The company is a family-run business formed in 1992 and markets variations of its wine investment service for a variety of purposes, from pensions to school fees planning. The company has also set up its own IFA consultancy division to train IFAs in wine investment and how clients could benefit.
The new product, Home Cellars, is an alternative to conventional ways of paying off an interest-only mortgage. If all goes well, the investment would pay off the mortgage balance at the end of the term, potentially with returns to spare.
According to Premier Cru, the fine wine market has a history of stability. It says a managed fine wine portfolio would have outperformed the FTSE All Share index by almost 130 per cent between January 1990 and January 2006.
The company invests in the top 30-60 wines registered in the Bordeaux region. It sources wine using its network of industry contacts, but does not use a wine merchant. It does not hold stock, so clients are not limited to wine already in Premier Cru’s possession.
The company also has a panel of experts that are able to predict when top class wines will mature. This is important as a client’s portfolio should contain wine that will mature at different rates. If a particular wine is trading high, the company will let the IFA and their client know of its increase in value and may recommend the client sells this wine to replace with a younger vintage. It ensures that wines are properly stored and fully insured at their replacement value.
If a client wants to encash their investment, there are no exit penalties but the company points out that its service is designed for a minimum term of there years.
While this may be an interesting idea, using wine investment to pay off a mortgage is high risk. Investors may be more likely to include wine as a small part of their overall investment portfolio than rely solely on fine wine to meet an important investment need.