Wine collections: an increasingly valuable asset

It’s almost time for the Cape Fine & Rare Wine Auction (the newly renamed Nederburg Auction), the industry platform of choice for buying South Africa’s most sought-after wines. The auction will take place on 18 and 19 October at its new home, the Rupert Museum in Stellenbosch. The Nederburg Auction was recognised as one of the world’s five major wine auctions and the new format aims to widen worldwide access to South African fine wines, with the ultimate goal of escalating their desirability and collectability. 

The rand per bottle price at the auction has been on an upward trajectory and as at 2018, had increased by an impressive 424% since 2012. The 2018 Nederburg Auction fetched record overall sales of R5 264 300 and the highest-priced item that year was a 1948 Monis Collectors Port, which sold for R21 000 for 3 x 750ml bottles. 

Wine is increasingly being recognised as an alternative investment class in South Africa, says Christelle Colman, managing director of Elite Risk Acceptances. “Demand for investment-grade wines at global auctions has skyrocketed in recent years, but not everyone collects wine for the same reason,” she adds. 

“For some it’s a long-term investment, whereas others like to consume their wine. Luckily wine improves over time, so you have time to decide if you want to keep it strictly as an investment. In either event, you’ll need to take steps to preserve both the taste and value by insuring properly against risks.”

The majority of home contents policies in South Africa do not provide adequate insurance coverage for wine collections. In most cases, collectors will need a bespoke personal insurance policy to protect their collection sufficiently, says Christelle. “Many homeowners’ policies may cover theft or fire to some extent. But if the value of your wine collection is growing, you might want to get some additional and more specific coverage for breakage, spillage, faulty cellar equipment and power outages. People who live in places which have a high risk of floods or earthquakes might consider specific insurance for their wine. Insurance cover is also available for wines in transit or for wines stored away from your home,” she notes.

Christelle adds that a home contents policy that provides cover with an overall limit is the best option for collectors who intend to eventually drink what they have acquired. “For example, Elite’s policy allows you the flexibility to add and remove bottles without having to send notification each time. You’d have to report a change only if the value of an individual bottle grew to exceed the limits on your policy.”

If you have bottles of the highest-priced vintages or if you intend to hold on to the items in your collection for the long term, Christelle recommends a specified valuables cover extension, where each bottle or case is itemised or insured separately. ”No matter which option you choose, damage from fire, theft, earthquake, flood, breakage and accidental damage should be standard.”

She offers the following tips to ensure wine connoisseurs get the right cover for their valuable wine collections:

  Contact your insurer to find out what cover they offer – if you’re shipping new purchases from vineyards, you’ll need to ensure that your wine is covered for its entire in-transit journey.

  Take an inventory of your wine, keep it up to date and make sure you update your insurer accordingly.

  Hire a professional wine appraiser or get an auction house that specialises in wine collections to evaluate yours.

  Make sure you can provide both the insurer and the appraiser with proof to show you have taken care to mitigate against risks. You’ll need to share details about how you store your wine and about your alarm system.

“Aside from the enjoyment it brings, a well-stocked wine cellar can be a savvy financial move, but make sure you’ve bought the best cover for your liquid investment. We’re looking forward to seeing what the highest-priced item will be at this year’s Cape Fine & Rare Wine Auction,” concludes Christelle.

• Elite is a bespoke insurance offering for high net worth individuals by Old Mutual Insure. For more information, visit www.eliterisk.co.za or contact Christelle at christelle.colman@eliterisk.co.za.