Buying Wine in Bond

Buying Wine in Bond

posted in: Blog | 0

Buying wine in bond was something quite new to me when I came to look through the wine that Henry had laid down over the years. I could see all the wine in our cellar but then I discovered there was more. We had wine in storage. What did the mysterious words ‘in bond’ mean? I started looking through our stocks. Then I began to explore why you would buy wine in bond in the UK. What are the advantages and why did Henry choose to?

What does Buying Wine in Bond mean?

When you buy wine in bond you are just paying for the wine itself. You buy the wine before paying duty and VAT. This obviously means that you pay less when you actually buy the wine so that you can spread the cost. You will pay duty of £2.23 on a 75cl bottle of still wine regardless of the price of the wine. Duty on a bottle of sparkling wine is £2.86. After the duty is added to the cost of the wine then 20% VAT raises the price of the bottle even further. When you buy wine in bond it is not delivered to you at home. On arrival in the UK it is stored in a HM Customs & Excise approved ‘bonded’ warehouse. You will need to pay both duty and VAT on the original sale price before you can have the wine delivered.

Just to warn you, you will have to pay to store your wine in bond. I think this rate is usually between £7 – £10 per case each year. I was surprised to receive quite few unexpected wine storage bills when I began to manage Henry’s wine collection!

What are the advantages of Buying Wine in Bond in the UK?

Obviously when you pay VAT and duty at a later date you spread of the cost of your wine. However, there are other reasons why you might be keen to buy in bond. Firstly, when you store wine in a bonded warehouse it is kept in ideal temperature and humidity controlled conditions. These will be more reliable than those of any home wine storage system. Your wine will mature and age better and more reliably. As it is usually fine wine, rather than every day drinking that you will be buying in this way, good storage can be a real benefit. These wines are designed to age and mature.

Secondly, are you buying the wine for investment? If you choose to sell the wine rather than drinking it there is another advantage. Wine stored in a bonded warehouse is very attractive to prospective buyers. The provenance is guaranteed and this will give your buyer some reassurance. If you think you might want to sell your wine later then many wine merchants actually recommend buying in this way. You will be selling wine with a traceable history. You may even find that your wine is worth more because you bought it in bond. If you do sell your wine you will never have to pay the duty and VAT. However, you will have to pay a brokers fee to whoever sells it for you.

I have recently been browsing through the wines we will still hold in bond and trying to weigh up whether to keep them or whether to sell. We didn’t buy them for investment but some wines and vintages are certainly more valuable than they were when we bought them.

Remember no investment is guaranteed and the price of wine can go down as well us up.

What is En Primeur Wine?

If you buy wine en primeur you will be purchasing the wine before it has even been bottled and released onto the market. The wine will still be maturing in barrels. You will not pay duty and VAT at this stage. Then when you do pay you will be charged on the original sale price and not on the current value of the wine.

This can be one of the most cost effective ways to have the opportunity of buying sought after vintages. You can also get your hands on wines that are only available in very limited quantities. You will receive your wine about 2 or 3 years after the vintage. At this stage you can either decide to have to pay the duty and get the wine delivered to your home or go down the bonded route. You can only buy en primeur wine by the unmixed case.

Where Can I Buy Wine in Bond?

You can buy wine in bond at most good wine merchants. When you buy wine in bond you won’t have actually seen it so it’s definitely worth doing your research. Find out about the growers. Try to go to some wine tastings. If you are thinking of En Primeur wine, then discover when vintages will be released. You can buy in this way through some well established, reputable wine businesses like The Wine Society or Berry Bros and Rudd. Talk to your favourite smaller wine merchant too. I’m sure they will be able to give guidance. Some actually specialise in selling wine in bond. Henry bought some wonderful wines with A & B Vintners and Farr Vintners.

When you buy wine for investment you might also want to speak to a specialist wine investment company.

Wine Cellar Record Book

Wine Record Book

I am gradually having most of our in-bond wine delivered. I plan to share it with friends and family in future. The best way to learn about wine is to keep tasting notes. I will be using my Wine Record Book whenever I open a bottle. I’m going to be keeping tasting notes and also writing about the occasion. I am lucky because Henry wrote about most of the wines we own in Thoughts on a Wine Cellar. These are wines that mean a lot. His words will guide me and let me know why he bought each wine. I hope they live up to his expectations.

Buy your own Wine Record and start making some notes about your collection.