Storage – time to tighten up security

A shorter version of this article is published by the Financial Times. 

Last February, to celebrate his 54th birthday, wine merchant Tuggy Meyer took his 15-year-old son out for dinner to the Chinese restaurant on top of the Royal Garden Hotel and enjoyed their famous duck and the views across Kensington Gardens. 

He’d recently sold the building in Kensington Church Street in which his shop, Huntsworth Wine, is located and so was feeling pretty good about things. But the next day he received news that has clouded his life ever since, and has implications for anyone who stores wine in a professional warehouse.

He was told that £200,000 worth of his stock had been lifted, out of the roof, of the bonded warehouse he used deep in the English countryside over the weekend when there was no member of staff present and the CCTV was not monitored. According to the terms and conditions of his storage contract, the warehouse was liable for just £1,000 of his loss. ‘If I hadn’t just sold the building, I would have gone under', he admits. But his chief concern is what he has come to perceive as widespread ignorance in the wine trade of how increasingly vulnerable fine wine is.

Every time he sees an article about the increase in fine-wine prices his heart sinks. His theory is that, thanks to the determination of a colleague of mine, Jim Budd, to wage war on wine investment scams, the individuals behind these rackets (often initiated by cold calling potential investors) are now looking for new ways of making money out of wine. ‘There’s no question that we’re being targeted', he told me. ‘I sent out emails last week to 100 wine merchants asking whether they’d experienced any losses and I’ve already had three positive responses.’

One of these instances involved a 20-foot container of wine that was intercepted en route to a bonded warehouse, the driver being told the delivery address had changed. Another merchant reported all of four cases missing from a consignment from France, while a third, a country wine merchant, found his order short by the case of particularly valuable mixed bordeaux. Short consignments of wine are commonplace. Meyer, for example, has received three short deliveries since his big heist.

Most of the drivers of these consignments are outside contractors. One of them told me, under condition of anonymity, that security varies enormously among different companies. Octavian, whose storage fees are the highest but store over a million cases of fine wine for traders, merchants and collectors from 48 different countries in limestone caverns deep beneath the turf at Corsham, are obsessive about it. Drivers are allowed on the premises only if they are on that day’s rota; every case is checked and photographed on despatch and arrival; every truck is carefully inspected. (Above right is the rack and pinion railway that every case has to travel on to reach the storage area 100 ft below ground.)

But some other professional wine-storage sites have little or no security on the gate and very little oversight, according to my source. Fourteen or fifteen drivers may well arrive at the same time at five in the morning and may be monitored by just one warehouseman, who cannot possibly check everything. The only safeguard on stocks is that contracted drivers are personally liable for any losses. My driver told me how, in a previous, non-wine-related career, he did some work for a bonded warehouseman and was asked whether he wanted to be paid in cash or wine.

Scourge of wine counterfeiters, California-based Maureen Downey of Chai Consulting, is also frustrated by what she sees as the complacency of the wine trade. According to her, ‘people who are not licensed to sell wine are selling illegally on non-traditional platforms. Craig’s List, Facebook, eBay ... there is not much of a fingerprint left when the sale is over, so the exposure of the crooks is limited.’

She also highlights a wine scam that is increasingly common in the Bay Area currently whereby a large order is placed by credit card with a wine store in the morning. An Uber driver arrives to pick it up, but by the evening, the credit card fails to cash out. 

Unlike Meyer and Downey, I’m not convinced the wine trade is being specifically targeted by an army of professional thieves – unless they are stocking their own cellars. I have come across no evidence of the disposal of stolen fine wine – in the UK anyway. Anyone likely to buy it belongs to a tight-knit club of UK traders, and would be extremely suspicious of an outsider offering, for example, classed-growth bordeaux of unspecified provenance, although admittedly the British wine trade may have nefarious underbelly of which I am ignorant.

But Meyer’s experience has convinced me of his other point, that the exponential increase in the value of fine wine has rarely been matched by an exponential increase in insured value and professional obsession with security. ‘I reckon about 40% of the people in the wine trade with much more valuable stocks than I had have never actually been to their bonded warehouse', claims Meyer. ‘So they have no idea whether they really have 24-hour CCTV, for instance. It’s a rather naïve, old-fashioned business that’s based on trust and has been too slow to adapt to change, so consumers are at increased risk.’

Only a very small proportion of the bottles sold by fine-wine traders and the smarter wine merchants in Britain is ready to drink. This means that their customers have to store their purchases, often for years and sometimes for decades. Very few wine collectors today have sufficient storage space that is suitably cool and dark to accommodate a personal cellar, so they typically pay whoever sold them the wine a storage charge per case of a dozen bottles, or part-case, that can vary from about £8 to £25 a year. (See our international guide to storing wine.)

Few of the UK wine merchants have their own storage either, and so they store vast quantities of wine with professional wine warehouses, typically bonded warehouses so that their customers don’t have to pay UK duty on the wine until they want to drink it. (And many a case is sold through a merchant’s own trading exchange to fellow customers who may or may not be UK-based.)

Insurance is the big issue. Some but by no means all merchants and warehouse-keepers offer full insurance that replaces losses at current value, this last phrase being crucial in this era of rising wine prices. Meyer admits that storage charges at the bond from which his stock was stolen were relatively low. Now that fine wine is so valuable, it is probably worth treating it to top-quality storage, and reading the terms and conditions in fine detail. Flexibility of access and speed of delivery will be a factor for many wine collectors.

The mystery remains of what happened to Meyer’s £200,000-worth of stolen wine. Perhaps it was shipped across the Channel to join the €600,000-worth of special bottles stolen recently via a crack in the wall of the cellar of Michel Rostaing’s Michelin-starred restaurant in Paris.

To add insult to injury, those whose wine is stolen are still liable for VAT and UK duty on it. ‘I bet half the trade don’t know that', says Meyer. 

UK merchants who store as well as sell

Many wine merchants operate their own specialist storage companies, established to distinguish client and company stock, such as Goedhuis’s Private Reserves, Private Cellar’s Private Cellar Reserves and Justerini & Brooks’ Cellarers, but do not have their own warehouses.

The following own their own bonded warehouses.

Averys and Laithwaite’s, Gloucester
Berry Bros & Rudd, Basingstoke
Bon Coeur Fine Wines, Richmond, Yorkshire

Seckford, Suffolk
The Wine Society, Stevenage

For a free international guide to Where to store wine, see our Learn section.  

Rack and pinion railway leading down 100 feet to Octavian's bonded wine warehouse at Corhsm