Your guide to collecting and investing in ﬁne wine · 2019. 11. 7. · Your guide to collecting and investing in ﬁne wine Fine wine provides a great means for preserving wealth

Your guide to collectingand investing in fine wine

Fine wine provides a great means

for preserving wealth tax

efficiently, it has outperformed

financial markets and gold over

the long term and it’s a fun asset

class we can all enjoy.

Peter Shakeshaft,

Chairman and Founder, Vin-X Limited

Introduction from the Directors 03

An introduction to wine investment 04

The benefits of investing in fine wine 04

The benefits of investing with Vin-X 05

Creating a rewarding fine wine portfolio 06

Valuing your fine wine portfolio 08

Tax treatment of fine wine 09

The fine wine market explained 10

Fine wine regions and investment grade wine 18

Fine wine experiences 24

Special relationships 25

The directors 26

Business services - key contacts 27

Frequently asked questions 28

The Vin-X service guarantee 30

Contents

02

Introduction from the directors

Like first class sport; investment is all about performance, and fine wine has agreat track record. With impressive returns and stability, particularly during timesof economic uncertainty, the inherent value of fine wine gives me security andexcellent long-term growth potential.

I have been acquiring fine wine with Vin-X since 2011 and found the market soengaging I became a Director of the Company in 2013, with our collective aim ofmaking fine wine available to all investors.

Austin Healey - Non-Executive Director, Vin-X Limited

Leicester, England and British Lions rugby player, and TV broadcaster.

Peter Shakeshaft - Chairman and Founder, Vin-X Limited.

Every investor should include a case of fine wine in their portfolio!

When I formed Vin-X in 2010 I simply wanted more people to realise that thisalternative and ‘real’ asset can be invested in with safety and with trust in theexpert advice our team provides; a service which I had not found previously inmy personal experience of investing in fine wine.

Since establishing Vin-X, we have proven our expertise through our wineselection strategy, average portfolio performance and bespoke managementsystems and, in the process, become a market leader and industry commentatorin local, national and international media.

In my view every investor should consider fine wine as an investment option, andgiven the current financial uncertainty we live with, I am even more strongly ofthis opinion!

Our Guide will provide you with an introduction to this exciting and rewardingasset class and the services we provide. We look forward to helping you to createyour own fine wine collection.

Yours sincerely

FOR MORE INFORMATIONVisit www.vin-x.com for ourregular blogs, market reportsand insightful marketcommentary.

CONTACT our team on 0203 384 2262 or email [email protected]

03For more information visit www.vin-x.com Call 0203 384 2262

The benefits of investing in fine wine

PERFORMANCE

Fine wine, when viewed as an alternative asset, has a trackrecord of delivering strong returns on investment and hasoutperformed financial markets and commodities over thelong term. Of those luxury investments termed ‘Passionassets’, fine wine is consistently one of the top performers,is the most accessible in terms of price, and enjoys a strongsecondary market with price transparency and liquidity.

HEDGE AGAINST INFLATION AND CURRENCYDEVALUATION

A tangible, stable ‘alternative‘ asset, fine wine is lesssusceptible to market downturns and adverse economicconditions. It can be used to preserve wealth by hedgingagainst recession, inflation, currency devaluation andmovements in financial markets.

FINITE SUPPLY AND GROWING DEMAND

Originally the primary focus for fine wine investors was thetop wines of Bordeaux with 90 percent of the fine wine

traded on Liv-ex from the region in 2009. Ten years later themarket has broadened significantly with Burgundy,Champagne, Italy and California enjoying significant growthin market share on the exchange. In total, however, there arestill less than one hundred producers worldwide of interestto investors. The supply of their wines per vintage vary fromapproximately 400 cases to 18,000 on average to satisfygrowing global demand. This fundamental supply / demanddynamic supports strong, stable price performance.

TANGIBLE ASSET

Wine as a ‘real asset’ has an inherent physical value unlikestocks and shares.

TAX EFFICIENT

The classification of fine wine by H.M. Revenue & Customs(‘HMRC’) as a ‘wasting asset’ generally means that CapitalGains Tax does not apply. SEE page 9 of this guide and ourspecial report: Tax Treatment of Fine Wine at www.vin-x.com.Advice should always be sought from your professional taxor financial advisor.

LIQUIDITY AND FLEXIBILITY

The secondary market in fine wine is well established andbenefits from platforms such as Liv-ex.com, which providetransparency and liquidity. We encourage investors to viewfine wine as a medium to long-term investment to optimiseperformance, but the asset can be liquidated at a time to suitpersonal circumstances.

DIVERSIFICATION

Fine wine asset performance does not directly correlate withfinancial markets and can be used to diversify investmentportfolios.

