Wine Investment in South Africa - Cape Wine Academy

Even with the best intentions, wine trading companies can falter. The largest fine wine trader
in the world, Vinfolio in San Francisco, nearly collapsed into bankruptcy leaving wine owners
in a very unsure position in 2010 before being rescued in a management buyout. Vinfolio
was apparently successful and very popular as a retailer and storage facility for half a million
bottles as well as an easy to use trading platform, so clients were shocked when cheques
they received for wines sold were not honoured. Vinfolio seems to have recovered and has
an active website, but events must have worried investors ( Decanter, 2010. Robinson,
2010 ).
Wine investment attracts two kinds of risk, it seems, at least when using investment funds.
Not only the risk of not achieving any real profit, but also the risk of large scale fraud. The
nature of investment means that large sums are involved; losses can be similarly large.
Consider the now defunct City Vintners Ltd in the UK who bought £8m (R88m) worth of wine
on behalf of their 1,450 clients but charged far more than the wine was worth and netted
£19m (R209m) profit from them ( Investdrinks.com, 2008 ).
It is clear that any investment with a broker, importer or investment company should be
thoroughly investigated before any money is exchanged. The new regulations of the
Consumer Protection Act which came into force in SA on 1 st April 2011 ( CPA 2008 ) at
least offer more protection to the investor, allowing them to demand full disclosure of the
price of goods and services, and protection against false, misleading or deceptive
representations. Key to investors is the opportunity to terminate a fixed-term contract by
giving 20 business days’ notice in writing and the shift from ‘buyer beware’ to ‘seller beware’
because of the power of redress now given to unhappy customers.
Though there are few real guarantees it makes sense to use established companies and to
check them on the Companies register as well as examining their trading records. They
should have excellent storage facilities and full insurances at every stage of the process and
to visit storage premises, photograph and record as much as possible and keep secure all
paperwork, especially receipts of monies paid. A wise investor would check optimum
storage conditions such as humidity levels and heating / cooling systems, security and that
their stock was identifiable by name or code numbers. They would expect individual stock
certificates and auditor’s reports of stock value.
The UK’s Wine and Spirit Trade Association chief executive Jeremy Beadles says;
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