Wine Investing Platforms

A friend sent me this today: https://www.vinovest.co/

They’ve got some prominent somms / wine people involved as advisors… Anyone have experience with this sort of thing?

To me it would cheapen the experience of building a cellar a bit and make it too much about returns, etc. And I’m not sure how much better the pricing they can get really is.

It’s also not a great investment to begin with, due to friction and carrying costs.

Exactly.
Their website compares “Wine” over 20 years to the S&P. What wine? Their Vinovest 100? Because if it’s an index done now it’s pretty meaningless, if I could pick stocks I wish I’d bought 20 years ago I’d be rich… Does that include the dividends one would have received/reinvested if you held stocks (pretty sure that Latour isn’t paying dividends) ? And while there is minimum “investment” amounts I didn’t see anything about storage fees, just management fees, which are unspecified (assume disclosed when you sign up). You can ask to be sent your wine, I’d love to see how shipping charges compare. As noted wine sale cost (and carrying costs) dwarf stocks. Lots of little things add up.

And some of the team bios need editing
Micah started her career as a collector specialist at JP Morgan Chase Bank which she became the youngest top collector at the age of 18 years old. She had managed several accounts and has accomplished her position as the acting CEO for an online company that helps modify the start-up website to attract traffic and have a good reputation.[/i]

Most of the wine bios seem accomplished (must have been most of 11 Mad team). But buying DRC, 1st growths, etc doesn’t take extensive knowledge

There are several earlier threads on this general topic.

Anybody invested with Cadman Capital in Toronto? Used to be Venulum? (2019)

Are wine investment funds good investments? (2018, with details on several funds)

I’m not really sure how Vinovest works. The investment schemes discussed in the other threads are funds, in which you invest, so they are considered securities – like mutual funds. Vinovest seems to be structured in some way to stay out from under the securities laws.

The funds, set up in Canada or the UK, where securities laws are less tight than US laws, generally have had lousy returns, in part because they stick you with huge fees going in (e.g., 7.5%!) and when you cash out (e.g., another 5%), and your investment is typically locked up for several years – which should earn you a higher return.

I don’t see anything on Vinovest’s site laying out their fees. That would be the key question.

I was wondering when people on the board would start talking about this!

Who is responsible for valuing the wines they hold?

One of the articles is about investing in Vouvray. Who buys Vouvray for speculation?

And the Sample Portfolio page shows 2006 Tattinger Comtes with a $70.83 price, and 2015 Guigal Ampuis at $57.33. Hunh?

So they pick wines for you (at what pricing?), hold on to them, you can take delivery at any time, and they’ll also sell it for you. Sounds more like a glorified wine club with storage and mark-to-market pricing of some kind. They say pricing is at “fair market value”, but what the heck is that in wine? Where are they finding buyers if you want to sell? Other customers of the service?

If I had to guess, knowing finance folks, they’re also taking a cut of the bid/ask on the trade - if you sell, are they just arranging the sale to another Vinovest customer and taking some spiv on that? (I don’t know if this is actually the case, but it’s how brokers make money).

I have a good friend that is investing in wine through a UK outfit. Same basic idea but in addition to trying to sell you wines from others you can buy EP so its easy to compare pricing. They keep the wine in-bond in the UK so no tax drag, and you hold title to the wine so you can get it whenever you want. Pricing initially was i think 10-15% upfront on purchases and that included storage/insurance and no sales commission on exit, but they had to change to a lower upfront, and added an annual cost based on the original investment amount and a small commission on exit.

Wine is a very poor candidate for this type of investment. I’ve run mutual funds and hedge funds as the primary portfolio manager so know a little about the business. I did not find that FAQ and am not goign to give my email out. But wien is illiquid and imagine the liquidy is poor, maybe monthly. I am not sure how that mark or value the assets and with any hedge fund type vehicle that gets tricky and is rife with potential issues.

I doubt they really get any significantly special pricing and in fact the whole pitch look pretty fluffy. And a key point here is the only returns that matter are how the fund did assuming it was of adequate assets (over 25 million) to have any hope of being repeatable/meaningful. Many new funds quote actual returns but with tiny assets as to make them near meaningless. This assumes the valuations are accurate and include liquidations as that ensure that the valuations and interim pricing are consistent and accurate. The turnover ratio will tell ya how much has been actually sold but be sure that does not include physical wine delivered to the buyer.