04

LIV-EX BURGUNDY 150: TEN YEARS 2009 - 2019

An introduction to wine investment

Investing in fine wine is not a new phenomenon - the finestBurgundies and the top wines of Bordeaux have beenacquired, for both enjoyment and the profits to be gained,for centuries. The last decade, however has seen the marketevolve at a pace with technological developments providinggreater transparency, liquidity and efficiency and now wineinvestment is better understood, safer and more accessible.

The economic principles of supply and demand are key tothe price performance of fine wine. Less than one per centof the wine made worldwide is considered to be investment-grade, by that we mean it has the quality, critical acclaim,

brand recognition, provenance and historical priceperformance to attract collectors and investors and sustainan active secondary market and growth over time.

The supply of these wines is finite with production strictlyregulated and they become rarer as a vintage is consumedover time. They are also highly desirable because of theirageing qualities and improve as they mature. These factorssupport the long term growth fine wine enjoys generally asan investment. Couple this with the beneficial tax treatmentand fine wine becomes a highly attractive addition to aninvestment portfolio.

Source: Liv-ex.com

A 2018 paper found thatpost-war classic Europeancars and cases of Bordeauxoutperformed equities,fixed income, real estateand gold in the periodbetween 1998 and 2016.

Investors Chronicle,26 September 2019

The benefits of investing with Vin-X

PORTFOLIO MANAGEMENT

Vin-X offers a bespoke, specialist service focused oncreating rewarding fine wine portfolios for our clients in linewith their investment goals.

MARKET LEADING SYSTEMS

Vin-X operates market-leading systems to protect investorsin fine wine. Our back-office systems are synchronised withour specialist storage provider’s and Liv-ex systems whichguarantees the most efficient trading and access to targetwines. This also ensures that ownership of our clients’ wineis always correctly recorded to that of our clients, whilstallowing us to efficiently manage their accounts to facilitatetrade and offer favourable terms. All of our telephone linesare recorded for training, monitoring and security purposes.

SELECTION STRATEGY

Our expert team of analysts and buyers have developed a

wine selection strategy which has resulted in our client wineportfolios out-performing Liv-ex indices and financialmarkets.

SPECIALIST BONDED STORAGE

Vin-X clients’ wines are stored at London City Bond’sspecialist Vinotheque facility and Vine International whichboth provide the perfect conditions to guarantee theirongoing quality, provenance and tax benefits.

SPECIALIST COMMENTATOR

Vin-X specialists feature in mainstream media and press.

WIA MEMBERSHIP

The Company is a founding member of the Wine InvestmentAssociation (‘WIA’), established to protect investors in finewine and progress best practice within the industry. For moreinformation please visit www.wineinvestmentassociation.org

05

Vin-X Limited is one of the world’s leading specialists in fine wine investment. Our team of experts with backgrounds in financialservices, alternative investments and the wine industry have created a portfolio management service and support systemswhich are dedicated to providing a bespoke wine investment solution for individuals, companies and other organisations. TheVin-X service provides the following benefits to our clients:

Chateau Margaux winery

Creating a rewarding fine wine portfolio

KEY FACTORS AFFECTING VALUE

A number of factors influence our decisions when decidingwhich wines to include in our portfolio planning and thesewill continue to determine performance and value of thewine over time. These include:

■ Brand and producer history.

■ Quality scores by influential critics with global reputation

■ Overall vintage quality – wines of a Prime vintage maycommand higher prices than similarly scored wines frommedium or Off vintages. Conversely veryhighly scored wines in medium and Off-vintages may represent excellent value anddeliver strong returns in time.

■ Historical price performance of theProducer’s wines and comparative analysis– past performance may provide a guide toinvestment but does not guarantee futuregains.

■ Supply – vintage production levels – pricemay be enhanced in smaller vintages

■ Provenance – sets out the chronology ofthe ownership, custody and location of thewine. Ensure you acquire your wine from anexcellent source, which can account for itshistory to guarantee it has been storedappropriately to protect quality.

GETTING STARTED – KEY DECISIONS:

1 Decide how much capital you wish to invest infine wine and over what period of time

2 As a stable asset, we recommend that you holdyour wine for the longer term to optimiseperformance – decide what period you are happyto hold your wine investment for

3 Discuss your performance goals with yourportfolio manager

4 Confirm the selection of wine for your portfolio

5 Ensure your wine is correctly stored and insured

6 Keep informed about the market conditions,trends and performance of your wine

7 Time your exit

For more information visit www.vin-x.com Call 0203 384 226206

■ Market trends including regional demand.

