers.
MM: How can someone clueless about investing in wine get started?
SH: First they need to start drinking some fine wine and appreciating it. Over time when they love and enjoy it they can buy a case from which 6 can be consumed and 6 can be sold. They should start slowly and ideally go through a trustworthy merchant who’ll build them a portfolio and keeps in touch with them constantly.
MM: Any resources our audience can turn to for updates on India’s fine wine market?
SH: They can read up a lot on wine on the platform- Live-Ex. It’s an organized platform to track movements of top 100 or top 50 most sort after wines of the world. From tracking appreciation to news one get an all updates from this website.
MM: If not directly in wine, would you recommend investing in wine companies and/or in the wine market (equity, stocks, bonds, derivatives, etc.)?
SH: There are certain wine mutual funds overseas through which you can invest in wine as an asset. Other than that getting an equity stake of even a percent in a fine wine company is really impossible. These companies are backed by some of the richest people like Salma Hayek, Angelina Jolie, Brad Pitt etc. It’s a tight network of the super-rich so they never really short of money!
Sonal is a domain expert on the business of wine & spirits in India and is passionate about drawing global attention to our country’s beverage industry. Sonal’s professional achievements include her role as the former corporate head of wine and beverages at homegrown luxury hospitality conglomerate, ITC Hotels. Currently, she is a wine buyer and consultant for luxury food retail chain Foodhall, and is also a wine consultant for the restaurant group, Gourmet Investments. Adjudged the Wine Personality of the Year recently, Sonal is regularly featured as one of the most powerful women and most influential personality in India’s luxury industry.
Some of her recent accolades –
- Top 50 Most Powerful Women in Indian Luxury for three consecutive years—2015, 2016 and 2017 by luxury business magazine Blackbook
- Top 100 Most Influential People in Indian Luxury in 2016 and 2017 by BlackBook
- Top Women in Wine by the Indian Wine Academy
- ‘Wine Personality of the Year’ award by India’s leading food writers’ association, the Food Bloggers Association of India (FBAI)
To know more about her enterprises visit her website www.sonalholland.com.