The Richest Yield
There remains a considerable amount of people to hear about an alternative investment vehicle that is very fine indeed.
The Fine Wine investment market has been the leading alternative investment platform in the UK for the past 50 years, and has seen even the Queen of England herself investing in highly sought after labels.
How this platform works is simple: it leverages on the simple yet powerful basis of Supply & Demand, based on various factors covering selective labels:
1) past track record of respective labels’ market performance
2) consistent demand for highly collectible labels that has a sound history
3) past track record of winery in terms of quality of wines produced
We also look at other factors such as a comparison between the mainstream and this alternative vehicle, and chart the significant increase in potential returns.
On average an investor who has his hands on a sound label can conservatively estimate about 8% - 14% P.A over 3 years, amounting to an approximate 40%.
That, and the fact that these wines are placed under full ownership of the investor, including the standard shipping, storage and insurance within the investment amount.
For En Primeur wines (fermenting in barrel at source in France), while they are not possible to be shipped to the respective outbound countries, the wines are still under full ownership of the investors and are inclusive of insurance.
What you might want to consider is doing a general read-up on the internet, where information is widely available, on the Top 5 First Growths of Bordeaux, France, and the significance of internationally renown wine critics such as Robert Parker Jr. (French wines), his associate Jay Miller (who rates Australian wines), Jancis Robinson (first person outside the industry to be certified MW), and the likes.
A general read-through should suffice, because each sound wine brokerage should process their selection of the wines based on the above 3 points mentioned, via a procurement team that secures these highly sought after labels.
Because not all labels are widely available in the open market, these brokerages that manage to secure the labels can do so based on standing relationship with the representatives of the wineries, who produce these wines.
Only about 1% of overall production of wines worldwide can be considered investment-grade, and in Fine Wine investment, it is also definitely about marketshare, especially when highly demanded labels start selling-out in even the larger wine retailers across the regions.
Fine Wines that are considered worth of investment are covered mainly by 2 countries, France (Old World) and Australia (New World). While that is not to say that fine wines of other countries do not hold a respectable value, it is their history based on selection into respective classifications that allow for them to lead the vehicle.
Do take note that labels not within the Top 5 First Growths of Bordeaux, France, should not be unfairly dismissed as “non-valuable”, as there are other rankings such as the Super Seconds, and other highly notable labels that fall within other categories.
The First Growths chart is only a clear indication of the rich history behind each winery, and does not benchmark the complete standard of wines, only the collectibility value it holds.
If you are not one who drinks wines or know much about investment-grade wines, do not worry as you can trust a broker from a sound brokerage to advise you on the labels to secure and learn along the way based on advise and rappall.
Should you face a phobia of a Lehman Brother’s collapse in this parallel vehicle, do not worry about liquidating because after all, the wines are stored under your name, non-withdrawable from the storage facility even by the brokerage itself.
Fine Wines have to be kept carefully, which is why storage is also included. The correct temperature and humidity level help ensure the value of the wines when it is time for trading.
The labels on the wine bottles are kept in tact by the right maintained humidity level in the facility (which is usually a bonded warehouse, not subject to government taxes unless withdrawn for consumption). This is important as the label is representative of the brand of the wine.
You would not want to purchase a luxury handbag or watch with a damaged tag or embossing.
Root yourself in a sound brokerage, trust your broker and equip yourself with a little of bare basics via the transparent accessibility of the internet.
In fact you can look forward to toasting yourself to a ripe yield of sound returns, for this is a vehicle that allows for you to have a steady buffer in your investments, based on its low correlation with the movement of the economy.
This low volatility alone is enough for you to drink to good cheers.