2018 Chateau Algorithm (not available in OWC) or, what on earth happened to The Emperor`s new clothes?
Where are we going on this one William? Okay, well it’s a minor beef (grumble) in the scope of things, but I do feel obliged to share with my dear reader, yes you! Thoughts and happenings that could be useful if shared, and if not just please hit the `delete` button as usual. But in the last two weeks, I have received some email and phone calls on the subject of ‘Wine Investment’. The first two, were asking if I wanted to start a wine investment plan (WIP) with them. The third and fourth calls/emails, were asking me for my advice on, as to what wines I would recommend ‘them’ investing in. I do prefer the latter of course.
Goodne$$ me, what is going on here. Well apparently, and it’s not the latest, hot off the press jargon as you probably already know being the wise reader you are. But this time it all comes with a sense of slightly aggressive, ‘well if you are not apart of this goldmine (aka: Bordeaux Grand Cru Classe) you are certainly not in the game at all, and you are probably still living in a tree somewhere in the Brazilian outback. Again, almost correct, but actually I am just a few thousand kilometres south of the world’s lungs, as they used to be referred to. Mother nature definitely takes care of herself there, without the help of today`s current addiction to something they call an Algorithm. Can you believe that these misguided second-hand car salesman and let`s include vacuum cleaner, insurance policies, stocks n`shares and maybe sellers of pension plans as well, all use a mathematical code, or set of rules, to look for the greatest common divisor in selling you what you really do not want, and definitely you do not need.
Anyway these cold calls got the old grey matter going, which normally takes a few litres of good old Arabica (no milk n’sugar thanks), a touch of feistyness and here we go. Personally I have never made a coherent financial investment my life. What a surprise that is! For goodness sake, I am an international fine wine merchant who buys and sells wines that, hopefully, I have had the honour of drinking most of them, as have my customers done or will be doing in the future. It’s always useful to know what you are dealing with and talking about when it comes to wine appreciation and conversation. You can smell the shit a mile away when people start bull-roaring on about wine. I would hate to recommend a wine that I have not personally tasted, and know very little about. But investment in wine would seem to go beyond this, and as you know the majority of fine, and also rare wines, bought and sold these days are done so through the recommendations of a few people who have the gift of the gab! and the gift of the pen and ink, with an Algorithm blotting paper to cover themselves by should something, dare I say it, go wrong.
So let’s go back a bit and think what we are doing here. Investment, from my understanding comes on two levels. I am sure there are more, of course, but I can only handle two for now. One, is or should be `personal` (I hate to say it but here we go, would include personal development? taste, personal knowledge, gastronomy and the likes of), and the other is `financial`, or the laying out of money (normally yours only!) or Capital, in this ‘case’ on wine, with the sole expectation of making a profit or turn on your wine investment. Mr Hogarth my Latin master at prep school would have also added the it was the act of putting on robes or vestments (vestimentum). So besides money, you can also put time, effort or emotional support into something and also call it an investment. Volunteering in an organization, for example, requires an investment of time and energy. You may hear someone say, “We must make an investment in the future of our children,” when he or she is pleading for fiscal responsibility, education, environmental protection or some other cause that will affect the success of future generations living on this planet. It was not so long ago that wine investment meant `laying down` Vintage Port for your children, and even grandchildren. Claret and Burgundy for your up and coming pleasures in the near or not so distant future. All very becoming I am sure, but coming back to what I wanted to share with you and do know a little bit about, WinE!
Can I? should I? would I? put someone into buying a case of wine as a financial investment with the knowledge that, and I am sure we can all remember the adages, ‘breakfast is for wimps’ and ‘remember that markets go up and down’ (the prices that is). Good old aggressive Wall Street jargon that should have little to do with our gentile vinous privileges. But things have changed dear reader as you know. We now have global cellphone and smart?phone coverage, Appleized Algorithms and we are bombarded daily with the fact that wine can be traded on a market place just like coffee, sugar, pork-belly, frozen OJ (do they still do that one?), copper, and yes GOLD. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. Blow me down with a feather (no, we do not trade feathers, yet!), could we really say that we can use Ch.Lynch Bages as our investment example. I really don`t think so. When was the last time you actually tasted or drank a bottle of Lynch? Good or bad vintage. And went mmmm, what a fabulous blend of Merlot, Cabernet Sauvignon (the spine of this wine) and a wee drop of Cabernet Franc. Unctious, massive blackcurrant, or tightly knit red cherry, gracefully balanced and pure St. Estephe classiness. My dear friend Gerrard Tesseron must be still turning in his grave over the idea that Pontet-Canet should also be used as an investment tool. I can buy 2009 today for less than it was being offered over the last two years. It’s a fabulous wine, please drink it. There are around 40.000 cases of 12 bottles produced from that year, and your guess is as good as mine as to how many are still in bonded warehouses and private cellars just sitting there gathering dust. Drink drinky now and maybe before we end up sharing a glass with Gerrard in his vinous heaven. God rest his soul.
