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

In this series we follow five examples from multiple regions and winemakers using historic financial data from liv-ex the largest online exchange for fine wines to demonstrate the financial gains achieved within a five year period.

One of Italy’s world renowned Super Tuscan wines, Marchesi Antinori’s Tignanello has shown some very impressive growth in recent years. Available for purchase in January 2014 for around £495 a case, the 2009 Tignanello grew in value by 9% the following year to reach a value of £540. The next year saw just £40 added to the value of a case but performance picked up over the next two years reaching a market value of £668, a 35% growth against the 2014 purchase price. As the secondary picked up, the gains continued and after a full five year hold the market value has reached £850 representing a 77.8% growth, or 15.5% CAGR over five years. With such an affordable unit price you should consider buying multiple cases in order to maximise your potential returns.

In this series we follow five examples from multiple regions and winemakers using historic financial data from liv-ex the largest online exchange for fine wines to demonstrate the financial gains achieved within a five year period.

Rarity can be one of the biggest driving forces in the wine market and from this perspective, Chave’s Cuvee Cathelin fits the bill. Only produced in outstanding vintages, this single vineyard Northern Rhone Hermitage could be bought for around £25,800 in January 2014. And its financial growth has been fairly linear ever since.

The first year’s hold would have delivered you 21% growth taking its value to £31,200 and by the end of year two growth against purchase price would have stood at an impressive 48%.

Prices in the third year dipped back down, which isn’t out of the ordinary for fine wine but, as scarcity began to take effect, it recovered and by the end of the fourth year reached a value of £55,092 – a growth of 114%. Today a case of this wine will set you back around £70,000, if you can find it, which would be a financial growth of 171%, or 34.24% CAGR.

In this series we follow five examples from multiple regions and winemakers using historic financial data from liv-ex the largest online exchange for fine wines to demonstrate the financial gains achieved within a five year period.

This wine from the famous Napa Valley in California has been a great diversification for those looking to see what the new world has to offer. In January 2014 a case would have set you back just £1,620 but don’t be fooled by the comparatively low entry price. One year into a five year hold its value had risen by 18% to £1,910 and by year three it had grown by 85% to a value of £3,000. Performance over the following two years slowed but today’s value of £3,170 represents a growth of 95.7% over five years, or 19.1% CAGR. With this type of performance you could consider acquiring multiple cases to increase your returns and gain more flexibility when you sell.

In this series we follow five examples from multiple regions and winemakers using historic financial data from liv-ex the largest online exchange for fine wines to demonstrate the financial gains achieved within a five year period.

One of the famous Bordeaux ‘First Growths’, this wine is a well known powerhouse within the fine wine market. We’ll take you through the last five year’s price performance but bear in mind this wine was released onto the market at £2,200 in 2001. Fast forward to January 2014 and its value had risen by 372% to £10,400.

Assuming you had purchased a case in January 2014, the first years hold term would have delivered a healthy 18%, reaching a market value of £12,200. Two years later this figure had risen to £14,826, a growth of 43% against the January 2014 purchase price. Today, at the end of a five year hold period, the ‘Mouton 2000’ has a market value of £19,339 and would have delivered a growth of 86%, or a CAGR of 17.2% per annum.

In this series we follow five examples from multiple regions and winemakers using historic financial data from liv-ex the largest online exchange for fine wines to demonstrate the financial gains achieved within a five year period.

Hailing from Burgundy, twelve bottle cases of 2009 La Tache could be picked up in January 2014 for around £23,000. Market prices fluctuated over the following two years before values really started to rise. By January 2017 its market value had risen by 6% to just under £24,500. From here onwards performance has been stellar – just one year later in January 2018 its value had reached over £36,000 and this January you would need over £41,000 to acquire a case. This represents a growth 76.3% over the last five years, or a Compound Annual Growth Rate (CAGR) of 15.3%.

In this series we follow five examples from multiple regions and winemakers using historic financial data from liv-ex the largest online exchange for fine wines to demonstrate the financial gains achieved within a five year period.

The fine wine market works on a supply and demand basis, every vintage is limited in production with the emphasis on quality not volume. Rarity is also influential on price performance with many of the market’s most prestigious wines proving very hard to acquire, even upon release where waiting lists are common.

