The wine market has been challenged like any other following the widespread disruption caused by Covid-19 but depending on your outlook there remains plenty to be optimistic about.

When trade started to slow down the obvious knee-jerk reaction for sellers was to lower their asking prices to stimulate trade.  This has softened prices across the board and we have watched Bordeaux’s share of trade slip to record lows in recent weeks.
 

 
The chart above shows how sellers have reduced their asking prices in order to stimulate sales.  There is a defined increase in the level of discount relative to market price since lockdown took effect in March.  Justin Gibb, co-founder of Liv-ex was quoted last month stating “It was a market struggling to go anywhere and feeling a bit tense” but went on to add “Now we’re in April and the market’s reasonably steady.”

While it may be true that trying to offload premium Bordeaux at a good price is tricky at present, wine is a long term market that will no doubt bounce back. The other side of that coin is the opportunity that lower prices can offer to buyers, those with a long term view and confidence in the market could take advantage of current prices to strengthen their portfolio.

 

Those able to weather the storm may choose to hold or even capitalize on buying opportunities. But for most, keeping turnover ticking over will require lower prices and the opportunity to reinvest in stock at the new level.

Liv-ex

 

The wine market is constantly evolving and many regions that offer a similar quality of wine to premium Bordeaux but at a lower price point have been thriving.  Regions such as Napa Valley, Tuscany, Piedmont and Rhone have benefited from this and will now be familiar to most of active wine investors.  We are beginning to see the price gap between these regions and Bordeaux narrow, as buyers and sellers acknowledge the opportunities that can be found elsewhere.

This was confirmed at the end of the first quarter when Liv-ex released details of best price performers.  Half of the wines on the list were Italian, three were from Rhone and one each from Burgundy and Spain.  Bordeaux did not make the top ten list but remains and integral part of the market with the largest share of trade, albeit at record lows for the region.
 

 
Italian wines in particular have continued to take big strides after securing the top spot in Q1.  Recently Italian wines hit another record high in trade by value, securing 27.7% of trade, up from 19.5% the previous week.  Californian wines have also held steady on the secondary market, particularly at auction where top flight Napa, including Screaming Eagle and Harlan Estate, has remained in demand commanding respectable prices.

 

The market for Bordeaux remains solid, accounting for 24% of both the dollar amount and bottle count sold. Champagne, California, Rhone and Italy combined for 18% of revenue and the bulk of the rest of sales.

Acker, Wine Auction House

 

Although regular updates on the price movements of fine wine and the market are essential to keep in touch with the here and now, it’s important keep hold of the fact that fine wine has traditionally rewarded patience.  Five years should be the minimum outlook to see satisfactory returns, and over this time span it’s hard to find examples of the market under-performing.

In a similar fashion to traditional financial markets, the type of trading conditions we are currently experiencing should be of interest to long term buyers, and the fact that the Liv-ex 100 has returned 205% over the past fifteen years should also offer some reassurance of the wine market’s ability to weather the storm.

 
By Enzo Giannotta

Will Covid-19 simply accelerate the inevitable?

Our previous article looked at the wine investment market’s initial reaction to the Covid-19 outbreak, and there was plenty to be optimistic about. With many wine merchants reporting a sharp uptick in sales since the Coronavirus lockdown, has this demand been echoed in the fine wine investment market?

Two weeks ago we were beginning to come to terms with being locked down, the equities markets had been in turmoil and workers across the UK were getting used to working remotely, or not at all in some cases. Despite this the wine market had shown signs of stability with the Liv-ex 50 only showing a fraction of the losses seen in equities and some regions continuing to increase their share of trade, of course at Bordeaux and Burgundy’s expense.

By the end of March Bordeaux’s share of trade had slipped to a record low and with Burgundy also losing ground, the ongoing power shift continued leaning toward other regions. The USA made great strides and helped to double the Rest of the World’s share of trade from 5% last year to 10% in 2020, hitting a new record high.

Last Friday Liv-ex reported that their benchmark index, the Liv-ex 100, had declined by 1.06% during March, but against a backdrop of global financial turmoil this could almost be seen as a victory. The broader Liv-ex 1000 index also fell last month, shedding 1.35% despite Italy trying its hardest to prop performance up. The index has struggled since Trump introduced tougher import tariffs in October 2019.