■ Drinking windows – these will affect supply and demandas consumption may reduce overall availability and rarerwines will increase further in value over time. Some winesheld beyond their drinking windows may decline in valueand owners should be aware of the optimum time to sell.

■ Scheduled re-scores by influential critics – the keyinvestment-grade wines are quality scored at en primeurstage, when they go into bottle and then at keyanniversaries such as ten years in bottle. The publicationof key critics’ scores has been known to move markets inwine, Robert Parker Jnr was particularly notable for this.

■ When to buy? Should you buy En Primeurs? See thebenefits and risks of buying ‘wine futures’ on page 7.

Vin-X’s analysts research this information to determinewhich wines available on the market offer the bestopportunities for growth. Their wine selection strategygenerally outperforms market trend.

Including fine wine in your investment portfolio offersstability, proven long term growth performance and theability to diversify against more volatile financial markets.So, as a new investor, how do you get started? We set outthe key steps and factors to consider below:

Cars and Liv-ex 100Gold, Cars and Liv-ex 100PERFORMANCE OF AVERAGE VIN-X PORTFOLIO vs FTSE, GOLD, CARS AND LIVE-EX 100

Source: Liv-ex.com

Other factors which determine value once you have selectedyour wine include storage and security:

Storage

Vin-X client wines are stored with industry leading fine winestorage specialists, including London City Bond (LCB) andVine International.

LCB is responsible for 3 million cases of wine. They operatethe highest standards of security with a state of the artsystem in operation 24 hours a day, seven days a week. VineInternational is the logistics and storage division of Liv-exand offers storage, settlement and distribution services builtspecifically for fine wine in London, Bordeaux and Hong Kong

for trade members. Both LCB and Vine International operatethe optimum storage conditions for the professional cellaringof fine wines in bonded warehouses ensuring the beneficialtax treatment.

The benefits of storage in bond

■ The correct temperature and humidity conditions aremanaged to protect the quality of your wine.

■ There is no requirement to pay Value Added Tax or UKExcise Duty until such time that the fine wine is removedfrom bonded storage.

■ If you choose to have your wine delivered out of bond theVAT will become payable on the original price of the wineat time of purchase and NOT its current market value.

■ Provenance is maintained which protects quality andvalue.

■ Wines stored in bond are more attractive to prospectivebuyers including merchants.

View current Duty & VAT charges at www.vin-x.com

Security

Every case of our clients’ wine held in bonded storagemanaged by us is clearly labelled with a unique referencewhich is also recorded on our Vin-X Certificates ofOwnership. LCB and Vin-X have evolved systems to ensureend-to-end control of our clients’ ownership of their finewine.

BENEFITS RISKS

• Opportunity to securesupply of rare wines

• Buy at first market entryprice which should belifetime lowest

• Acquire at earliestopportunity formaximum growthpotential

• Wine delivered directfrom the chateauxproviding excellentprovenance and futurevalue

• Forecast priceperformance may not beachieved

• En Primeur price maylimit future returns

• Investor exposed topotential failures in thesupply chain beforephysical delivery

• Wine may not age asexpected when scoredin barrel and may notachieve predictedscores when wine goesinto bottle and at latertastings with a resultanteffect on price

For more information visit www.vin-x.com Call 0203 384 2262 07

BUYING WINE ‘EN PRIMEUR’

We may, on occasion, recommend that clients invest in winesen primeur, i.e. buying wine allocations whilst still in barrel(similar to a future). The en primeur process was originallyinstigated by the key players of the Bordeaux market toassist the chateaux with their cashflow and to providebuyers with the opportunity to secure positions in relativelyrare, highly sought-after wines at a discounted price to theeventual ‘in-bottle’ values. Latterly, en primeur prices haverisen and as a consequence this has driven demand for morereasonably priced physical vintages. We therefore select enprimeur wines extremely carefully.

Investors should be aware of the benefits and risks ofacquiring wine en primeur:

08 For more information visit www.vin-x.com Call 0203 384 2262

Chateau Pontet-Canet

Valuing your fine wine portfolio

With so many factors influencing the value of fine wine it isnot hard to see why valuations may vary. Prior to the internetputting a value on a wine portfolio was a lengthy, manualprocess with merchants having to read through printedbrochures and prices from various sources before making ajudgement on value. The internet made this research mucheasier but still required merchants to go through a similarprocess and make an educated guess, which would vary frommerchant to merchant. Now there are a number of platformswhich have the software to scan publicly available priceinformation on traded wine, but even with this expertknowledge is required to base a valuation.

More sophisticated online resources available to professionalmembers of the wine trade offer a greater depth of data andprovide more accurate valuations and Liv-ex is at theforefront of this. Liv-ex formulates valuation data based onmembers’ transaction prices, including bids, offers, last tradeand the Market Price.