Most wines have a slow start but as stock availability decreases and the wine mature we tend to see a good increase in market value. To demonstrate this we have given five examples below using historical market data taken from Liv-ex – the largest online exchange for fine wines and the most reliable source for market data.

We believe that a healthy fine wine portfolio should feature wines from various regions, producers, regions and price points – in order to protect against under-performance in any one particular area and this has been reflected in the examples below. Purchase prices range from £495 to over £25,000 allowing access for both sophisticated and modest investors.

 

I finally called at the port stand and was poured a glass of Dow’s 20 year old Tawny by the chairman of Fells, Paul Symington.

 

I always look forward to my visit in early January to the Fells Burgundy tasting, as it is a welcome sign that Christmas is out of the way and the excitement of the New Year beckons (please don’t groan).

This year there was a change of venue for the tasting to the RAF Club in Piccadilly, and as the Service celebrated its centenary in 2018 so the Club was looking in very good nick.

This was my first visit to the Club , as it would have been for a number of exhibitors, and although some aspects of it are very modern – a new stained-glass window commemorating the role of women in the RAF had been unveiled by HM The Queen in October 2018 – others were very ‘time-warp’. I had a strange urge to quicken my pace down a long corridor whilst humming the theme of ‘ The Dam Busters’. I also wondered, surrounded by so many portraits of Air Vice-Marshals and the like, whether I ought to have grown a handle-bar moustache for the occasion. However, once inside a very long room and having been greeted warmly by the lovely Isabelle, I was very much back in primeur 2017 tasting territory.

I take my hat off to our suppliers Fells and Sons, as with Bouchard Pere and William Fevre they handle two of the oldest-established and most reliable domaines in North and South Burgundy. I began at the beginning, with No.1 on the Bouchard list which was a simple Pinot Noir “La Vignee”. But of course I use the word ‘simple’ very loosely, as there was much to entertain in a few gulps of this. I wrote in my notes that I could smell this all day : beautifully rich classic pinot on the nose and lots going on on the palate for around the £15 mark.

I then decided to move north to a Chablis from William Fevre, the Grand Cru Vaudesir, which remains one of my favourites, though in a higher price-band. I notice that immediately below this on the list is the Grand Cru Valmur, also oak-aged which I tasted some time later, and underneath that is the Grand Cru Les Preuses against which I had simply written ‘Blow your socks off!’ .This might have been after a swallowed glass or two of something quite fruity at lunchtime. All these are around £70 mark.

This tasting was not just confined to the Bouchard and Fevre houses. Always able to surprise us, Fells have acquired the Champagne Henriot portfolio showing on the day, which includes the Beaux Freres vineyard in Willamette Valley, Oregon. Beaux Freres specialise in Pinot Noir, so it was logical to combine the tasting. It is quite powerful stuff : the Zena Crown Vineyard Pinot Noir has an ABV of 14.8% . This is something of a contrast to the average 12% in the Old World. Those of you wanting a bit of inside knowledge should note if you don’t know already that beaux-freres is French for ‘brothers – in –law’. The founding owner and president of Beaux-Freres , Michael Etzel, purchased the vineyard with his brother–in –law, one Robert Parker Jr., So now you know.

I was well advised to try a glass of Henriot Brut Millesime 2002 before I left, which is highly recommended and was the perfect end to another enjoyable day on the road.

Just over a month later it was again my palate’s pleasure to be entertained by Fells and Co, this time with their full Portfolio Tasting at the Institute of Engineering and Technology (IET) on the Embankment. This time the wines came from all over the world, so your palate and your stamina needed to be honed for the occasion. Every wine producing continent in the world was there – so the M.O. is just to dive in!

I first found myself next to the Spain and Portugal section and tasted a very appealing 2015 Priorat ‘Perpetual’ from Familia Torres. 70% Carinena and 30% Garnacha yield a good mix of spice and fruit, and an ABV of 14.5%, so quite a good place to start. I also tasted a 2009 Penedes from Jean Leon : ‘Vinya La Scala Gran Reserva’, which was 100% Cabernet Sauvignon and very dignified.

Next I hopped over to South Africa to taste Vergelegen’s GVB 2012 Red, which is a lovely mix of mostly Cabernet Sauvignon and Merlot with a little Petit Verdot and Cabernet Franc thrown in to add more interest. This is special occasion wine and highly recommended.

