Is En Primeur Worth It? A Guide for Collectors

Is en primeur worth it? The answer involves weighing the potential to secure limited wines and achieve price appreciation against significant market risks and various costs. En primeur offers the opportunity to purchase wines before they are bottled, often a year or 18 months prior to their official release. Even so, there is no guarantee that prices will increase once the wine is on the market. For example, buyers of top wines from the 2014 vintage reported an average ROI of +13.4% as the wines were nearing release. However, those who bought into the 2009 and 2010 vintages faced losses during the subsequent four years, as prices were not readjusted. This method can be particularly attractive for securing very limited quantity wines that may be unavailable later. It does, however, require careful consideration of market dynamics and associated expenses.

What is en primeur?

En primeur, also known as "wine futures," is a method of purchasing wines early while the wine is still in the barrel. Payment is typically made a year or 18 months before the official release of a vintage. This process allows customers to invest in a wine before it is bottled, securing the right to receive the bottles once the producer has completed the maturing phase. The wines most commonly offered en primeur are from Bordeaux, Burgundy, the Rhône Valley, and Port. Other regions like Piedmont, Tuscany, Ribera del Duero, and Rioja are also adopting the practice.

What are the potential benefits of buying en primeur?

Buying en primeur can offer you several advantages, including securing wines with limited quantities and potentially benefiting from a lower purchase price. Tom Stevenson, a wine expert, recommends buying en primeur for wines with very limited quantities. Those bottles are unlikely to be available once they are released. For consumers, this method provides the opportunity to secure such wines that would otherwise be difficult to acquire after their market release. We also point out that the purchase price during the en primeur period may be lower than the price the wine will command once it is bottled and released to the market. For instance, the 1982 vintage of Château Latour was sold at £250 a case en primeur in 1983 and was valued at £9,000 in 2007. The major part of this price increase occurred after bottling.

What are the risks and market dynamics to consider?

En primeur offers potential benefits, but It is a "delicate method of investment", where a purchase may ultimately result in a loss. The potential for a lower price during the en primeur period compared to the release price is "not guaranteed," and some wines "may lose value over time." The market has shown significant volatility: the 2008 en primeur from Bordeaux was released at an average of 30% less than the previous year, leading to a "huge buying frenzy." However, the "record release prices" of the 2009 and 2010 vintages "tested the resolve of the En Primeur market." The "Failure to re-adjust prices in the following two years effectively killed demand," causing many who bought these vintages to face losses during the subsequent four years. The market has since "turned," and buying en primeur has "become attractive once more,". Buyers of top wines from the 2014 vintage reported an average ROI of +13.4% as those wines were nearing release. You are advised to use caution, as "incidents of fraud in the "en primeur" market have been significant" in the US and UK wine investment sectors.

What are the costs and tax implications of buying wine?

When you acquire wine, especially through auction or en primeur, you face various costs and tax implications beyond the initial hammer price. Christie's, for example, charges a buyer's premium of 25% of the hammer price for Wine, Spirits, and Cigars, with VAT payable on this premium at the applicable rate.

If you purchase wines "in bond" (marked with a ‡ symbol in Christie's catalogues), Christie's charges no excise duty or clearance VAT on the hammer price. It does charge VAT on the buyer's premium. You are responsible for arranging collection by a shipper with a bond movement guarantee or a warehouse with a customs bond/suspense regime, and for any associated fees. If you later take your purchases out of bond, excise duty and clearance charges become payable, Christie's states.

If you choose to buy wine "duty paid," Christie's explains that it adds excise duty at current rates to the hammer price. It then adds clearance VAT to the duty-inclusive hammer price on your invoice. Christie's cannot cancel or refund these charges. For wine with an alcohol by volume (ABV) between 8.5% and 22%, HMRC sets the duty rate at £30.62 for each litre of pure alcohol.

For international shipments, you are responsible for all applicable taxes, including any VAT, GST, sales, or compensating use tax, Christie's notes. For example, Jersey shipments incur GST at a rate of 5% on the hammer price, buyer's premium, freight charges, and any applicable customs duty. Indian Equalisation Levy Tax at a rate of 2% is due on the hammer price and buyer's premium (exclusive of any applicable VAT), Christie's specifies. This applies to lots purchased by a successful bidder with a registered address in India who has bid via Christie's LIVE™.