 

this may well represent a good opportunity to strengthen your position before things starts to advance again.

 

The Italy 100 index has grown by almost 4% over the last twelve months and continues to be an area of focus for drinkers and investors alike. Recent releases from Tuscany and Piedmont have proved popular with merchants and have helped to boost results. Following a great start to the year Champagne remains in our buy zone. Prices started to stagnate by the beginning of April due to a build up of stock on the market but based on the region’s performance to date, this may well represent a good opportunity to strengthen your position before things starts to advance again.

It’s definitely not all doom and gloom, during the first week of April the value of fine wine available on the Liv-ex exchange exceeded £50million for the first time in its history. This is a reflection of the wine trade adapting to overcome the closing of bars and restaurants, and following an initial drop in bidding activity there is evidence of buyers returning to the market now prices have softened.

 

China is ready for business and wants the world’s greatest wines as much as ever

Acker Chairman, John Kapon

 

The auction scene has been much more positive. Acker’s first Hong Kong online sale since the virus took hold saw strong demand with Domaine de la Romanee-Conti (DRC) and Japanese whiskies rising to the top. Driven by Chinese buyers, the sale saw a magnum of DRC Romanee-Conti set a new world record selling for USD$57,231. Acker Chairman, John Kapon commented “it was very reassuring to see strong demand across the board in this intimate sale. The three top buyers of the sale were from three different cities in mainland China, which shows that China is ready for business and wants the world’s greatest wines as much as ever.”

Meanwhile their latest online sale in New York took place on 3rd and 4th April. Attracting buyers from around the world, it delivered some very good results with a total of 119 new world records set. The top ten was again dominated by Burgundy. A jeroboam of 1990 Dujac Clos de la Roche came out on top setting a new world record at USD$43,400, followed by great results for Petrus, Leroy, Meo-Camuzet and Rousseau. Following the sale Kapon acknowledged the global challenges we face adding “it is wonderful to see that demand for fine and rare wine remains healthy, and that people remain engaged. Wine remains something that will always bring people together even if physically apart”

 

Seeing this overall level of consistency within the fine wine auction market is encouraging

Cult & Boutique Managing Director, Enzo Giannotta

 

The fine wine market revolves around supply and demand, so it’s great to see the consumption end of the market thriving. We feel that Bordeaux’s reduced trade share can only benefit the market as a whole. As the back bone of the market it should always take the lion’s share, and will no doubt remain as the blue chip element. The ground it has lost will allow Italy, USA, Champagne and Rhone to flourish as the market further diversifies, and ideally the spread between prices should also continue to contract.

Cult & Boutique’s Managing Director, Enzo Giannotta added “seeing this overall level of consistency within the fine wine auction market is encouraging. Even though results vary for individual products due to the pure volume of lots sold over two days, it offers a viable exit strategy and a very rewarding one for those with the most patience.”

By Spencer Leat

With the first quarter of 2020 behind us, we take a closer look at our Q1 best seller and its price performance within the market.

 

Sparkling wines from the Champagne region of France have been steadily gathering momentum for a number of years. This progress was highlighted at the end of 2019 when Liv-ex announced that three Champagnes had made the top ten performers of the year. One of those three wines, Salon’s Le Mesnil 2002, has remained popular with our customers to become our best seller of the quarter.

 

Just 37 vintages were produced in the 20th century, a unique phenomenon in the world of wine

Salon

 

Salon Le Mesnil is a sparkling white wine made from 100% Chardonnay grown in the Le Mesnil-sur-Oger vineyards. The first commercial vintage was produced in 1921 but a vintage is only declared when the quality is deemed to meet strict standards. This results in an average of around three vintages being released per decade, production is small at approximately 60,000 bottles per vintage which also helps add to the excitement each time a new release enters the market.

Salon has been held in high regard since its arrival, in the Roaring Twenties it was the house champagne at Maxim’s and has been enjoyed by high society ever since. Today Salon is globally recognised as one of the top Blanc de Blancs and although the house has changed hands several times since Eugene-Aime Salon’s passing in 1943, the quality has remained intact solidifying its place as one of the most desirable and expensive Champagnes on the market.

