Who Says There Are No Opportunities in DRC?

But First, A Cautionary Tale

Picture from BAGHERA/WINES

What are the risks of investing in a slow and opaque market like fine wine?

Plenty.

Here are some of the main challenges:

1. Liquidity

   Liquidity is the biggest hurdle, often rearing its head when you most need to sell. A 30% “haircut” isn’t uncommon. Low liquidity is typical of non-fungible assets like wine, and it’s only worsened by the traditional, somewhat outdated methods of trading fine wine.

2. Delivery Times and Storage Issues

   Moving wine from one merchant to your preferred warehouse isn’t a quick process. This can lead to missed opportunities and delays, adding an element of unpredictability.

3. Lack of a Centralised Exchange

   Unlike stocks, fine wine lacks a centralised price listing. Values fluctuate based on factors like popularity and availability, so the same bottle might be priced differently depending on where it’s sold. In the UK, three major marketplaces (BBX, BI, and Cru) dominate, but without a centralised platform, someone selling on BBR can’t instantly connect with a buyer on Cru. This inconsistency makes fair pricing a challenge and creates arbitrage opportunities, like those discussed in “George Soros & The Art Of Arbitrage”.

4. Risk of Counterfeits

   High-value bottles inevitably attract fraud. For collectors, the best protection is to choose reputable wine merchants. However, while the risk of counterfaits while buying in bond is extremely low, it may mean more rigorous checks between warehouses, which in turn can lengthen delivery times & increase the price.

Here’s my cautionary tale:

On 1st October, I spotted an arbitrage opportunity (thanks to

winestreetbets

) to buy a case of 2022 Produttori del Barbaresco, Langhe, Nebbiolo (6x75cl) for £65 on Mann Fine Wine and sell it on Cru, where there was a live bid for £110. By the time it arrived on 18th October, someone had accepted the bid at £118 the day before!

Due to the long delivery time—and the lack of a centralised exchange—I missed out on this great opportunity.

But hey, what’s life without a bit of spice?

Nothing ventured, nothing gained.

If you’re ready for a meaty arbitrage opportunity, here’s one that our friends at

winestreetbets

sent yesterday and that could net you £1,479 if executed successfully.

⚠️ Just remember, this is a speculative trade—you may lose out (as I did) on the initial outlay! ⚠️ That said, there are worse fates than getting stuck with a bottle of DRC La Tâche!

Purchase Price and Initial Costs

• Wine Cost: We’re purchasing 1x75cl of Domaine de la Romanée-Conti La Tâche Grand Cru 2015 from Cru World Wine at £4,804.

  • The delivery time is quite high — 5 to 7 weeks:

    

  • Alternatively, Turville Valley Wines offers the same bottle at £4,500, which could boost your profit by £300 if their delivery time is faster than Cru’s. However, I haven’t purchased from them before, so I’m unsure about their service. (If you’ve used them, please share any feedback in the comments below or send me a note by hitting reply!) If their delivery time is faster than Cru’s, it might be worth a try.

    

  • For the adventurous: Vinum-S in Belgium offers this bottle at €4,700 (£3,946.5), with insured delivery to a UK bonded warehouse for €216 (£181.3). Using Vinum-S would further increase profit by another £388.

Shipping & Transfer Costs

• Shipping to Warehouse: fter purchasing from Cru, the wine will need to be transferred to the CultX bonded warehouse in Melksham, located in the London City Bond.

  • Cost: £12.50 + VAT (= £15)

  • Note, if you’re using Vinum S, the delivery cost would be ~ £181.3

Listing and Selling Fees on Cru World Wine

• Take the Bids: Once the stock is in the CultX warehouse, you can accept the live bid at £5,750.

  

• Commission Fee: CultX charges a 2.5% commission on sales, which would amount to £143.75 in this case.

Net (Estimated) Profit

• Estimated profit: If successful, the net profit from this trade would be £787.25, or a 15.8% return.

  • Using Turville Valley Wines, profit would jump to £1,091 (23.4%).

  • With Vinum-S, profit would soar to £1,479 (34.6%).

Happy trading!

What do you think of this opportunity? Let me know in the poll and comments below.

Thanks, as always, for being here.

👋 Sara Danese

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Disclaimer: The content provided in this article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any financial product or investment. The value of fine wine investments may go down as well as up, and you may not get back the original amount invested. Past performance is not indicative of future results. Any opinions expressed are those of the author and are subject to change without notice. You should seek advice from an independent financial adviser if you have any questions regarding the suitability of any investment. 'In the Mood for Wine' is not regulated by the Financial Conduct Authority (FCA) and does not provide regulated investment services.