Vin-X uses the following Liv-ex Valuation models to applyaverage performance when valuing their client portfolios:

■ The Liv-ex Benchmark Market Price: is the lowest quotedentry price on the Liv-ex trade exchange over a 30 dayperiod from what Liv-ex refer to as “Tier One” merchants,i.e. those merchants who can be reasonably relied upon tohave the stock they are advertising for sale at the pricesthey are quoting. Similar to any asset, there is a spreadbetween the entry and exit prices, as such these figurescannot and should not be relied upon to calculate arealisation or exit value, but offer an indication of a likelyceiling to values achievable at a point in time.

■ The Liv-ex Average List Price: takes the average of retaillist prices over a 30 day period from the “Tier One”merchants. This provides an indicative rather than anaccurate guide to exit prices. The Average List Price istherefore a useful guide to what is a reasonable buyingprice for your wines.

■ The Liv-ex Benchmark Trade Price: is the most recentprice the wine has traded at on the Liv-ex exchange, notincluding fees.

WHAT FACTORS INFLUENCE VALUE?

• Popularity of producer and brand strength

• Critics scores

• Region e.g. Bordeaux, Burgundy

• Vintage - Prime / Mid / Off

• Age

• Scarcity

• Provenance and storage

• Current wine market strength

• Currency

• Bottle condition

• Original Wooden Case (‘OWC’)

• Tax status - still In Bond

• Merchant commission


Compared to other investments, fine wine enjoys favourabletreatment by HMRC. The following points are key areas forconsideration, for more information investors should alwaysconsult their tax or financial advisor.

Value Added Tax and Duty

Generally it is understood that, whilst stored in a GovernmentBond warehouse, wine does not incur VAT or Duty payments,these are chargeable once the wine is shipped out of Bond.VAT and Duty costs will be charged at the rates prevailing atthe time of transfer from Bond. Visit www.vin-x.com forinformation on the current rates.

Income Tax

A defining position with regard to attracting Income Tax iswhether the investor is perceived to be acquiring wine withthe intention to trade on and profit on a regular basis and nothold as a longer term investment.

Capital Gains Tax

Investment in fine wine should normally be exempt fromexposure to Capital Gains Tax (‘CGT’) due to HMRC’squalification of wine as a Wasting Asset. A ‘wasting asset’ isdefined in tax law as having a predictable life at the time ofacquisition not exceeding 50 years.

Should an individual’s circumstances be such that the profitsmade on wine investment sales do attract CGT, the investorwill normally pay the current rate on any gain after takinginto account the CGT annual exemption sum in any relevanttax year.

Fine wine also qualifies for the ‘chattels’ exemption based onvalue, i.e. where wine is sold for proceeds of less than£6,000, no taxable gain will arise. The policy objective behindthe exemption is presumably to prevent a taxpayer havingto make detailed calculations every time any small asset isdisposed of. However, it may assist the wine investor inmaking small tax effective disposals to take advantage of theexemption.

Inheritance Tax

Upon death, inheritance tax (‘IHT’) will be charged on wineinvestments, however as with all IHT relevant assets,planning steps can be taken to manage this in a tax efficientmanner with advice from your tax advisor.

Companies

Companies have the potential to use retained earnings toinvest in wine and enjoy the potential tax benefits,appropriate advice should be sought from a tax advisor.

Read Peter Owen’s specialist report on the Tax Treatment ofFine Wine at www.vin-x.com

Tax treatment of fine wine

Peter Owen,

Gatwick Enterprise Tax Services Limited.

Chateau Cheval Blanc winery

BackgroundThe fine wine trade as we know it today originated in Francewith the formalising of trade between Bordeaux and Londonunder the reign of King Henry II and Eleanor of Aquitaine.Over time and as production and global trade in France’s winegrew the market evolved. A key development still shaping themarket today was instigated by Emperor Napoleon III whoinstructed the Bordeaux merchants to create a rankingsystem to guide the world’s merchants and consumers onthe great wines of the region which resulted in the 1855Medoc & Graves Classification. This focused purely on theLeft Bank wines and since then other classification systemshave been developed throughout France and globally andthese are explained in further detail on pages 16 - 23.

Modern technologies continued to improve wine productionand how it was marketed and sold. Specialist vineyardpractices such as green harvesting and bio-dynamictechniques have been introduced by renowned experts andare now mainstream. Storage evolutions such as the use ofoak barrels, bottling and larger format bottles, corks and newclosure mechanisms have all had an influence. The latesttechnologies continue to move the quality and yields inproduction forward to the extent now that winemakers canutilise satellite imagery to sort grapes for quality control.