Released into the market in 2014, the 2002 joined a succession of well received vintages with critical acclaim. Antonio Galloni described it as “utterly mesmerizing”, Julia Harding MW found “definition, clarity and finesse” while The Wine Advocate’s William Kelley recently proclaimed the release “full-bodied, broad and powerful”.

 

Salon 2002 is a great romantic, but also armed for battle! Its strength and audacity give it the balance of a classical dancer

Salon

 

Market data from Liv-ex shows that price performance has also been good, over the last twelve months the market value of the 2002 has grown by 12.5%. Spanning back over two years the growth figure more than doubles to 30%, and taking a five year view of past performance unveils an impressive 108% gain.

The highly anticipated 2008 vintage was released late last year, but with a twist. The latest vintage was to be released in magnum format only and limited to just 8,000 bottles in total. Sold as the ‘2008 Salon Limited Edition Oenotheque Case’, the handcrafted collector’s case contains one magnum of the 2008 and two regular bottles of the 2004, 2006 and 2007 vintages.

 

It is quite simply one of the most magnificent Champagnes I have ever tasted.

Antonio Galloni

 
It’s yet to be seen how prices will react to the huge disruption to global business and financial markets that we are seeing but signs are looking good so far. The wine market has been in a state of flux for some time now with Champagne emerging as a beacon of success, alongside Italian and Californian wines. If history has taught us anything about the wine market it’s that wine usually thrives when traditional markets struggle. Additionally, once this mess stabilises there will no doubt be swathes of celebrations around the world which will require lubrication – and which drink do we choose to celebrate?

By Spencer Leat

 

Wine has a proven track record of stability during some of harshest financial storms

 

This is a concerning time for everyone but investors have had a very bumpy ride via the global equities markets and its knock-on effects. Following Boris Johnson’s escalation of social distancing and isolation measures, many are wondering where to look for stability among all the uncertainty.

Wine has a proven track record of stability during some of harshest financial storms we have weathered to date, but how has the wine market reacted to the Coronavirus outbreak?

 

With a low correlation to equity markets, fine wine moves at a glacial pace and is generally influenced by two long term economic fundamentals – namely supply and demand.

Liv-ex, March 2020

 

The modern fine wine market has come a long way since the days of deals being brokered over the telephone from faxed stock lists. The introduction of online auctions, exchanges and logistics have helped to build an environment where trade can be conducted remotely. Wine can easily be bought, sold, viewed, valued and delivered online with the help of trade partners in the supply and logistics chains.

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The Liv-ex Exchange remains open for trade reporting today that their Fine Wine 50 index (which tracks the price movements of the last ten bottled vintages of the Bordeaux First Growth wines) had retreated just 3.45% year-to-date, holding relatively firm in comparison to the free fall witnessed on the FTSE 100 & 250 and around the world due to panic selling.

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Zachy’s auction house in the US also confirmed to us today that they are open for business, giving access to another key sector of the wine market. Following from last year’s successes which saw them become the most active fine wine auctioneer generating $121 million worth of sales, Zachy’s form part of a global fine wine auction market which grew by 9% in 2019 from $479 million to $521 million.

We’ll continue to monitor the market as the situation develops and if you’re yet to take a serious look at the market yourself, now may prove to be a good time to keep tabs.

By Spencer Leat

 

One of the main draws for many over the years has been the low correlation to equity markets.

 

The spread of Covid-19 is gripping the World, Europe has now become the epicentre, markets have been reeling, casualties are building up.  Although the priority will always be one’s health and the health of our loved ones, the financial implications of this pandemic are very real.

We have been introducing clients into the fine wine investment market for well over a decade and one of the main draws for many over the years has been the low correlation to equity markets. The chart below is a great example of just how fine wine can offer stability to any investment portfolio; it’s also why we are seeing a large amount of interest as investors look for a safe haven.

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The main reason for this low correlation is the supply and demand nature of fine wine. Even before the effects of Covid-19 started to hit the financial markets wine had been ambling due to tariffs imposed by the Trump administration. Yet no signs of panic selling have been evident and that trend has continued as we’ve moved into uncharted territory. In fact, it’s been quite the opposite with seasoned investors looking to strengthen their positions.