These wines were of course made for our palatial pleasure, and quite frankly if you are thinking of buying a ton of the stuff to make you more ‘do-ray-me’ than the bank or the stock market can, then don’t! My Prep school economics tells me here that rising demand coupled with falling supply = increasing prices. Well, blow me down with another feather! By the way is Ricardo Branson seriously considering travelling to the moon in a special Virgin Atlantic Space-Plane. Honestly! please don’t bother getting any insurance cover on that one, falling supply is definitely the name of that space game. NASA (nice attitude sensible attire) can pick up the pieces on that one.
So, the wines that you need, or should only buy for your ‘portfolio’ are a lot more costly from the outset, than this little Pauillac drinking-gem that we have mentioned, and the example we are using here. How much is a case or ten of 2009 (great vintage) Ch.Lynch Bages today compared with the release price just under a decade ago now. (540 in 2010 – 650 in 2018) The BIG numbers and BIG names (M, LR, HB, Mx, L, CB), or visa versa are quite hard to find unless you do what I do, and once the title has passed through several other`s hands, until it ends up with your name on it, along with your storage charges and your transport/shipping fees all paid upfront and eating away into your initial investment. I do wonder really where the appeal lies. Or maybe it is no more than owning some Clarety new clothes, a bit like the Apple cellphone effect, or Chinese people buying chateaux in Bordeaux for huge amounts of dosh, that you and I can barely pronounce, or spell, the name of (Chateau Beasejour Becot de Lagarosse or Chateau Marquis d’Alesme Becker Margaux as examples) and you have a wonderful feeling `cos` you own it, that little wooden box with six or twelve bottles inside and it`s gonna make you some doe in de future.
Ah, unless of course you are not really such a stingy Capitalist s.o.b. and secretly, in fact, want to drink the wine. Great idea! as far as I am concerned. I do, by the way, have some ideas for you, on bits n`pieces that you could make a turn on if needed, but I will not be apart of that sinking feeling when your so called portfolio still shows the same amount of literage you have purchased but for some strange reason you could have bought it all anyway years later at more or less the same price, and can you believe this bit, sometimes a bit less. I will share my little ideas at the end of this bugga-bloggy blog, just for you as I do need to cash in on `la mode`. Living in hyperinflationary times down here does move ones` boundaries of self discipline when it comes to making good old fashioned money to pay the rent.
Before hand, please read this: It is the current blurb on the wine investment platform. Take it or leave it as you will of course. And as ever, all of this is written ‘without prejudice’ but just a little nudge of disbelief, a pinch of sarcasmo and a tremendous sense of humour. What would we do without that one? now.
The wine investment market today:
Investing with us is straightforward. Following an initial consultation so that we clearly understand your investment ambitions – we want to know the timescales you’re working towards, your attitude to risk and so on – we will be most glad to provide you with some recommendations based on your requirements.
One thing you can always rely on us for is straight talking, so here are the three principal reasons as to why you might want to invest in wine:
1. Mini Stock Market
One of wine’s great benefits over other asset classes is that the market is broad and deep, with many producers in many regions offering their product over multiple vintages. In this sense, it is much like a mini stock market, whereas gold will always just be gold and oil will always just be oil. There is no homogeneity in the wine market, but there is sufficient fungible supply so as to prevent it becoming overly specialised like, for example, art. These characteristics allow diversification within the asset class itself, which can be used to mitigate risk.
A common mistake made by many newcomers to the market is that they attempt to manage risk by minimising their financial exposure, and so ‘dip their toe’ with a single case. But in actual fact this investor has placed himself at the polar extreme of the risk spectrum because his return rests in the fortunes of that one case. We would always advocate diversification through a portfolio approach – like stocks and sectors, wines do not all move up and down at the same time or rate. It is our job to try and ensure that our clients’ portfolios are exposed to wines with the potential for maximum price appreciation, and to avoid those with the biggest downside threat.
2. Unique Characteristics
Wine investment is often touted as being predicated on a supply/demand dynamic. This is patently true, but then, aren’t all markets? But a couple of supply/demand characteristics of wine are genuinely unique. The first sits on the supply side: unlike other luxury commodities, supply cannot be increased. Once the production of any chateau in a given vintage (year of production – each one totally unique) comes to market, that’s it – there will never be any more. Over time this supply will actually reduce as the wines are consumed – fine wine being one of the only luxury commodities that can be used and enjoyed just once. The result is a perfect inverted supply curve that is truly unique to fine wine.
The importance of this from an investment perspective this cannot be overstated. If sales increase for Range Rovers or Hermès handbags, it’s relatively straightforward to raise production to meet demand. With wine, it’s quite the opposite; as demand grows the inverse supply curve accelerates.