As vineyard ownership has changed over time and newtechnologies have been introduced to improve wine makingpractices, regulation, such as the French AOC system, havebeen developed to manage quality control. As the marketgrew, so too did the marketing sophistication of the greathouses selling into that market. Initiatives to develop brandbecame important. The Bordeaux First Growths benefitedfrom a vast heritage to build profile and awareness on, butalso understood how to leverage brand to grow their marketshare.

Chateau Mouton Rothschild led the way in terms of finewine’s association with great artists in promoting theirproduct. Baron Philippe’s genius strategy of commissioninggreat artists to create a new vintage label every year is oneof the Chateau’s great differentiating selling points, anapproach now being adopted by others.

How wine could be bought has also been an importantdevelopment, for example buying wine en primeur has beenan influencing factor, affecting price, supply, demand andcashflow – please see page 7 for more information.

Market mechanics in terms of the development of thesecondary market in fine wine has been another importantevolution. Technological innovations such as the internethave delivered the means to establish market efficienciescreating the greater price transparency and liquidity the finewine market enjoys today. Probably the most importantexponent of this is Liv-ex.

10

The fine wine market explained


The fine wine market has evolved over centuries with theorigins of the industry rooted in the terroirs of the greatvineyards of Bordeaux and Burgundy. Factors that haveshaped the development of the market over time includeownership and investment, the introduction of the strict

AOC (appellation d’origine controllee) production rules toensure quality and regional expression, classificationsystems and critics to guide the market and technologicaladvancements which have aided both production andmarket efficiency.

Chateau Latour

Chateau Mouton Rothschild


LIV-EX

Established by former bankers, James Miles and JustinGibbs with an original ten members in London in 2000, Liv-ex has grown to more than 450 trade members which rangefrom start-ups to established merchants located in 41countries around the world. The founders’ aim was to makethe fine wine market more transparent, efficient and safe andthe service has now extended from the delivery of tradingand data services to include full logistics and storagecapability.

The Liv-ex platform is available to trade members only andcurrently contains over £60million real-time buy and sellpositions in more than 15,000 wines.

Data and Analysis

Liv-ex is the only source of market data based on realmerchants’ transactions, rather than advertised prices whichcan be inaccurate and out of date. The data is based on theactivity and information provided by over 450 fine winemerchants who account for an estimated 90 per cent of the

turnover in fine wine globally. Trades, price updates, bids andoffers are standardised, verified and published as tens ofmillions of historic lines with thousands of daily updates ofreliable, independent and trusted data. This information isemployed by the world’s largest merchants, wealthmanagers and quoted by media outlets such as Bloombergand Reuters.

Liv-ex data explained:

Liv-ex has established a number of measurements to tracktrends and individual wine performances which help guidethe market. The Liv-ex benchmarks record the averageperformance of the most traded wines from the regionsproducing fine wine. All of the indices are calculated usingthe Liv-ex Mid Price which is the most robust measure basedon merchants’ transactions detail. Wines must attract aregular market on Liv-ex to qualify and must also bephysically available in the UK (excludes en primeur). Theconstituent wines are reviewed quarterly by committee.

Key Liv-ex Indices:

■ Liv-ex Fine Wine 50: Tracks the dailymovement of the most heavily tradedcommodities on the market; the fiveBordeaux First Growths. This indexcomprises the pricing data of the ten mostrecent physical vintages (excludes enprimeur) of Chateaux Haut Brion, Latour,Lafite Rothschild, Margaux and MoutonRothschild.

■ Liv-ex Fine Wine 100: Is the industryleading benchmark which represents theprice movement of 100 of the most soughtafter wines on the secondary market and isutilised by key media platforms (Bloomberg:LIVX100 and Thomson Reuters: LIVF100).Constituent wines would include vintagesof the five First Growths, the four St Emilion Grand Cru Classe A wines (Ausone, Cheval Blanc, Angelus and Pavie), Pomerol’sPetrus and Le Pin and the top wines of Burgundy, Champagne, Rhone, Spain, Tuscany and the USA.

■ Liv-ex Bordeaux 500: This index provides the most comprehensive measure of Bordeaux wine performance and representsthe average price movement of 500 leading wines of the region. It comprises six component sub-indices: the Fine Wine 50,Right Bank 50, Second Wine 50, Sauternes 50, Right Bank 100 and Left Bank 200.

■ Liv-ex Fine Wine 1000: Is the market’s broadest measure, is calculated monthly and tracks 1000 wines from across theworld using the Liv-ex Mid Price. The Liv-ex 1000 comprises seven sub-indices: the Bordeaux 500, Bordeaux Legends 50,Burgundy 150, Champagne 50, Rhone 100, Italy 100 and the Rest of the World 50.

