Storage, insurance and the cost of carrying a case

Bonded storage

'Under bond' means duty and sales tax are deferred while the wine sits in a licensed warehouse; the wine can be sold on without ever leaving. Trade prices are quoted in bond. UK fees have commonly been in the range of £15–25 a case a year including insurance; the warehouse's records also become the wine's provenance.

The arithmetic

A $2,000 case stored at $25 a year costs 1.25% a year to hold before insurance. Add a 10–20% buyer's premium or retail margin on the way in and a 10% commission on the way out, and a wine must rise by roughly 30–40% over a decade before the holder is even in nominal terms — before inflation, before the opportunity cost of the cash.

In the ledger

Every return on this site is a gross price change. The net-of-costs illustration uses stated assumptions (10% in, 10% out, 2% a year) so that the direction and order of magnitude are visible; the assumptions can be argued with, the principle cannot.