Italy drew me in next, and I tasted a 2016 entry level Barbera d’Alba DOC Battaglione from Renato Ratti which you could find around the £20 retail price point. 100% Barbera, lovely rich fruit matured in oak – great with a veal escalope! I’ve always preferred Barbera d’Alba to its sister Asti, as Asti seems to be everywhere.

I then tried a 2014 Barolo DOCG Marcenasco,100% Nebbiolo matured in oak – and I can now say I’m beginning to ‘get’ Italian wine, why Barolo is so revered etc. This is a very fine wine and the grapes are distinguishable. I’ve always had difficulty with Italian grape varieties as the wine-growing areas are so concentrated, one runs into another and individual character to my mind becomes something of a blur. Not any more I am pleased to say! In any case, Burgundy and especially the Cote d’Or is comprised of tiny ‘parcelles’, all on top of each other but each with a different characteristic, and you’d never hear me say I had difficulty with them.

Now we come to my Big Discovery of the afternoon, and the wonder is that it’s white! An entry-level 100% Riesling high up in the Eden Valley in Australia : Pewsey Vale Vineyard Riesling 2017. For added interest you could also look out for Pewsey Vale ‘The Contours’ Riesling 2012, aged in bottle for 5 years before release. These two could be found for around the £15 – £25 mark respectively.

Those readers who know my slight bias towards ‘la belle France’ will have noticed that it hasn’t featured greatly so far. That is because the Fells Portfolio tasting tends to concentrate on the New World, and also that the Burgundies have largely been covered by tastings elsewhere (see above).

However I did pay a visit to Alsace, to taste again a wine I’ve just bought a bottle of – Hugel’s 2016 ‘Gentil’. It is their only blended wine, a mix of 41% Sylvaner & Pinot Blanc, 19% Pinot Gris%, 18% Gewurztraminer, 17% Riesling and 5% Muscat. A real ‘pot pourri’ (well perhaps not trop pourri) of Alsatian sunshine.

I finally called at the port stand and was poured a glass of Dow’s 20 year old Tawny by the chairman of Fells, Paul Symington. A fine end to a fine afternoon. I’m looking forward to next February already.

By Jonathan Whittley

 

Our consignment was described in Zachys catalogue as ‘A diverse selection of the most coveted wines in the world’

 

December saw our Managing Director, Enzo Giannotta travel to New York to oversee our first auction in association with Zachys. Founded in 1991, the family owned business quickly became one of the most renowned prestige wine auctioneers in the world. Billed as The Holiday Auction, the Zachys December Sale saw a plethora of the world’s finest and most sought-after wines go under the hammer.

Our consignment was described in Zachys catalogue as “A diverse selection of the most coveted wines in the world” and drew attention from a number of private collectors and consumers, many of whom were in attendance on the day, with more bidding remotely both by telephone and online.

Highlights of the sale included a six litre imperial of the 1974 Heitz Cellar’s Martha’s Vineyard Cabernet Sauvignon, one of only three made which fetched a staggering $96,330*, way above its pre-sale estimate of $40,000 to $80,000.

Other wines to find their price were a six bottle case of Le Pin 2005 which sold for $23,465* and a three bottle case of Domaine de la Romanee-Conti Romanee Saint Vivant 2005 which fetched $8,028*.

A number of lots came very close to their high estimates – various cases of Taittinger Comtes de Champagne 2004 sold for $1,976* per twelve, against a pre-sale high of $2,000 and the 2006 vintage wasn’t far behind, selling for an impressive $1,729* per twelve against a pre-sale high estimate of $1,800.

Italian wines also fared well on the day with two, twelve bottle cases of Sassicaia 2009 selling for $2,347* against pre-sale highs of $2,400 but this was pipped by a 12 bottle lot of Solaia 2009 which fetched $2,717*, exceeding its pre-sale high price of $2,400 by 13%.

Overall the sale was a success and we’re looking forward to further auctions in the New Year. If you would like to consider prestige auctions as an exit strategy for your portfolio, please speak with your Portfolio Manager who will be able to advise on and upcoming sales and the suitability of wines from your portfolio.

*Prices obtained from Zachys post-sale report and include sellers premium

By Spencer Leat