You need to distinguish between (a) investing in wine for returns and (b) increased demand. An expanding wine consuming public, in the West and in Asia, and better information (critics, wine press), has certainly increased demand for high-end wines over the past 40 years. Parker’s enthusiasm in the 80s led to higher prices and a wave of construction across Bordeaux in the late 80s and 90s. The same thing happened in the Langhe after Barolo caught on circa 2000 – lots of new caves were dug into the hillsides.
But I don’t think that had much to do with managed wine investments. It was simply a matter of prices rising with increased demand.
I think its hard to separate out what price is because of increased demand vs wine speculation right?
At the end of the day we can only observe the wine price increase - I’d argue that speculation and investment has led to that as chateaus dont want to pass on all the profits to third parties and release their wines with some level of pricing guidance based on history.
To be clear, I’m not talking about managed wine investments (e.g. 2% AMC like is being discussed here) - its hard to separate out demand because of drinkers versus people speculating on wine. I would naively expect the actively managed wine ‘funds’ is a tiny proportion of the market compared to people who buy as an investment directly, and people who buy to drink or hold.
HenryB, The Climens “price” on their website is for 12 bottles so seems fine. On the Chateaus and infrastructure improvements that has been pretty steady for the last 15 years and seems directly correlated with increased wine pricing which of course goes directly to their bottom line. I’m not smart enough to say if that is due to “wine investing” or just good ole supple and demand. Certainly much more demand and better information since I started this hobby 30 years ago.
If you can get climens at that price for 12 bottles give me your suppliers! Technically it does say per bottle, and $180 for a bottle of 1987 cos I can believe
For what its worrth, I’m pretty sure its just placeholder/stock - all three wines show a 60% increase week on week which is clearly ludicrous (which is why I said the commenet was a little flippant, but if you’re going to use a placeholder image, at least make it something people would want to invest in, with some sensible numbers)
Weird that I saw it showed the Climens as per 12 bottles. But I looked again and it also says per bottles. Anyhow much of the stuff they have in their sales pitch would never have passed my compliance dept for a hedge fund sales materials and certainly a not for a more regulated mutual fund. Many, many things there I find misleading and I can tell you do as well. As soon as an investors feels that, they should run. Problem is many don’t have the knowledge or tools to identify it.
I’m a fairly passive investor in my own time, and i like to keep my AMCs low If Vanguard release a passive wine fund then we can talk!
Obviously my wine investing is very different, but as mentioned above, a lot of that isn’t scalable. Finding unicorn wines at good prices EP or opportunity for arbitrage.
Allen Meadows never answered my e-mailed questions, for my hopes of understanding better what had happened. Perhaps, he has traveling to taste some newly made vintages.
To me, there are really two ways of making money in this way:
Buy liquid wines, which ensures that your marks are always high and you can liquidate them to meet investor redemption demands. But this seems like a high fee low reward strategy - any wine investor has a pretty decent idea what the highly priced liquid wines are - we have auction data. It’s not genius to be able to tell that Leroy, DRC, Latour and Lafite are liquid and in demand wines that will likely go up in price. But if you have the money, you can just buy cases of them and put them in a bonded warehouse in London. You don’t need a fund.
Buy less liquid wines on the basis of a large appreciation in the future. The hope is that you’re finding the next Roulot, Juge, Verset, Burlotto, etc. I’m not aware of any fund that does this, because it’s likely they wouldn’t be able to show a return or an increase in asset value for years - it’s really hard to know who’s going to become a wine cognoscenti darling in the next decade (and may well depend on a producer’s untimely death).
In which case, why not just buy what you like? And hey, it might appreciate too, without having to pay someone any commission for “cellar management”
It looks to me that they’ve structured this so there’s no pooled interest; that each investor has title to specific cases of wine from the outset. That has a securities lawyer’s fingerprints on it.
On the other hand, I wonder if the language about returns might not land them in trouble with some regulator somewhere.
FWIW the images of returns I saw for 1 week would never fly in any compliance group I know for sales materials. Cherry picking is the term. Illustrative is the compliant benchmark.
Hey all,
I’m Anthony, cofounder and CEO of Vinovest.
A ton of comments here so I’ll try to address the most common ones I’m seeing:
Pricing. We source either direct from the chateau/domaine/winery or work with their exclusive distributors to be able to get wines at below retail prices.
Valuation and return. We calculate the current FMV and historical pricing of each bottle based on the last sold price or the lowest live offer price through a variety of publicly available channels ( i.e Wine-searcher, liv-ex, etc.).
Liquidity. The wine investment market is a lot smaller than the wine drinking market, so we also work with counter parties on the consumption side (other wine merchants, retailers, restaurant groups, etc.) when we are selling wine.
I’m not sure if there would be interest for this, but I would love to do a live Zoom AMA this Friday afternoon 3:30pm PDT.
Pour a glass and come grill me with your hardest questions.
I’m not sure if I’m allowed to post Zoom links or not so I’ll refrain from doing that in this post. Please comment if interested. If not, I appreciate everybody’s feedback since it’s clear there’s a lot of work that we need to do on clarifying our offering.
Could you give us some examples of, say, Bdx 2019 EP purchases you made and the price paid for them? Also if you had any sales recently, same question, a few examples of the wine, vintage, and price achieved (net to investor)
Also where you got the data to suggest an average wine investor spends 10-15% of their portfolio worth on on annual basis maintaining their wines
As an aside, I’m not sure how, if a wine producer has an exclusive distributor, you can get below retail prices, unless said distributor is giving you a discount because they like you vs the other people they sell to
(which is why I said the commenet was a little flippant, but if you’re going to use a placeholder image, at least make it something people would want to invest in, with some sensible numbers)
I didnt know there was any fraud allegations