On the demand side, too, wine has some helpful characteristics. Fine wine, by definition, improves with age in the bottle. Consequently, as it matures and enters its prime drinking phase, it becomes more desirable and therefore subject to greater demand.
3. Capital Gains Tax Break
There are precious few investments with a legitimate CGT break, so investors to whom this is of relevance would be wise to explore wine. Of course, taxation is a complicated area, and whilst we can offer you our understanding of the current HMRC view, we are not tax experts, and so strongly urge you to independently consult with one before making your decision to invest.
Now! it`s me again dear reader, I am back. I do apologise if you fell asleep there reading the above tripe. I copied and pasted most of it from an advertisement on the world wide (wine?) web (www). But this is real and this is what a lot of people, from my understanding are getting into. Good luck m8 as the traders used to say down near Bank Tube in the days of hard nosed financial futures trading.
I urge you with all my will forces to please buy wine to drink. And drink loads of it. It`s great for all of us, especially your health, both mental and physical. If you want to dabble in the investment game because you are teetotaller, fine of course, but really the idea of owning some of the world’s greatest wines (and the only ones pursuing in both investment ideas, personal/financial) which you can do with great pleasure if you look at my wine list, and never you having tasted any of them would be awful and a bit like giving a horse a raspberry to eat for his lunch.
I am now going to write a small list of names in our current wine world that most of you have never heard of, and if you have gotten this far in reading all this piffle, then you might be onto something, as I sure as hell am.
- Don Enzo Bianchi
- Don Nicolas Catena Zapata
- Don Felipe Rutini
There we go! What do they mean? Well, they are the names of what I call the Don Grand Cru of Mendoza (there are three of them only in the Premier DGC). There are four others, but not to complicate or distract from these top three, we can call the next lot, Les Deuxieme DGCs. Dona Mendel, Dona Zuccardi, Dona Tacuil and Dona Noemia. Yes all women! and not to be deceived by them being good investment material, or that the female connection is totally correct. They are trannies, and they are only good investment material for your palates, dear reader.
Now, back to the big three, the Dons (DGCM). Who are they, where do they come from and why the hell are they in this blog about wine investment? Well, because they are my tips! Ahhg there we go! No they are not Pauillac-Rothschild, and no they are not Pomerol-Petrus or Domaine de la furkinn Romanee-Conti thank you very much. They are the three GRAND CRU CLASSEs from Mendoza region in Argentina, lying alongside Los Andes and if you are following wine prices you will see that their top cuvees are just about to go through the roof. Maybe like me, you have been accustomed to drinking these bold, south American thoroughbreds. Well, soon you are not going to be able to. So either drink up now and enjoy them or buy some to stash away for a rainy day and laugh at everyone when you can draw the cork on a bottle of wine that cost you £20-25 quid, and now will cost you at least £250 quid + plus plus plus. Do you need to know more? I remember the day when people could not even spell Brunello di Montalcino, let alone know where it was on the map. Or how many SSs where in Sassicaia, and I am not joking. How many wine offers do you receive these days with a heading, Argentina. In the last year, daily!
Now, if this is all too much information, I do apologise and I shall now go back to making my October Pesto sauce. However, if your palate and wallet have been tickled even just a bit, then there is more to come here. Check out these ones if you are a Yacht owner, or have a week-end pad in the Seychelles, they are def. for you:
- Gianfranco Soldera (All cuvees)
- Henri Bonneau* (Cuvee Celestins and Cuvee Speciale only)
- Bonneau du Martray (Corton Charlemagne)
- Super Tuscans (Sassicaia, Solaia & Masseto from ONLY top vintages: 1981, 1985, 1988 etc)
- Jean-Francois Coche-Dury (Whites)
- 2015 Bordeaux Second wines from top Chateaux (but you are a bit late on that one)
- Dear old Domaine Leflaive (When Anne-Claude was alive that is)
Names, names and more names, yes! and you may find some of them on my wine list, do have a butchers! And I will not make a list of wines for you to avoid dabbling in, as the list will stretch to the moon and back, and well before Herr Branson’s little flying machine even gets past first thrust into orbit. By the way how much do you wanna bet that he does not make it before 2020. He told everyone back in 2009 that it was all happening and by the end of that year the dam thing exploded. Nasty eh! Why not this time? and who would be stupid enough anyway to step inside the contraption. Isn`t life complicated enough already. Maybe it`s all for people who are bored and just have too much money? I really do not know and I don’t care, that`s their business.
I can guarantee one thing though. All the wines that I recommend here taste absolutely fantastic, if not mind blowing (1989 Cuvee Celestins, Soldera`s Sangioveses, Coche-Dury`s Chardonnay just for starters). Who needs to go to the moon when you can elevate in front of a chilled glass of Ch.d`Yquem or an Anne-Claude Leflaive Puligny-Montrachet. Okay all done now.
Rant overrr, and OUT!