 

It’s widely acknowledged that diversification is vital in any investment portfolio

 

Our ‘4 portfolio’ assemblage takes into account buyers’ tastes, appetite to risk, desired hold terms and budget levels, allowing new speculators to enter the market with confidence knowing the products have been selected around specific requirements. This offer was put on hold last week due to a spike in interest from our existing client base, so it’s my pleasure to announce that we are now asking for anyone who has an interest to submit details via our website here.

These are unprecedented times, yet if we look back at the historical performance of fine wine, when markets are in free fall the results have been strong. In 2011 with the backing of the Chinese government the most successful wine fund in history was launched. Aiming to yield 15% over five years, The Dinghong fund raised closer to 125% across the 5-year period. It’s widely acknowledged that diversification is vital in any investment portfolio and we see fine wine playing an important role for many in the years ahead.

By Enzo Giannotta

Just over a year ago I travelled to Cheshire to the funeral of a priest in whose church choir in North London I had sung many years ago. I’d not seen his two daughters for about thirty years, so it was good to catch up with them, but I was particularly touched by the fact that both their husbands remembered me vividly from the days when they were dating. One of them had been a Group-Captain in the RAF, and so I was able to tell him of my recent visit to the spruced-up RAF Club in Piccadilly. “I’ve not been there for a while”, he said, “but I can remember drinking some very nice wine”. Well what do you know.

 

I had fortified myself for the occasion with a buck rarebit at Fortnum and Mason

 

I explained that the purpose of my recent visit to the Club was to do precisely that, as detailed in this newsletter a year ago. And so it was that in early January this year I went to the same place for the 2018 EP William Fevre and Bouchard Pere Burgundy tasting organised by Fells & Co. I had fortified myself for the occasion with a buck rarebit at Fortnum and Mason (poached egg atop Welsh) and it was a wonder I didn’t arrive at the wine-tasting already reeling from the price I paid for it in relation to its size!

I soon got down to the serious business of tasting first some very fine Chablis from Domaine William Fevre. Now I don’t know how you feel about oysters – bear with me – but I am tending these days to evangelise about them in the manner of a born-again Christian.  I only discovered them a matter of three years ago when I watched my neighbour in a bistro on the Ile de Re tucking in and thought there must be something about them. Indeed there is. Now, the perfect marriage for a dozen oysters, dressed or undressed – however you like, is I would say a glass or two of William Fevre Grand Cru Vaudesir or Les Clos. Why should this be? Because the soil in which the chardonnay grape is cultivated to produce this wonderful liquid is comprised of clay and ….oyster shells! Let it not be said that this contributor doesn’t know his stuff or enjoy imparting thereof.

 

They are neither of them entry-level, but you could spoil yourself

 

Vaudesir and Les Clos are two parcelles that I return to year on year as they always have a very exciting mouthfeel. They are neither of them entry-level, but you could spoil yourself and either would go down very nicely with half a dozen Carlingford Lough Rocks.

Oysters, top-end Chablis, am I moving into a different league? Well I equally enjoy, and said as much in my report last year, the Petit Chablis and Chablis Domaine for everyday drinking, which tasted as good this year as they ever do. The 2018 Petit Chablis has a very satisfying hit on the nose and the Chablis Domaine is good and ‘rocky’.

I am afraid I can’t recommend an entry level red from Bouchard Pere & Fils as I simply didn’t taste any. In any case, entry-level red Burgundy these days can be pricey enough, and some that are not that pricey are not worth the investment. This reminds me of a mantra quoted by the proprietor of my local Italian deli : “Good ain’t cheap and cheap ain’t good” says he as he gleefully prices up a bottle of premium olive-oil.

I did however taste some mid-range, lesser known reds, even discovering a new and apparently revered parcelle. Bonnes-Mares Grand Cru sits a few kilometres south-east of Gevrey-Chambertin. Lovely fruity taste, could develop well, but certainly not entry-level. Nor is Echezaux Grand Cru, at around 40 euros less ex-cellar price per bottle, but there is a rather nice dryness missing from the Bonnes-Mares, together with a subtle richness.

