Picture credit: Getty
Artillery Row

Venal vintages

The murky world of wine collecting

On a murky morning in early March 2022, a Bombardier Challenger 350 is warming its engines on the tarmac at Luton Airport. The luxury cabin is full, but there are no  passengers — just case upon case of blue-chip wine worth £1.5 million. Amongst the  haul are ten cases of Petrus 1982, worth around £260k, fifteen cases of Latour from the same year worth £390k, and ten six-packs of Le Pin 2010 worth a mind-bending  £400k. The £20 million private jet is owned by a foreign billionaire and it’s taking his wine home before the UK government gets a chance to seize it. To avoid suspicion, the jet is destined for Cyprus, where it will refuel before heading to its final destination, Russia. 

The UK government has sanctioned over 1,200 Russian citizens since Putin first  invaded Ukraine. There were obvious financial targets: football clubs, super-yachts,  Mayfair mansions and bank accounts. But there was also wine. Millions of bottles of it. 

The global secondary market for wine — where investors trade bottles already in  circulation — is valued at £5bn. According to Robbie Stevens, a senior territory  manager for global wine marketplace Liv-ex, a remarkable 33 per cent of that — roughly 2 million cases — is held in the UK. This wine isn’t for drinking; it’s a high-value  growth asset. As one long-time investor joked with total sincerity, “where’s the value in an empty bottle?” 

For Stevens, the reason is simple enough, “wine investment has thrived in the UK because of the tax efficient means of buying and storing it here.” Simply put, the UK  is a tax haven for wine and investors are getting drunk on the profits using established merchants such as Berry Bros. & Rudd, Lay & Wheeler and Armit Wines to source and hoard the finest vintages. 


Most bottles are either bought en primeur or in bond. Bonded wine is stored at an HM Customs and Excise-approved warehouse. As Mark Steibel, a senior lawyer in luxury assets explains, “wine held in bond hasn’t officially entered the UK, it’s like buying from duty free at an airport.” 

Bonded wines are only taxed when they’re withdrawn from bond, and even then, the sums are miserly. The usual 20% VAT is added to a duty rate of just £2.23 per bottle. In the high-end market, where cases regularly go for tens if not hundreds of  thousands, it’s a laughably small price to pay. 

En primeur wine is yet to be bottled and isn’t delivered for at least two years while it  matures. To buy en primeur is to get in on the ground floor — the prices are as cheap as they’ll ever be. Once bottled, most en primeur purchases are delivered to bonded  warehouses anyway, avoiding duty and VAT. 

Competition for en primeur is fierce

But competition for en primeur is fierce. Investors spend years cultivating  relationships with merchants to secure top vintages in the primary market. One  grizzled dealer I spoke to was treated to not one but two skiing holidays this year, all paid for by an investor looking to secure premium cases ahead of the competition. They’re off to the Monaco Grand Prix next year. Though whether they’ll be able to see the track from the super-yacht, I don’t know. 

On top of this, UK sales are also exempt from capital gains tax. HMRC, typically so  quick to squeeze those who can least afford it, hands out enormous tax breaks to wine investors on the basis that wine is a “wasting asset” likely to go bad after fifty years. But ask any investor and you’ll know that half a century is plenty of time to grow an asset that notoriously matures with age. 

Just this year an anonymous individual sold his original £380,000 investment  portfolio 20 years on for £4.2million without paying a penny in capital gains. The  dealer took 10 per cent — a commission greater than the original price of the wine. With around £2bn of wine held as investment in the UK and the top level of capital gains  tax at 28%, that’s at least 500 million pounds of tax credits being handed out to the super-rich. 

Tax breaks aside, wine can be a lucrative financial position. Over the past five years, the Liv-ex Fine Wine 100 index has outperformed the FTSE 100. No wonder those with the deepest pockets have cultivated an interest in grapes and vines. Money from  all over the world flows to the UK where discrete domestic dealers secure large wine portfolios for Arab sheikhs, Japanese gangsters and Russian oligarchs. 


Attending a smart dinner in central London last week, I feared the worst when my  neighbour began swirling a wine glass and sending his nose for a deep dive. There’s nothing more tedious than someone who thinks they smell cedar wood and notes of  tobacco. Thankfully, he turned out to be far more interesting, revealing he makes hundreds of thousands of pounds dealing blue-chip wines to some of the richest people on the planet. “You don’t need to be a genius”, he boasted, “but if you’re made of the right stuff and are willing to turn a blind eye here and there, you can make a fortune”. So here’s the recipe for a great wine dealer, a bottle of Blitz spirit and a large glass of ethical disregard. If you have the money, London will store it for you in wine. 

