Wine investment scams are like London buses!

Scammers offering the chance to earn a fortune from wine investment had gone quiet for a while. But, like the London Bus, they are arriving back in their droves.

Margaret Thatcher apparently once said that anyone past the age of 30 who travelled on a bus was a failure. I'm older than that, and sometimes travel by bus, so you make your own conclusions.

Like all bus travellers, I know the rules. You wait for ages for the one you want and then three come along in a row.

It's the same with dodgy financial schemes. You go ages without a particular variety and then three come along together.

Making money from wine

Thatcher's argument was that a bus journey meant you could not afford a cab or, better, your own chauffeur.

I reckon, with a lot more evidence than anyone subscribing to the bus theory, that anyone who cold calls you with a financial scheme that they claim is guaranteed to make you a load of dosh, is as crooked as a three pound coin.

I hadn't heard for months from any of those firms which promise a fortune from wine investment. And then, one day late last week, not one, not two but three phoned me in the same morning. I don't know if these firms were linked but all used the same out of date details for me (email address I had not used in years) so I assume they were all using the same list. They may have all been the same call centre, using different company names.

Now none of these admit to cold calling – they all use the "You answered a marketing survey, but we don't have details of it” formula. This is nonsense.

One of the callers was Jake. He told me his group was featured in the Financial Times. That's the first the FT knew of it, but maybe he was talking in general terms about the articles on wine that appear in that paper.

Jake then asked me if I had noticed “the economical downpour” and how “banks eat interest”. He went on to inform me that “99% of people use a bank”. That is nonsense so should I believe anything he says? No.

Fast learners

He told me that his firm was a “specialist in alternative areas, concentrating on fine wines”. A quick check at Companies House showed that the firm had only been in existence for two months so that was a very short time to develop “Our reputation as fine wine brokers and investment experts.”

So I had to accept they were quick learners. I was then informed that “the wine market is prepared for a new bull run.” Now “prepared” is meaningless – I might be “prepared” to visit Manchester but it does not say categorically that I'm buying a ticket on one of Branson's lovely trains or going there at all.

Supply and demand

“It's all down to supply and demand,” says Jake. “Demand is increasing but supply is not. It was all about China but now it is about India. Rich people in India want the very best vintages and are prepared to pay for it.”

I don't doubt that there are very rich people in India – one hundred families own a quarter of the nation's wealth. And while this is a country whose major religions ban alcohol, I had to agree with Jake that some very rich people in India consume wine.

Then Jake came up with a new line. “India has abolished import duty tax”, he said. Well, not quite. It has abolished import duties on a number of items including cement, soda ash, liquefied natural gas and some textiles. It has cut the tax on wine and spirits but it is not clear how much that will reduce prices.

But the actual reduction really does not matter. Only the ultra rich drink investment grade wines – those typically selling at £100 upwards a bottle. And if you can afford that much, a bit of duty here or there makes no difference. Think of the UK Budget. The 37p a packet increase in cigarette prices is noticeable if you are poor but it makes no difference to billionaires.

Supply and demand – Jake's main argument - is a funny thing. In theory, if supply is limited (and this can apply to fine wines as to many other items) and demand increases, then prices rise. But in practice, there is either an increase in supply (more wines come on to the market) or there is “substitution” (rice for potatoes, scotch for wine and so on).

Wine is also a funny thing. An expensive bottle is pricey only because some “expert” says it should be. But many blind tastings show “experts” can't tell a £50 bottle from one costing £10.

No wine merchant of repute cold calls. Cold callers offer either over-priced wines or fakes. If you want to know more – or check a firm – try www.investdrinks.com. Other than slamming the phone down, it's the best protection against scam wine sellers.