Liv-ex positions itself as the foremost global market place for the fine wine trade and acts as a form of ‘stock exchange’facilitating trade and publishing price and analytical data for the industry.

LIV-EX KEY INDICES 2014 - 2019

Source: Liv-ex.com

12

Data on Individual Wines

Liv-ex gathers and publishes a significant amount of data on each wine, whichincludes live bid and offer information, an archive of price performanceinformation since first release onto the market, merchants’ trade data, detailson critics’ tastings and published scores over time.

This information is exclusively available for trade members and is importantfor valuing fine wine and facilitating efficient trade in the secondary market.

Liv-ex Regional Sub-Indices:

■ Bordeaux 500: Tracks the ten most recentphysical vintages of the top 50 BordeauxChateaux.

■ Bordeaux Legends 50: A selection of 50Bordeaux wines from exceptional oldervintages from 1982.

■ Burgundy 150: Records the ten mostrecent physical vintages for 15 red andwhite Burgundy wines including sixDomaine de la Romanée-Conti labels.

■ California 50: Tracks the performance ofthe last ten physical vintages of ScreamingEagle, Opus One, Dominus, Harlan Estateand Ridge Monte Bello.

■ Champagne 50: The most recentlyphysical vintages for twelve Champagnes.

■ Italy 100: Tracks the ten most recently physical vintages of the five Super Tuscans and five other leading Italian producers.

■ Rhone 100: Comprises ten most recently physical vintages for five Northern and five Southern Rhone wines.

■ Rest of the World 50: Records the ten most recently physical vintages for five wines from Spain, Portugal, the USA andAustralia.

PERFORMANCE OF 2006 VINTAGE DRC’S 2009 - 2019

Source: Liv-ex.com

to 2019 to 2019LIV-EX REGIONAL 2014 - 2019

Source: Liv-ex.com



13

The fine wine market has a trackrecord of stable, long term growthwhich clearly demonstrates itsvalue as an alternative assetwhich can be used to diversify andstrengthen investment portfolios.

LIV-EX INVESTABLES INDEX TOTAL COMPARED TO GOLDAND FTSE SINCE 1988

Data sources - see note 1 below

LIV-EX INDEXES COMPARED TO FTSE 100 AND GOLD

PERFORMANCE

Fine wine performance does not correlatedirectly with movements in financialmarkets and as a tangible, ‘alternative’asset, is less volatile and less susceptibleto market downturns and adverseeconomic conditions.

Prices are not immune from the dynamicsof global recession, however, historicallyfine wine has proven to be an effectivehedge against the effects of economicdownturns, inflation and movements infinancial assets. For investors seekingwealth protection and capital growth,portfolio diversification has becomeessential and wine is viewed as animportant tool to do so.

Fine Wine Compared to TraditionalAssets

The over-riding performance character-istics of fine wine are stability and growthover the long term. As a rule therefore weguide our clients to look to hold their winefor at least five years ideally and longer tosee optimum performance. There areinstances when market dynamics will seehigher returns than normal over a shorterperiod, but these are not the generaltrend. Historically, over these longerperiods, fine wine has outperformed othertraditional investments such as equitiesand gold.

Data sources - see note 1 below

Index

Liv-ex 1000

Burgundy 150

FTSE 100

S&P 500

Gold

2.6

11.17

- 3.0

0.8

27.8

48.3

98.35

5.7

46.1

19.3

1 Year % 5 Years %

ASSET COMPARISON TABLE

Data sources: see note 1 below

Note 1: Data Sources:

Gold: http://www.bundesbank.de/Navigation/EN/Statistics/Time_series_databases/Macro_economic_time_serie

s/its_details_value_node.html?tsId=BBEX3.M.XAU.USD.EA.AC.C07&listId=www_s331_b01015_2

FTSE: http://uk.investing.com/indices/uk-100-historical-data Wine: Liv-ex.com October 2019

14


PERFORMANCE DRIVERS

Supply and Demand: Investment-grade wine production is strictly controlled witha finite amount produced each vintage with quality the keydriver. In some vintages supply may be reduced due toclimatic and other production influences. Fine wine is createdto improve as it ages and as it becomes scarcer over time itcontinues to develop in quality, sustaining demand andsupporting price growth over time. This supply is reducedover time as the wine is consumed.

The traditional markets for the finest Bordeaux clarets hashistorically been from Europe and North America, howeverthe demand for luxury goods from the Far East has reshapedthe global composition of consumer demand for the bestwines in the world.

