Grape expectations for investors in fine wines
Published 11/10/2011 | 08:00
A new Belfast-based company is advising clients how to place their hard-earned cash in bottled gold, in a bid to steer clear of volatile trading conditions of traditional markets
Gold, silver, oil - and wine?
Despite having the image of being more fond of the black stuff than the red or the white, Northern Ireland has a growing and ever-vibrant wine scene and now a new company has been established in Belfast aimed at urging investors to put their pounds into plonk.
Fine & Co recently set up shop at the Scottish Provident building and already has 30 clients in Northern Ireland.
With a current staff of three employees with over 40 years' experience in trading in fine wine, the 'investment consultancy' aims to offer "everyone from novices to seasoned investors" a chance to invest in and hopefully enjoy good returns from a market which it is claimed is virtually "recession-proof".
Returns on wine were 40% in 2010, with this year also showing strong growth with very little volatility, mainly due to the boost in popularity in the Asian market.
Managing director Barry Rollins comes from a background in the wine industry and worked with brokers in London before coming home to Northern Ireland to help advise homegrown enthusiasts on where to put their money.
"I've worked in Spain and France, more recently in London and the Northern Ireland investor does not have great deal of access to this market," he said.
"I decided to come back to Northern Ireland to offer people the same services here that they could avail of in London," he said.
So why wine?
"Wine has for many years proved a safe and dependable market to invest in. It has out-performed a lot of the traditional markets.
"People are understandably concerned about the current European economic climate and the impact that is going to have on bonds, pension and shares.
"That volatility does not suit a lot of people. Even people who are more willing to take risks do not want to put all their eggs in one basket and we do not encourage any of our investors to put all of their money into wine.
"Wine does not have that element of exposure, with the right wine you get a decent return, certain chateaux are very resilient and the correlation between the financial markets and wine is very small.
"Fine wine is tangible asset and a luxury product - something that will always sell."
Barry said that one of the first hurdles for enticing new clients is combating the elitist imagery of the fine wine market.
"People have this image in their heads of the way things were years ago, the landed gentry living in stately homes, going down to the cellar and producing a bottle of Chateau Lafite for their friends around the dinner table to quaff," he said.
"However they are not the only ones consuming and buying fine wine any more. North America became a huge market and now we are seeing massive demands from China, India, the South Americas.
"There is no doubt that fine wine still does have an elitist image - but investing in it is not elitist. Not many of us can afford to buy and open and drink a £1,000 bottle of wine every day - but invest in it, and some day you will make a profit from it.
"Investing in art or gold, doesn't mean you have to walk around with a Picasso under your arm or chains around your neck - wine is a commodity."
"France is still the biggest region in which the investments are being made. Around 90% of the wine we deal with comes from Bordeaux.
"The best chateaux, what we call the top five, always deliver consistently. Like having shares in British Airways or BT in your portfolio, they can go up and down but over the long term, they will always perform well.
"There is another section of emerging wines called the "super seconds" coming up.
"Some of these wines are very popular in Asian markets and are still hundreds of pounds a bottle, if not thousands. We'll be able to tell you that a certain bottle sold last week at Sothebys in Hong Kong for £780 - we do a lot of market research and invest a lot of time and money into being able to tell our clients what to buy and when."
Mr Rollins said that even the most novice of investors is guided through the whole process.
"We try to find out what the client wants to achieve, do they want a long-term investment like 20 years, or something like five years?
"We try and find out what their expectations are and what they estimate their ideal return to be and of course how much they want to invest.
"We then put a portfolio and presentation together with various wines that we feel would be good for them to invest in.
"We are essentially executing trade on behalf of customers. The wine is put into one of a small number of bonded warehouses in London which can accommodate the wine safely at the correct temperatures. Typically duty has not been paid at this stage.
"The wine is kept under the client's name, they will be sent a certificate and they can see the wine at any time.
"We would advise the minimum investment to be around £5,000 but on average the initial investment is between £10,000 and £15,000 and we would see that as a fair starting point."
Mr Rollins said that the firm does not intend to compete with other wine firms and believes there is plenty of room in the market on the small but active wine scene in Northern Ireland.
"We only specialise in investment in great wine and our wine recommendations are geared toward leveraging as much profit as possible, the big years producing great wines.
"With our clients' hard-earned money, we look for wine which, over term, is going to show a minimum 15% return, something that can give consistent and long-term rewards and longevity in market.
"We are a new company in Northern Ireland, having only operated for about six months.
"Because of our contacts in London, a lot of the marketing we did initially was picked up in England and we were at first having more organic growth there.
"However through networking we are getting more interest from Northern Ireland while still letting people from across the water know we are here."
Fine & Co will be holding a number of open days in Belfast to introduce people to wine investment.
"There will be no pressure to hand over cash, we just want to show people what we are all about," said Mr Rollins. "People in Northern Ireland love their wine, there is no doubt about that. The Northern Ireland consumer spends more on a bottle of wine than anywhere else in the UK."
The investment open day will take place at The Merchant Hotel on Friday, October 28, which will allow interested investors a chance to meet the brokers, taste a selection of fine wine, and learn more about investing.
The event lasts from 4pm to 6pm.
For more information visit www.fineandco.co.uk.
Where to put your money, according to Fine & Co
2000 Chateau Lafite
"Chateau Lafite Rothschild occupies the finest land in Pauillac, Bordeaux. It is certainly the wine of choice when it comes to the Chinese buyers, who are verging on obsessional when it comes to buying claret" Price 2005: £2.500 per case Today's value: £19,388 per case 675% increase
2000 Chateau Latour
"One of the most consistent of the First Growths, Chateau Latour's great vintages are famed for their longevity and producing exceptional wines even in comparatively poor vintages" Price 2005: £3,000 per case Today's value: £11,533 per case 284% increase
2000 Chateau Mouton Rothschild
"This Premier Cru is the only Chateau in the Medoc Classification to be promoted to First Growth status in 1973. It was also the first Chateau to complete Chateau-Bottling of the harvest" Price 2005: £2,300 per case Today's value: £10,194 per case 343% increase
2000 Chateau Haut Brion
"The Chateau stands apart from the other First Growths in terms of style. It has an individuality and personality that makes it the easiest to identify blind and was made famous by being quoted in the diary of Samuel Pepys in 1663" Price 2005: £2,100 per case Today's value: £7,168 per case 241% increase
2000 Chateau Margaux
"Thomas Jefferson placed this Chateau as number one in his carefully studied classification, and in 1855 the famous classification ordered by Napoleon III confirmed its status" Price 2005: £3,000 per case Today's value: £9,000 per case 347% increase
2000 Chateau Cheval Blanc
"French for Chateau of the White Horse, this famous claret has confused many a wine drinker into believing it was a white wine" Price 2005: £3,800 per case Today's value: £8,025 per case 111% increase
2000 Chateau Petrus
"Probably one of the most recognisable names in the world of fine wine, the average age of Chateau Petrus exceeds 45 years. It was consumed by Hercule Poirot in Death on the Nile" Price 2005: £11,500 per case Today's value: £40,000 248% increase