Regarding Capital Gains Tax (CGT), you may have to pay CGT if you make a profit when you sell a personal possession for £6,000 or more, according to GOV.UK. However, you do not usually pay CGT on "anything with a limited lifespan, like clocks - unless used for business," GOV.UK states. HMRC's Capital Gains Manual notes that disposals of chattels (tangible moveable property) which are "wasting assets" are exempt for CGT purposes. That exemption falls away if Capital Allowances were or could have been claimed, or if TCGA92/S45(3B) applies. Some assets "naturally have a predictable life not exceeding 50 years," according to HMRC.

Here is a summary of common costs and tax implications:

Cost/Tax Type	Applies To	Rate/Threshold	Notes
Buyer's Premium	All lots	25% of hammer price for Wine, Spirits, Cigars	VAT at applicable rate added to premium.
VAT on Buyer's Premium	All lots	20%	Shown separately on invoice. Reclaimable by UK VAT registered clients or overseas businesses under certain conditions.
Excise Duty (Duty Paid)	Hammer price (wine taken duty paid)	Varies by ABV: e.g., £30.62 per litre of pure alcohol for 8.5% to 22% ABV wine	Added to hammer price. Cannot be cancelled or refunded by Christie's.
Clearance VAT (Duty Paid)	Duty-inclusive hammer price (wine taken duty paid)	20%	Added to duty-inclusive hammer price. Not recoverable.
GST (Jersey)	Hammer price, buyer's premium, freight, customs duty	5%	Christie's collects where legally required.
Indian Equalisation Levy Tax	Hammer price and buyer's premium (exclusive of VAT)	2%	For India-registered bidders via Christie's LIVE™. Christie's collects where required.
Capital Gains Tax (CGT)	Personal possessions sold for £6,000 or more	£6,000 threshold	Not usually paid on "anything with a limited lifespan, like clocks - unless used for business." "Wasting assets" (predictable life not exceeding 50 years) are generally exempt unless Capital Allowances claimed or TCGA92/S45(3B) applies.

You can explore your potential all-in costs with our landed cost calculator.

Does price correlate with enjoyment in blind tastings?

The enjoyment you derive from a wine's intrinsic qualities may not directly correlate with its price, especially if you are not a wine expert. Goldstein et al. (2008) published a study in the Journal of Wine Economics based on over 6,000 US blind tastings. It found that individuals who were unaware of the price did not, on average, derive more enjoyment from more expensive wine. In fact, for non-experts, the correlation between price and overall rating was "small and negative," suggesting they "enjoy more expensive wines slightly less."

For individuals with wine training, about 12% of the participants in the study, there were "indications of a non-negative relationship between price and enjoyment," though this was "significantly different from zero, but only at the 10% level," Goldstein et al. (2008) reported. The study's OLS estimation predicted that for a wine costing ten times more, non-experts would assign an overall rating four points lower on a 100-point scale. Experts would assign a rating seven points higher. The model predicted that experts and non-experts would assign the same rating at a price of $25.70. Below this price, experts were predicted to assign lower ratings, and vice versa. This research suggests that non-expert wine consumers "should not anticipate greater enjoyment of the intrinsic qualities of a wine simply because it is expensive or is appreciated by experts," Goldstein et al. (2008) concluded.

How can you monitor the value of your en primeur purchases?

Monitoring the value of your en primeur purchases is crucial for managing your collection and making informed decisions about holding or selling. The London International Vintners Exchange (Liv-ex) has been tracking the prices of the world’s most traded fine wines since 2000, using the Liv-ex Mid Price. That figure is independent, transaction-based data, according to Liv-ex.

Liv-ex offers various indices that can help you track market performance. The Liv-ex Fine Wine 50 Index, for example, tracks the daily price movements of Bordeaux First Growths, including the ten most recent vintages of Château Margaux and Château Lafite, Liv-ex states. The Liv-ex Fine Wine 100 Index is the industry-leading benchmark, representing the price movement of 100 of the most sought-after fine wines on the secondary market. For a broader view, the Liv-ex Fine Wine 1000 tracks 1,000 wines from across the world. It includes sub-indices like the Bordeaux 500, Burgundy 150, and Italy 100, Liv-ex reports. These indices provide valuable insights into market trends for different regions and types of wine, helping you assess the performance of your own collection. You can also track the broader fine wine market index for general trends.

Consider the condition of your wines as they age. Factors like ullage can impact value, and understanding wine ullage levels explained is important for collectors. Proper how to store wine is also vital to preserve value.

Ultimately, whether en primeur is worth it depends on your objectives, risk tolerance, and ability to navigate the market. For more on managing your collection, see our guides on fine wine investment and how to sell fine wine. If you are considering how to buy wine at auction as an alternative, be aware of the registration requirements and bidding processes, which Christie's details.

Stay informed about market movements for your collection with price alerts on your watchlist.