What is Wine in Bond? (Benefits, Easiest Way To Buy It)

by Anthony Zhang

Wondering what is “in bond” wine? (Clue: Doesn’t refer to wine sipped by Sean Connery or Daniel Craig in any James Bond movie!)

Wine purchased in bond is stored in an authorized bonded warehouse, has not passed through customs, and its duty and VAT (Value-Added Tax) have not been paid.

They cannot be delivered for consumption until the relevant taxes are paid. However, if you decide to sell your wine while in bond, you will never have to pay the VAT or duty taxes.

This makes wine in bond a smart way for savvy investors to add prestigious wines to their portfolios and make a profit out of them.

Let’s explore the benefits of buying wine in bond and the differences between in bond and out-of bond wines. We’ll also discover how to easily purchase wine in bond through Vinovest and answer a few common questions about buying wine in bond.

What Are The Benefits of Buying Wine in Bond?

Purchasing wine in bond is a common way to acquire En Primeur and other wine bottles for investment purposes.

Some of the main benefits of purchasing in bond wines include:

Secured Storage for Aging Investment Wines
Deferred VAT and Duty Taxes
Tax Savings
Proven Authenticity

1. Secure Storage For Aging Investment Wines

To be called a bonded wine, it should be stored at authorized bonded premises, like London City Bond or other professional storage facilities.

Such bonded wine premises maintain ideal storage conditions. This ensures your investment bottles will age well and appreciate in value, so you can easily sell them at a profit later on.

2. Deferred VAT and Duty Taxes

When you buy wine in bond, payment of VAT and duty taxes are deferred. You’re only liable for the VAT and duty taxes when you withdraw your wine from the bonded warehouse.

If you choose to sell the wine while in bond, you won’t have to pay these taxes.

3. Tax Savings

If you have your wine removed from the bonded warehouse, the VAT you pay will be calculated on the wine’s original price.

So even if the wine’s price increases, you’ll pay VAT on the wine’s original in bond price and not the current market price (which could be much higher than the initial bond amount.)

This can result in substantial wine savings, especially when buying wines lauded by critics like Robert Parker and Neal Martin.

Wines like these generally appreciate over time:

Château Mouton Rothschild
Château Angélus
Harlan Estate (owned by H William Harlan)

4. Proven Authenticity

Proving the provenance of in bond wines is easier.

Why is this important for fine wine investors?

If you’re buying wine so you can sell it for a profit later on, any prospective buyer would want to be sure of the wine’s authenticity and storage history before making a purchase. If it’s a bonded wine, the buyer can easily trace the wine’s provenance back to the bonded warehouse.

With in bond wines, it’s easier to show that:

You purchased the wine directly from the winery.
The wine never left the secure bonded warehouse where it's been stored under ideal conditions.

This makes the wine more attractive to an auction house, wine merchant or any other prospective buyer.

Buying In Bond vs. Buying Out-of-Bond

When buying wine as an investment, keep in mind the following:

In bond wines have better aging potential: For example, if you invest in an expensive red wine like Cabernet Sauvignon, aging will likely soften the tannins (which are usually very concentrated in red grapes and too harsh if the wine is too young), smooth the texture, and bring out the wine’s earthy dark fruit flavor. This flavor development is more likely to occur if your wine is stored correctly in a bonded warehouse's secure, climate-controlled environment rather than out-of-bond.

Excessive shipping: Keep in mind that in bond wines may be excessively shipped between bonded warehouses so they can be damaged during the shipping process. The bottles may also suffer label damage which can lower the value of the wine.

Purchasing wine for consumption: If you’re purchasing wine for personal consumption, it may be best to buy out-of-bond to avoid paying additional storage fees to a bonded warehouse.

So what’s the best way to buy wine in bond?

Purchase Wine in Bond Through Vinovest

One of the best ways to purchase wine in bond is through Vinovest, a leading wine investment platform that lets you easily buy and sell sought-after wines.

Vinovest also stores your wine in a professional bonded storage facility, strategically located close to the best wine regions globally, including France, the United Kingdom, and Napa Valley.

Their bonded premises are climate-controlled and kept under 24/7 surveillance. This ensures that your precious wine remains safe and retains its delicious flavor and market value over time.

