PARIS: A whopping 80% of wines stored in bond are French, but France has not managed to profit from this. New legislation in France, however, could change this.
As explained by Decanter.com, when you buy enprimeur wines from Bordeaux, Burgundy, the Rhône or elsewhere, you are paying your merchant an “in bond” price so that if the wine moves into a bonded warehouse, you only pay the taxes and duties due at the moment you take physical receipt of your bottles.
You can guarantee pristine storage conditions and traceability, and if you also choose to sell on your cases in bond (IB), you avoid those payments entirely. The same case can change owners several times while never leaving the bonded warehouse (ideally with the owners taking a handsome profit at each handover).
Bonded warehouses have built up a vast and lucrative business out of this system by charging for the storage of the wines – the exact global amount is difficult to know, but Octavian Vaults alone, the biggest bonded warehouse in the UK, counts 10,000 clients from 39 countries, and looks after close to £2bn worth of bottles, charging somewhere between £16 and £18 per case, reported Decanter.com.
Similar companies exist all over the UK, Switzerland and the US, with a recent mushrooming of facilities in Singapore, Hong Kong and Shanghai.
Now, France might finally start making a profit from this sector too. A new law published in France’s Journal Officiel government bulletin in July (and which took nine years of lobbying) is aimed to level the playing field between France and other wine trading countries when it comes to storing wine IB by relaxing the previously punitive tax laws, reported Decanter.com.
“Think about international hotel groups who buy the wine for their global needs,” says Philippe Dumand, one of the key movers behind lobbying for the law change as president of Bordeaux’s only fully-independent bonded warehouse, Bordeaux City Bond (there are others, but they tend to be linked to individual merchant houses, producers or transporters).
“Until now they have to take French wine out of France and store it in, say, London or Geneva to give them flexibility over where it would end up eventually – even if that meant bringing it right back to Monaco or Paris. It is the same deal for international airlines, or any other buyer that needs flexibility over where the stock ends up.”
And even though the wine will continue to be sold internationally, the new law’s flexibility means there is no longer a reason to take the wine out of France.
