Wine fund - things to know
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How can wine be an investment?
Not all wines from all locations of the world have investment value. Fine wines are only the ones that grow in value with time. For the fund we consider only those that are in demand on the largest global B2B trade platform for fine wines - Liv-ex (London Wine Exchange). Those wines are produced annually in limited quantities and according to the regulations in their specific geographical area.
Where do wines with investment value come from?
Fund will buy wines from the following regions: Bordeaux, Burgundy, Champagne, Rhone, Tuscany, Piedmont, USA. Some wines with high potential might be added from Chile, Australia, Germany and the Republic of South Africa. In the case of Burgundy and Piedmont, it is important to pick the right vineyards, and in the case of Bordeaux, it is important to pick the right classification. One of the most important indicators that we consider is the Liv-ex 1000 tracking index, which is updated annually and shows the world's most desirable wines.
Who assesses the quality of wines?
In the wine world, quality is based on the scores of wine critics who are members of such portals as Vinous, Decanter, Wine Spectator, Robert Parker's Wine Advocate, JamesSuckling.com, InsideBurgundy, InsideBordeaux, WineEnthusiast, Falstaff.
The most famous names we follow are definitely James Suckling, Antonio Galloni, Neal Martin, Lisa Perroti-Brown, Tim Atkin, Jane Anson, Jancis Robinson and many others.
The evaluation is mainly on a 0-100 point scale, where an excellent wine is from 90 points and the exceptional level, from which the wines of the fund are also selected, is 95-100 points.
How long can the value of fine wine grow over time?
Most importantly, this wine must be able to develop. Most of the wines on our shelves are intended for immediate drinking, i.e. they are already developed wines. Investment wines’ aroma and flavor characteristics get better and better over time up to a certain point. This moment depends on the grape variety, the region of origin and the quality of the vintage.
For the fund, the priority is the biggest and fastest possible profit, so we bet on wines that are still developing in the barrel or we see that these wines will be re-evaluated by top critics in the near future. It is customary to re-evaluate great vintages at the end of a decade. For the most part, lighter red wines peak around 20 years and more powerful red wines peak around 30 years.
The goal of the fund is not to store wines for decades, but to realize them with maximum profit, where we expect a profit of at least 15% per year.
Do the fund wines physically exist somewhere?
One of the main advantages of investing in wines is precisely the physical asset behind the investment. The amount of these wines in the world is constantly decreasing, and the demand is increasing. The wines are stored in a wine cellar with the best climate. All investment wines are insured at Liv-ex market price.
Our partner in wine storage is Europe's largest wine storage company, Octavian, operating in England. They have more than 30 years of experience and today have more than 4 million bottles in their warehouses.
What does "En Primeur" mean?
When it comes to fine wines, one of the most important terms while buying is En Primeur, or wine future. It is an imaginary part of a wine barrel, which merchants buy in advance 1.5-2 years before the wines are bottled.
In En Primeur, wine critics first assess the wine's potential from a barrel sample and then reassess once the wine is bottled. In this case, the price of the best wines can increase by 50% or more on the secondary market in just 2 years. It is also the first and one of the most important sales windows for the fund.
Where does the fund buy and sell wines?
The fund buys fine wines directly from producers or, if the producers themselves do not deal with sales, then from their official representatives (negociants). The fund sells wines on the Liv-ex platform, which provides the opportunity to sell wines around the world. Also on the WineFortune platform, through which wines are offered in the largest price observation portal Wine-Searcher, and several smaller platforms such as Eleanor Wine or Wine Owners.
What is the expected return on premium wines?
The historical average for fine wines has been 13%, but in recent years we have seen Liv-ex tracking indexes show growth of over 20% per year for Burgundy and Champagne, and nearly 20% for the best wines from Italy's Tuscany and Piedmont regions.
The goal of the fund is to select those wines with the highest expected price growth, taking into account market trends, points from wine critics and price growth from previous vintages.
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