Luxury asset finance: leveraging fine wine to finance property

For many, a glass of wine is an enjoyable after-work tipple, or the perfect accompaniment to a sunshine lunch. But did you know wine is also a prime example of a luxury asset you can use as security for a loan?

We’ve previously written about how fine art, luxury cars and even designer handbags can be used as security. Valuable wine collections have also now become a very viable option; the art of serious wine collecting has become increasingly popular over the last 30 years, whilst prices for the most prestigious wines have soared.

Just this month, a Jeroboam-sized bottle of Domaine Romanée-Conti wine sold for approximately US$85,247 at a wine auction in Geneva. This is a clear illustration of just how valuable wine is considered by serious collectors, and certainly justifies why many lenders are now happy to use wine as collateral.

Wine is also considered a low-risk form of security, with a 2010 study showing the value of ‘top-notch wine has withstood two US recessions and beaten a benchmark shares index over the past 13 years’. One of the advantages of wine as an asset is it is easy to value. Some luxury assets such as cars are worth huge sums, but it is difficult to value them objectively, whereas the fine wine market is easier to assess.

So how can you go about borrowing against your wine collection? A meticulous and careful inventory will need to be taken, as it’s important to verify the stock before any loan is offered. It’s essential the wine is stored correctly; fortunately, most serious wine investors are aware of the importance of this, and already have their wine stored accordingly.

There are several factors which will be considered when assessing the value of your wine, including:

• The name of your wine
• The vintage
• The condition
• The storage
• The provenance (the chronology of ownership and location of the collection)

You’ll also need to approach a specialist lender for this niche form of lending. If you have a wine collection you would like to use as security for a loan, we would be delighted to help you arrange this. Our extensive experience of dealing luxury assets, in addition to our access to a wide range of specialist lenders, means we can confidently advise you. Contact us today for a further discussion.