However of the reds I tasted on that occasion, the most interesting with good length and balance was the Le Corton Grand Cru. 70 euros worth of Burgundian class.

Burgundy has been in the headlines recently in the press in France as a result of the body of the French Ministry of Agriculture responsible for regulating French agricultural products with Protected Designations of Origin – what we know as ‘Appellation d’Origine Controlee’ (AOC) – meeting on 6 February to discuss excluding 7000 hectares from the Bourgogne appellation, including the whole of Chablis. Sacre bleu! Quelle horreur.

As might be expected, there was a demonstration by the Syndicats de Bourgogne outside the offices of the Institut Nationale d’Origine et de Qualite, and the status quo remains for now, no such drastic measures have been taken. This rather thorny question will however remain on the agenda as, surprisingly, Burgundy’s viticultural area was never entirely defined (technically) when the AOC sytem was introduced in 1937.

 

It is very easy to go ‘round the world’ of wine, as it were, in a few steps in a long room.

 

Fells Portfolio Tasting

I always enjoy the Fells Portfolio tasting which takes place in mid-February at the Institute of Engineering Technology near the Savoy Hotel in the Strand. It is very easy to go ‘round the world’ of wine, as it were, in a few steps in a long room. Because of other commitments I actually paid a morning visit for the first time this year, thinking that all the fun happens in the afternoon and I’d miss the throngs and the jollity. Not a bit of it! The place was heaving.

It might have been something to do with the weather but I gravitated towards the red wine rather than the white, particularly the Italy stand. I first tasted a 2017 Langhe Nebbiolo DOC from Renato Ratti, followed by a 2015 Barolo DOCG Marcenasco : two very noble wines in succession. I then tasted several wines from a producer entirely new to me : Tedeschi. I tried a really fruity 2016 Capitel San Rocco Valpolicella (around £20). However I subsequently made two very interesting discoveries from the same producer – a 2016 La Fabriseria Valpolicella DOC Classico Superiore (around £30), quite fruity with balsamic notes adding richness.

I have always found Amarone della Valpolicella quite heavy and more like a dessert wine than anything else, so my big discovery was Tedeschi’s 2016 Marne 180 Amarone DOCG (around £40), which even with a 16.5% ABV ( yes really ) was quite dry and not as cloying as many others I’ve tasted.

I did venture slightly into the New World to try Yalumba’s 2015 The Signature red (around £40) : 51% Cabernet Sauvignon,49% Shiraz – a stand-out vintage, smooth as silk, and thoroughly recommended.

By Jonathan Whittley

 

Given the stark price difference between premium Italian & Burgundian wines it makes sense to sample what Italy has to offer, even if it means purchasing multiple cases to increase your return.

 

It’s no secret to us that Italian fine wine has been making great price movements in recent years but market statistics have recently placed Italy just behind Burgundy in terms of the growth it has delivered. As covered by various articles in both the trade, and regular press – Italian wine is somewhat of the market’s darling right now and its performance is predicted to continue for the foreseeable future.Even though the price of premium Italian wine on the secondary market trails far far behind that of top flight Burgundy, the price performance gap is closing. Over the last five years the Burgundy 150 index which tracks the price performance of Burgundy’s most tradeable wines, has grown by 97%. Over the same five year period Italy is the next best performer at 39%. To be fair, both statistics are appealing but if you compare the buy-in price of prime examples from both regions, Italy’s 39% comes at a much more cost effective level – a good Burgundy can cost considerably more per bottle than a top Tuscan example does per case.

You could take a position with a very good Super Tuscan wine for less than £1,000 but a similarly scored example from Burgundy could cost more than £10,000. Given the stark price difference between premium Italian & Burgundian wines it makes sense to sample what Italy has to offer, even if it means purchasing multiple cases to increase your return.

 

Italy’s market share has risen from 6% to 8% (over 2 years), a sign perhaps that the region’s potential is only now being discovered

Anthony Maxwell,
Liv-Ex Director, August 2019

None of the above is news to Cult & Boutique. We have been recommending top flight Italian wines regularly since 2013 and many clients that purchased Italian wines through us have seen good growth and sold at a profit. Here are a few historical examples:-

Although Tuscany dominates Italian trades, taking more than two thirds of total sales but this level of performance is not limited to the traditional go-to Super Tuscans. Other regions are also taking big strides – top wines from Piedmont have grown by more than 12% since December 2017 and trades in Piedmontese wines have risen by an astonishing 3,300% over the past ten years, with price performance year-to-date reaching 40%.