A broadening market since 2011 has seen increasingdemand for the top wines of Burgundy, Champagne, Italy andthe USA. This demand has driven price increases for thesewines, notably Liv-ex’s Burgundy 150 has seen 98.35 percent growth since 2014 and the California 50 index is up byan average 25 per cent over the same period. Theinvestment-grade wines of both of these regions have verylow production levels and increasing rarity is a key driver oftheir price performance.

Brand: The most powerful fine wine brands of Bordeaux, Burgundy,Rhone, Champagne, Tuscany, Spain, Australia and Californiaattract global investor focus and drive market values. Thestrength of the most powerful fine wine brands is largely a

result of the profile gained from the historical status andheritage of centuries of wine making of the great BordeauxChateaux and Burgundy’s Grand Cru vineyards. But relativelyyoung wine producers, in comparison, have also createdgreat brands from delivering excellent quality which hasenjoyed critical success and also understanding how tomarket to today’s consumers. For example, California’sScreaming Eagle first hit the market in 1982, and RobertParker’s backing of the brand helped launch it onto the globalstage.

Liv-ex’s annual Power 100 Report ranks the top 100 mostpowerful fine wine brands and in recent years has seen thisevolve from being nearly totally dominated by the top namesof Bordeaux to a broader reflection of market demand.’ The2018 ranking shows the influence Burgundy has had overthe market in recent times.

LIV-EX POWER 100 2018 – TOP 10 FINE WINE BRANDS

Source: Liv-ex.com

Wine

Leroy

Lafite Rothschild

DRC

Mouton Rothschild

Margaux

Haut-Brion

Armand Rousseau

Petrus

Coche Dury

Latour

Ranking 2018 Ranking 2017 Value Tradedon Liv-ex

Average TradePrice

Price Growth

1

2

3

4

5

6

7

8

9

10

N/A

1

4

3

2

9

8

10

54

12

£941,416

£4,291,972

£1,439,782

£2,753,790

£1,876,280

£2,071,514

£305,954

£1,597,597

£296,620

£1,606,409

£1,806

£4,374

£30,472

£3,946

£4,332

£3,358

£6,420

£23,963

£5,384

£3,442

58.2%

14.0%

33.5%

13.8%

11.9%

11.5%

42.7%

15.4%

23.6%

8.4%

Chateau Lafite Rothschild

15

Vintage:

One of the determining factors of value and consumerinterest is the overall average quality ranking of a vintage. InBordeaux the market qualifies a vintage as Prime, Mid andOff dependent on the number of very high scores awardedby industry critics to the wines of a particular year. Primevintage status generally adds a premium to the value of awine and very highly scored individual wines from Mid or Offvintages may offer significant potential for growth. As aconsequence, wine portfolios should be diversified byvintage to optimise performance.

Critics:

The opinions of the industry’s most highly regarded critics,are of significant importance to the producers and acquirersof fine wine. Critics’ scores aim to accurately reflect and rankthe quality of the wines and their future potential. Scores aretraditionally published at en primeur release, then again whenthey go in to bottle. Fine wine is tasted and scored at pointsthroughout its ‘drinking life’, for example at ten years fromrelease and once they are in their drinking windows.Publication of critics scores can have a major influence overmarket prices.

The key critics recognised by the fine wine market are: NealMartin, James Suckling, Antonio Galloni, Jancis Robinson,Lisa Perotti-Brown, Jeannie Cho Lee and a few others.Robert Parker Jnr, the American critic who founded The WineAdvocate, has been the most influential wine critic to dateand his view on specific wines often moved global marketprices. Parker’s official retirement in 2019, followed his exitfrom the Bordeaux en primeurs tastings in 2016 but hispresence is still felt. Wines awarded a Parker 100 point scorewill continue to have a special cachet and enjoy demandfrom collectors and investors.

Geo-politics and economic uncertainty:

Fine wine, like other commodities, is affected by politicalevents. When Hong Kong abolished import duty and taxeson fine wine in 2008, establishing itself as a tax-free wineport, an 88% rise in wine imports followed in the immediateperiod.

Similarly, the UK Referendum vote in June 2016 and

subsequent Brexit trigger in 2017 both impacted on themarket, with prevailing economic uncertainty affectingcurrency and leading investors to seek ‘safe haven’ tangibleassets such as fine wine.

Tax:

The tax categorisation of fine wine as a Wasting Asset, byHMRC in the UK, means that generally any profits areexempt from Capital Gains Tax. This has been an influencingfactor for some collectors and investors, for moreinformation consult your Tax Advisor and see page 9 of thisGuide.

FINE WINE - ASSET CHARACTERISTICS:

■ StabIlity and Low RiskThe long-term asset performance of fine wine is verystable and low risk, there is no direct correlation tofinancial markets and wine prices tend not to bevolatile.