Additionally, Vinovest's bonded warehouses are equipped with backup power generators in case of power outages. So, you can rest assured that optimal conditions are consistently maintained even in extreme situations.

Vinovest also offers a full insurance policy to protect your wines from breaks, leaks, and damage.

Frequently Asked Questions About Purchasing Wine in Bond

If you’re still unsure whether investing in bonded wines is for you, here are a few answers to frequently asked questions that may help you decide.

Which Wines Can you Purchase in Bond?
What Do I Pay For When Buying Wine In Bond?
How Much Tax Will I Pay If I Remove My Wine From The Bonded Warehouse?
What Happens After The Bonded Wine Is Shipped?
How to Choose Good In Bond Investment Wines?

1. Which Wines Can you Purchase in Bond?

Wines you can buy in bond include:

En Primeur (wine futures): These wines are sold before bottling while the wine is still in the barrel. Selling En Primeur wine is common in Old World wine regions like Bordeaux, Burgundy, and the Rhone Valley. It’s also popular in New World regions like New Zealand and St Helena in Napa Valley.

Popular French wineries that sell En Primeur wines include Mouton Rothschild and Château Angélus. In the USA, famed California producer H William Harlan also sells En Primeur wines under his Harlan Estate and Bond Winery labels.

Bottled wine stored in a bonded facility: Often, a wine merchant will purchase bottled wine directly from the winery in unmixed 12 bottle cases, or 24 half bottle cases. The wine is sent directly from the winery to a bonded wine premises.

2. What Do I Pay For When Buying Wine In Bond?

When you buy in bond wine, you’ll pay a fee for storage in a registered bonded warehouse.

But the wine in bond price excludes wine duty and VAT. You are only required to pay these taxes when the wines leave the bonded warehouse for delivery to you or a non-bonded facility.

If you choose to sell your wine under bond, you could make a profit without paying taxes on the wine. You will have to pay an annual storage fee, but this is usually much less than you would pay in taxes.

When you sell the wine under bond, the buyer will be responsible for paying the taxes if they remove the wine from the bonded warehouse.

3. How Much Tax Will I Pay If I Remove My Wine From The Bonded Warehouse?

If you remove your wine from the bonded warehouse, the tax you’re liable for is calculated on the original price of the wine and not the current market value.

According to the UK’s Customs Authority, HM Customs and Excise, wine duty is charged at a fixed rate and determined by the government. It remains the same, regardless of the wine’s price.

The VAT is calculated on the price you paid for the wine, plus a percentage of the duty.

For example, here’s how the tax would be calculated in the UK for an in bond 12-bottle case of 2005 Ducru Beaucaillou with an original price of £1,038 ($1352,93):

duty: £24.60 ($32)
VAT on the duty (20% of £24.60): £4.92 ($6.41)
VAT on the wines (20% of £1,038): £207.60 ($270.63)
Total tax to pay on delivery: £237.12 ($309.11)

In the United States, wine sales tax varies from state to state, ranging from 0% to 10.25%. US federal wine excise rates also differ depending on the wine’s alcohol content.

4. What Happens After The Bonded Wine Is Shipped?

Here’s how the shipment of your wine in bond works:

Once you purchase the wine, the winemaker will mark the wine as a “bonded shipment.”
The wine will then be shipped directly from the winery to an authorized storage facility without passing through customs.
Here the wine is kept under the ideal storage conditions until you decide to sell it or have it shipped to you for consumption.

5. How to Choose Good In Bond Investment Wines?

Here are a couple of wine investment tips that will help you decide on which wine labels are investment-worthy options:

When purchasing wine as an investment, look for wines that have been backed by leading wine critics like Robert Parker, James Suckling, and others.

An in bond wine that is made with grapes sourced from a Grand Cru vineyard is likely to provide a good return on investment. (‘Grand Cru’ refers to a vineyard and terroir of superior quality.)

Up Your Investment Game By Purchasing Wine in Bond!

Whether you’re a seasoned investor or a wine investment novice, buying wine in bond is a great way to expand or build your wine collection.

You can save on taxes or defer them entirely, ensure provenance, and safely store your treasured bottles.

If you’re looking for the easiest and most reliable way to buy wine in bond or fine wine bottles of Cabernet Sauvignon, Merlot, and Semillon sign up with Vinovest today.