 

Other regions are also taking big strides – top wines from Piedmont have grown by more than 12% since December 2017

 

If you missed out on our previous Italian recommendations there is still time to act. We have an impressive range of Italian wines currently available, at varying price levels that allow us to cater for all budgets. Speak with your Portfolio Manager directly to discuss your options and find a wine that suits your budget, and also fits in with your wider investment strategy.

By Spencer Leat

 

I’ll never forget what the region went through October of 2017, there were multiple fires burning at the same time and going off in different directions. It was like living in a war zone

Jeff Bitter,
President of California’s Allied Grape Growers

 

It has almost become ‘the norm’ to hear about various wildfires breaking out in different locations annually around the world.  Of course the loss of human life, livestock, livelihood and property are heart breaking and the damage to the environment very concerning.  But there is another by-product of certain wildfires that could have an effect on your fine wine portfolio.California has suffered more than its fair share of wildfires in recent years, which has had a dramatic effect on the region’s ability to provide successive vintages of some of its most favoured wines.  The Californian wine industry is worth an estimated $114bn to the US economy and pays around £35bn in wages, not to mention $250bn of charitable contributions at the last count. So, any disruption to the big Californian wine machine could have huge knock-on implications.

The 2017 wildfires have proved particularly damaging, not only physically but also psychologically in the minds of consumers.  Only a fraction of the 2017 Cabernet Sauvignon crop was directly affected by the fires and these were non-reserve grapes that would be destined for $60 – $80 bottles.  In fact, by the time the fires took hold around 90% of harvest had already been picked and stored from Napa and Sonoma growers.

 

At the recent Auction Napa Valley, we were able to connect with buyers and collectors from all over the world who are still concerned about the 2017 vintage.  There’s no way we wanted to compromise the brand we spent 25 years building and put out wine that might taste fine now, but could start exhibiting signs of smoke taint a year or more down the road. So we sold off about half of our Napa Valley Cabernet Sauvignon in bulk. But at the Auction, we realized that collectors are still concerned.

 

Rich Frank,
Frank Family Vineyard

 

But direct fire damage is not the only concern on winemakers’ minds – grapes can also be affected by smoke taint, where smoke present in the air can be absorbed into the grapes themselves.  There is no definitive test for smoke taint and the majority of premium producers from affected regions have decided to pull entire vintages, in order to protect consumer confidence and reduce the risk of tarnishing their brand.  After all, wine develops over many years and a wine that tastes fine after a couple of years may go on to develop unwanted nuances of taste and aroma which would be catastrophic for many premium producers, who trade at heady prices based on the long held quality of their wine.

The fine wine investment market is a supply and demand environment and having most of the top producers from Napa and Sonoma reduce their supply to zero is bound to apply pressure on the overall supply and, in turn, put upward pressure on price as a growing number of consumers start to chase a dwindling number of bottles.  With climate change progressing and Californian wildfires becoming more frequent and widespread, it would be a good idea to consider taking a position in some of the unaffected vintages before demand pushes prices out of reach.

 

I got to the vineyard early on Monday morning [the first morning of the fires] and started tasting through the fruit. I knew right away it was gone

Nic Gislason,
Screaming Eagle

 

The upper tier of collectible Californian wines is already hard to break in to.  Most of the very best producers work with tightly controlled waiting lists, lasting for many years.  And if you dare to pass on a particular vintage release, you can be pushed to the back of the queue, just like snakes and ladders.  Working with Cult & Boutique is one way to gain access to some of these coveted wines, as our presence in the wine market allows us access to wines that otherwise would be out of the reach of most buyers.

Some of our recent Californian recommendations have performed well but you should always bear in mind that wine is a long term market that delivers the best returns over extended hold periods.  We will have to revisit these wines in five to ten years time to see what the full effect of the wildfires has been.

On a related note, if you are awaiting an allocation of Californian wine we have recently secured an impressive allocation of premium brands and will contact you soon with full details.  As always with this region, quantities will be minuscule so take what you can while it’s available.