My new friend had been late for the main course, held up at the office liquidating  £200,000 of vintage stock for a client whose UK bank accounts had been frozen. The buyer was a nineteen-year-old Arab who demanded the cases be sent immediately to a super-yacht moored in the Mediterranean. A jet was chartered and by the time we were tucking into chicken supreme, just under a quarter of a million pounds of wine was on its way to Monaco… alongside a briefcase of VAT exemption documents, of course. 

Bizarrely, Muslim collectors — many of whom refrain from drinking alcohol on  religious grounds — are among the world’s most prolific wine collectors. A significant  proportion of their stock is stored in the UK. It’s not only wine they’ll never drink, it’s bottles they’ll never see, held in places they’ll never visit. The Quran describes wine as “Satan’s handiwork”. Oddly enough, religious objections seem to wane when there’s the prospect of a heathy profit from a few thousands French bottles. 

But it’s not just obscure foreign money cashing in on the wine trade. Legendary football manager Sir Alex Ferguson, when he’s not buying thoroughbred racehorses, is an avid wine collector. Back in 2014, the Glaswegian sold a selection of his cellar at a charity auction orchestrated by Christies raising £2.7million. The highlight was a magnum of 2002 DRC Romanée-Conti selling for £16,450. But even Sir Alex’s collection is dwarfed by that of Lord Andrew Lloyd Webber who is thought to have tens of millions of pounds tied up in wine, a collection he began at just 15 years old. 


Why isn’t the government looking to tighten tax laws around wine trades? One  informed British dealer cackled at the prospect, informing me that most of his trade comes from members of the House of Lords, wise to the tax incentives at play. 

This dealer works with domestic collectors in positions of significant influence, from lawyers and politicians to landed gentry and financiers. In his own words, any  attempt to tax the secondary wine market would, “seriously cock-up our client’s  financial planning”. Turkeys don’t vote for Christmas, and the establishment doesn’t vote for tax hikes on wine. 

So should everyone be selling up and slamming it all on red? As Liv-ex’s Robbie  Stevens explains, the wine market has opened up in recent years, creating  opportunities for investors with smaller pockets, “you can buy into a fund or even just  buy a tiny percentage of one bottle”. 

As with any investment opportunity, it helps to know a little about what you’re  buying. Small-time wine investors have been caught out in recent years with rogue  traders cashing in on new, ignorant investors. Dow and Jones Ltd. was one of a  number of companies that sold bottles at grossly inflated prices before being exposed for fraud and shut down, leaving thousands of ordinary investors out of pocket.  

I met one industry insider who spent four months at a boiler room operation, cold  calling would-be investors and reading ludicrously inaccurate sales scripts down the phone. If the business model wasn’t nefarious enough, these companies prey on  vulnerable investors who are known to have lost out elsewhere. 

Even high-end investors can be caught out

Even high-end investors can be caught out. Perhaps the most famous case of fraud concerns the disgraced Indonesian dealer, Rudy Kurniawan, since immortalised in the Netflix documentary Sour Grapes. By 30 he was globally renowned as a buyer, seller and connoisseur. In early March 2012, aged 36, he was arrested for fraud after it  emerged he’d been buying cheap wine, decanting it and passing it off as vintage stock  from elite vineyards. 

Remarkably, it’s not just investors who need to watch out. One emerging English  trader told me, “I always make sure waiters remove the cork in front of me when  eating out. These days, no matter where you are, there’s no guarantee you’re drinking what you’ve ordered.” It’s an astonishing claim, but one he insists we shouldn’t be  surprised by. If you’re working front-of-house on minimum wage, watching bankers  throw thousands of pounds on a mid-week dinner, why wouldn’t you try and flog some stuff on the sly — especially if your customers are too drunk to taste the difference? 


As my dinner party friend finished up his lemon tart, he recalled travelling to  Knightsbridge on the tube late one evening with a £25k bottle of red in his backpack. A Russian client had had a last minute thirst for a particular vintage which he bought and drank within hours. 

But if there’s anything more grotesque than a billionaire swigging from a bottle of  Bordeaux, it’s a billionaire storing that bottle in a climate-controlled, heavily-guarded bonded warehouse as part of what is ultimately a very convenient multi-million pound tax avoidance scheme. After a bottle of red, I struggle to tell the drinker’s lips from the dark purple of a blood-fed leech. Wine can be a dirty drink. But what’s dirtier than wine, is the money sloshing around in it. 

There’s every chance the price of a pint could reach £7 after Jeremy Hunt scrapped  plans to freeze alcohol duty. So rather than a pint, it might be an idea to go tee-total. Squirrel away the beer money until one day, with a few thousand pounds underneath the mattress, you buy a case of Bordeaux en primeur. In ten years time, it might not matter that your pension’s gone to pot. 

Enjoying The Critic online? It's even better in print

Try five issues of Britain’s newest magazine for £10

Critic magazine cover