How much pleasure is enough?

by Sarah Modlock

22 December 2004

A timely sin, gluttony, as we prepare to eat out own body weight in turkey and mince pies over the festive season. If you are not yet obese there is still plenty of time to join the 40% of Brits who are on the fast track to diabetes, heart disease and a whole menu of serious illnesses. You will even be offered cookery lessons and given vouchers for fruit and veg. No wonder a succession of diet experts have become the Pied Pipers of the modern age.

This year, food has been in focus everywhere from Morgan Spurlock's film 'Super Size Me', about the dangers of living on junk food, through to the desire to 'Feed the world' by buying the Band Aid single. It's fair to say that food is an obsession for most.

Gluttony is the desire for too much food and drink according to Pope Gregory the Great, the chap who gave us the list of the seven deadly sins. Medieval monks took a dim view of gluttony, describing it as 'The mother of lust, the nourishment of evil thoughts, receptacle of disease, envy of health, pollution of the intellect, weakness of the body'. Not that any of this bothered the Romans who opted to throw up after meals so that they could eat even more. Nice.

Vintage sin

These days, when we are not stuffing our faces, we are guzzling gallons of booze. Sales are up more than a quarter at Majestic Wine Warehouses across the country. They raked in £74.6 million in the six months to September this year - a decent slug of the £6 billion market. And UK wine drinkers are expected to increase their consumption by 16% within the next four years as beer sales decrease. The boost in wine figures is put down to the increasing volumes of alcohol consumed by women drinkers. Women account for 55% of the UK wine market, compared with 24% of the beer market, say researchers at Datamonitor.

If you choose to put your money where your mouth is then dwindling interest rates and stagnant markets are prompting many people to invest in wine. It may seem like fun but gluttons should not make the mistake of thinking that it carries less risk than other forms of investment. It is not a soft option. In reality, the wine market is fickle, at the mercy of critics and even the weather. It is also the target of fraudsters. Having said that, if you are patient, aware of the potential risks and are prepared to do your homework, then it can be rewarding and interesting.

Wine investment in based on the most basic economic premise of supply and demand. Because wines are made in limited quantities, the demand necessarily exceeds supply in many cases. But like most investments, returns are not guaranteed and you can lose all your money. Less than 3% of wine is made to age and only a small proportion of that is suitable for investing in. Even so, investment quality wines account for more than £30bn spent annually on wine worldwide. Consumption trends have moved up-market, too, increasing the demand for the top, collectable wines.

The good, the bad and the bubbly

But it's not enough to 'know what you like' in order to make money from wine. The fine wine market can be frenetic at times and investors need to know their stuff and act quickly once potential is spotted. Alternatively, you can get a good wine merchant or broker to manage your investments. Check them out at Companies House first to make sure their business exists and has been around as long as they claim. Some brokers recommend a minimum investment of £3,000. Serious investors spend much more on their cellar, with the average portfolio worth about £25,000.

Correct storage is important for several reasons. Most investment quality wine will take many years to reach its peak and can be easily ruined by poor storage. The same applies to wine you are keeping at home to drink. My friend James got a good deal on a couple of cases of wine but the only room he had for storage was in his loft. The extremes of hot and cold temperatures over the following months practically boiled and froze the wine and when he came to open the first bottle, it was clear the whole lot was undrinkable. For investors, storage costs can be considerable and so need to be factored-in when working out how much they can afford to invest.

As with any walk of life where money is involved, fraudsters will not be far behind. The most common scams tend to involve companies or individuals posing as wine merchants. Unfortunately, these fraudsters don't lurk in the dark corners of the wine industry, they attract investors through extensive - often direct - marketing. Fraudsters may have 'upper class' accents and a Mayfair address but the lines are the same. The 'broker' will tell you that s/he has a 'bargain' and must have your decision immediately if you are to 'profit' from this 'rare opportunity'. They reassure the investor with a certificate showing that their wine is stored in a reputable bond warehouse. It is only later that the investor discovers that the wine is far less valuable than they were led to believe. Unlike other financial ventures, drinks investments are often not covered by financial regulators, leaving the market open to abuse from opportunist fraudsters who target the large numbers of inexperienced investors.

Of course, it's tempting to think that if your wine investment does not go according to plan then you can just drink it all. Just remember that the pursuit of gluttony leads to a specific damnation: the glutton in hell will dine on toads and be forced to drink putrid water. Cheers.