 

According to the 2018 Knight Frank Wealth Report wine investments rose by 192% in the last decade.

 

When thinking about investing, most people only think about stocks, shares and other traditional services provided by banking and financial institutions. However, other types of investment are becoming increasingly more popular - cars, watches, art and wine are also investment options to invest your money and increase your profit.

Stocks are a well-known investment vehicle but due to high volatility you could lose your entire investment, as demonstrated during the 2007 financial crisis. Hence investing in stocks can be quite a high-risk choice. It demands in-depth research prior to each investment that will cost you more than a couple of hours, on top of the ongoing portfolio management. In addition, another disadvantage is that you will be competing with professionals such as Institutional Investors and professional traders that probably have a greater knowledge and more sophisticated tools and resources at their disposal. You should also bear in mind that if the company you chose to invest in goes bankrupt, stockholders are the last to be paid, in other words you will probably have to wait some time to receive your money, if  it does happen.

On the other hand, investing in alternative solutions could offer more stability and profit. As mentioned before, classic cars, vintage watches, art as well as fine wine are all alternative options to stocks. According to Knight Frank’s Luxury Investment Index from 2018(i) and 2019(ii), alternative or “passion” investments such as fine art, classic cars, watches, rare whisky and fine wine have been showing very strong growth in the last decade. Investments in wine has been as lucrative as art over both the last year, showing a growth of 9%. When compared to classic cars and watches, wine also showed better performance: 7% higher than cars and 4% higher than watches. However, rare whisky was the market leader last year showing 40% in annual growth. The Knight Frank Rare Whisky 100 Index (KFRW100), which contains 100 bottles of the world’s most desirable rare Scotch whisky and tracks UK auction prices, increased by almost 40% through 2018.

Taking a closer look at the fine wine investment market, according to Knight Frank’s Luxury Investment Index from 2018(iii), wine investments rose by 192% in the last decade and the most lucrative brands in this market have been rising in value since 2016 by 165% according to The Telegraph(iv). Demand for top Burgundies is stronger than ever, driven by the scant quantities produced in recent vintages. Sotheby’s October 2018 sale saw a single bottle of La Romanée-Conti 1945 fetch US$558,000(v). The sale highlighted the level of premium that the market is prepared to pay for impeccable provenance. Considered as a passion investment, it could become a lucrative hobby and more pleasurable to manage than traditional investments. Wine investment can also offer further advantages, such as

Low Levels of Risk and Stable Returns: It has been proven that when investing in wine, the returns are consistently higher when compared to traditional investments such as stocks, shares and commodities. The wine market has also been showing less volatility, as well offering comparatively lower levels of risk.

Physical Asset that Improves with Age: Fine Wines get better over time. This is another great characteristic of investing in fine wine. Your investment will not only improve with age but should consequently also rise in value. In addition, you have the possibility of investing in a particular vintage to mark a special occasion, such as the birth of a child or grandchild, wedding anniversaries or other landmark occasions.

A Tax Efficient Market: The tax efficiency of investing in wine is another great advantage that makes it even more attractive to invest in. Investing in wine doesn’t attract Capital Gains Tax since it is considered a wasting asset. You can also avoid paying VAT and Duty by storing your wine in a bonded warehouse. The Capital Gains Tax exemption is for UK residents and will depend on your tax status, for more detailed information we suggest you consult your tax advisor.

Positive Supply and Demand Correlation: Bordeaux and Burgundy are regarded as the blue-chip element of the fine wine market.  Due to tight controls and limited vineyard space, the quantity of wine produced by the best Chateaux is strictly limited. On the other hand, demand for these attractive wines continues to grow and tends to outweigh supply. This is a major driving force of the market and naturally pushes values upwards, which benefits investors.

Financial Securities: Your investment portfolio should have a mix of high-risk/reward and low risk/reward in order to minimize the overall risk of financial loss. Fine Wine investments are a perfect vehicle to diversify and protect against movements in traditional financial markets.

Support to Increase Your Knowledge: We provide a wealth of information and support to help create, monitor and manage your fine wine portfolio. In addition to our blog, we also provide up to date market information through a private online client portal and regular newsletters. You will have all the support needed to expand your wine market knowledge as well as your profits.