Looking as some index return is pretty much meaningless given the large adjustment in wine prices so your starting point is going to matter a lot. This is why the actual funds returns are what matters and again if the assel pool is sufficient. It is still not to hard to make good returns if you get a few cherries and then value them. But to do this is size is a whole different matter.

I have certainly seen worse investments but would not touch these things for the reasons mentioned above.

The thing that has always worried me about funds like this are the redemptions side. Market crash… ah, brilliant, wine is an uncorrelated asset… so I need some cash, time to sell my wine fund. The fund suddenly gets hit by a number of people looking tyo redeem - how do you sell illiquid things with high individual value, whilst trying to maximise returns?

It’s an absolute nightmare. I saw a lot of this ~March where massive (£mm+) Burgundy portfolios were being liquidated, and prices were falling rapidly on them - sometimes you’d get the same offer a few days later with no buyers and an additional 10% off. ‘Market price’ makes a lot of sense for the stock market, it’s much harder to denote in the wine market where you really need to consider the depth of a firm buy/sell offer as well as the price. Price is obviously irrelevant if there are no buyers or sellers at that point; it’s the point at which an exchange can actually occur.

I think wine can be a pretty sensible investment, but not through mechanisms like this. Also dont overestimate the cost of a DIY portfolio - IB uk wines are very cheap to hold, and dont scale with the cost of wine, so its not a %age fee.


I also agree with John’s point about scalability. You get unicorn wines that make good money (things like if you can get Lafleur EP). They’re not elastic. You cant get 10,000 cases of Lafleur EP that you then go and double your money on. You’ll be lucky to get 5 cases. It’s a very volume-limited asset class for any wine worth investing in (realistically).

If the bolded part is accurate to what your quoted valuation would be that is a HUGE red flag. Those valuations are more than 25% lower than available retail prices anywhere in the world (per Winesearcher). It says elsewhere on the site that you are guaranteed the quoted valuation when you redeem – well if you just get to make up the valuation then that’s pretty easy to do! Where do those valuations come from? That’s really a critical issue.

Also, what relationship do they have to the fund’s acquisition prices? (If the fund was somehow able to purchase those wines at that price they should just set themselves up as a retailer because they could undercut anybody).

Its an interesting dilemma - on the one hand, higher prices = more AMC fees for the fund owners, but it means a bigger promise when redemptions come. Of course that’s all arbitrary if they can make up their own valuations, I’d just expect to see any valuations quite heavily correlated with the stock market, thus defeating the whole point of buying wine in the first place!


Far as I’m aware, 2015 Guigal D’Ampuis came out at £63/bottle in-bond ex-London, which is like $82.


flippantly, I’d be cautious of anyone recommending 1987 Bordeaux as an investment (see chart here: Vinovest ) - putting visualisations with +60% increase in week on week is just farcical, even if illustrative.

That’s nothing, they have an article on Beaujolais Nouveau that at the end pitches the Vinovest portfolio as a way to buy it! Imagining the family conversation – yes dear, I’ve cashed out our stocks but I have an excellent portfolio of Beaujolais Nouveau

Re valuation, they apparently do claim that they can access wines for you at below market prices – “You’ll be able to buy the finest wines at the best wholesale prices. This is because Vinovest buys directly from wineries, wine exchanges, and merchants — without involving intermediaries.”

seems somewhat unlikely that they could get better than London prices

Or potentially they take their margin out of the sale and focus on margin from management of inventory instead, which isnt a bad idea. you need ~3.5 years of managing a bottle to compensate for the 10% typical sales margin retailers might have,before any price appreciation.

Its very misleading, though, when they say a typical wine investor will spend 10-15% of their portfolio worth a year on managing their wine; I spend about 0.3-0.6% on storage, no more.

Can I buy shares with non-recourse margin debt?

Vinovest’s credit department will be happy to arrange that.

But there is no counterparty credit risk, as the margin loan is backed with the readily liquid, value-supported shares.

Who provides said insurance? Thank you.

I would naively assume they just use standard bonded warehouse storage - e.g. if you’re in London its costed as part of the case storage cost.