These are just some of the benefits you can enjoy when investing in fine wine. Apart from the obvious financial benefits, it is also a fun and exciting form of investment. For more information about the wine market contact us directly and follow us on Instagram, Twitter and Facebook.

If you are considering investing in fine wine the team here at Cult and Boutique are available to help on +44 20 8948 9430 with all you need to know about this market. For more information request our free wine investment guide.

[i] https://content.knightfrank.com/resources/knightfrank.com/wealthreport2018/the-wealth-report-2018.pdf

[ii] https://content.knightfrank.com/resources/knightfrank.com/wealthreport/2019/the-wealth-report-2019.pdf

[iii] https://content.knightfrank.com/resources/knightfrank.com/wealthreport2018/the-wealth-report-2018.pdf

[iv] https://www.bizepic.com/2019/01/07/is-fine-wine-still-a-worthwhile-investment/

[v] https://content.knightfrank.com/resources/knightfrank.com/wealthreport/2019/the-wealth-report-2019.pdf

 

The physical condition of stock is one of the biggest influences on a wine’s value

 

Our longer standing clients would have recently received storage invoices for 2018 and we thought we would take this opportunity to offer some detailed information on the quality of storage that we provide, the processes involved and the importance of good storage for fine wine.

We use the services of London City Bond’s Vinotheque facility in Burton-upon-Trent. Unlike many other bonded warehouses available, Vinotheque is dedicated to the storage of fine wines only, which offers a more mindful approach to handling and storage of your wine.

If you’re a stickler for security you should be impressed with the steps that are taken to protect your portfolio. Your wines are stored in a private reserve within our account, under your unique client reference and full name, so your wines are not deemed as part of Cult & Boutique or LCB’s assets. In addition to this, Vinotheque’s state of the art security system, which includes movement detectors, infrared beams, security cameras and a security guard, is also constantly monitored by an off-site specialist enabling LCB to deliver maximum security 24 hours a day, seven days a week.

Vinotheque is a Grade II listed building constructed in the late 19th Century with metre-thick walls. This substantial foundation was built upon with the addition of a one million pound air conditioning system, described as unique within Europe and the most advanced air conditioning system within a warehouse. Together they create the perfect controlled environment for the long term storage and maturation of fine wine.

In addition to the bricks, mortar and hardware within, all staff at LCB Vinotheque are enrolled on to the Wine & Spirits Education Trust (WSET) Level 1 course in order to increase thier expertise and enthusiasm for the role. Some members of staff have continued to expand thier knowledge and pursued this to diploma level – so with staff this knowledgeable and and professional, you can be sure your wine is in good hands.

Vinotheque provides the ideal storage conditons for fine wines. Temperature and humidity are maintained at a constant, suitable level with light and disturbance also kept to a minimum. The physical condition of stock is one of the biggest influences on a wine’s value, so it’s very important to ensure that variables such as temerature, humidity, light and vibration are kept under strict control and continuously monitored. Vinotheque also has a purpose-built photographic studio to provide full condition reports, including bottle/case photographs and fill-level assessment. Such reports are available on request and can help with the sale of your stock should the buyer have any questions regarding condition.

Vinotheque has also been a recipient on the Best Supply Chain Innovation Award in recognition of the investments they have made to create the perfect environment for fine wine maturation. The warehouse is linked in to London City Bond’s national transport network and through Cult & Boutique your wines are fully insured, both whilst in storage and in transit. LCB’s transport drivers are equipped with the latest EPod units which provide real-time electronic proof of delivery enabling us to track shipments to their destination and confirm safe delivery with our clients where neccessary.

We include five years of storage and insurance with every purchase you make, so you will not be asked to pay any additional storage fees until you have held your wines for longer than five years. Once your inclusive storage expires we charge annually in arrears. If you would like to sell your wine before any additiional storage fees are due, you should contact us before your inclusive storage expires allowing enough time to arrange and execute the sale of your wine. If you are unsure of timescales it would be advisable to keep in regular contact with your Portfolio Manager who will be able to discuss these matters with you and offer information specific to the wines you would like to sell.

By Spencer Leat