■ Tangible As a physical asset fine wine has an inherent valuewhich is uncorrelated to movement in financialmarkets and normally resistant to inflationarypressures and currency dynamics.

■ Growth Fine wine has a track record of stable, long-termgrowth; the Liv-ex 1000 Compound Annual GrowthRate over five years stood at 8.18 per cent on the 31stAugust 2019.

■ Tax efficient HMRC’s classification of fine wine as a Wasting Assetshould mean that it is exempt from Capital Gains Taxand may also be free from VAT and Duty, subject toterms and conditions. Always seek professional taxadvice on your wine investment.

■ DiversificationFine Wine provides the opportunity to diversify yourinvestment portfolio safely.

Prime 1982 2000 2005 2009 2010 2015 2016

Mid 2001 2003 2006 2008 2012 2014

Off 2002 2004 2007 2011 2013

QUALITY RANKING OF BORDEAUX VINTAGES

The opinions of the industry’smost highly regarded critics,are of significant importanceto the producers andacquirers of fine wine.


Fine wine is viewed, along with a number of other ‘collectibleinvestments’, as a ‘luxury asset’. These also include classiccars, fine art and vintage watches, jewellery, Chineseceramics amongst others.

Property investment specialist, Knight Frank publishes anannual Wealth Report which provides information on theperformance of global property markets and an insight intothe current investment trends of the world’s ‘Super Wealthy’.The report includes an Attitudes Survey based on theresponses of over 500 of the world’s leading private bankersand wealth advisers, representing about 50,000 individualswith a combined wealth of over US$3trillion.

This annual report looks at investment in ‘Passion Assets’such as classic cars, fine art, jewellery, coins and fine wine.Knight Frank’s 2017 Wealth Report showed that fine winewas the top performing Passion Asset in 2016 with growthof 24%. In 2017 fine wine was pushed to second place byfine art, largely due to the sale of Leonardo da Vinci’s Salvator

Mundi blowing all previous records raising US$450millionpushing fine art to the top of the Passion Assets.

Fine wine is certainly a more accessible investment, and theactive secondary market with established exchanges suchas Liv-ex.com provides transparency and market efficiency.The other Passion Assets do not enjoy similar levels of thesebenefits, in part because of the singular nature of many ofthese assets and the challenge then to value them.

FINE WINE COMPARED WITH LUXURY ASSETS


KNIGHT FRANK ATTITUDE SURVEY 2019 FINDINGS:

■ 4% of UHNWI’s wealth is invested in luxury assets.

■ 2018 saw a 5% increase in investments in luxuryassets and 3% in gold in contrast to a 7% decreasein equities and 4% less in bonds.

■ 28% of wealth managers’ clients invested in luxuryassets.

HIGHLIGHT LUXURY ASSET SALES:

Asset

Wine US $558,000 2018 Sotheby’s1 x 75cl Domaine de la Romanée Conti,DRC 1945

Classic Car US $48.4million 2018 Sotheby’s1962 Ferrari 250 GTO

US $18million 2017 Sotheby’s1959 Ferrari 250 GTO

Vintage Watch US $5.9million 2018 PhilipsThe 1970 Rolex Daytona ‘Unicorn’

US $17.8million 2017 PhilipsPaul Newman’s Rolex Daytona

Stamps US $1.6million 2018 Robert SeigelA 1918 Jenny Invert 24 cent. stamp

Coins US $2.2million 2018 ChristiesA 1621 Polish gold ducat

Whisky US $1.5million 2018 ChristiesThe Macallan 1926, Michael Dillon

£1.5million (US$1.9million) 2019 Sotheby’sThe Macallan 1926 Fine and Rare

Jewellery US $36million 2018 Sotheby’sThe Marie Antoinette Pearl Pendant

US $7.1million 2017 -Diamond - Pink Star (59.6 carat pinkdiamond)

£264,000 2017 -1 x 75cl Domaine de la Romanée Conti,DRC 1988

Art US $90million 2019 ChristiesDavid Hockney: ‘Portrait of an Artist(Pool With Two Figures)’

US $450million + commission 2017 Sotheby’sLenoardo da Vinci: ‘Salvator Mundi

Item Value Year Auction House

Knight Frank Wealth Reports 2018 and 2019


Knight Frank Wealth Report 2019

Fine wine regions and investment grade wine


The fine wine market today is global interms of demand, but the supply ofinvestment-grade wine represents lessthan 1 per cent of the world’s productionand is concentrated to a few key areas.Bordeaux is still the most prolific region, interms of the volume of fine wine producedand traded on the global market. Themarket has broadened since 2011 toinclude the wines of the most outstandingproducers of Burgundy, Champagne,Rhone, Italy, Spain, California andAustralia. These wines offer serious valueand the opportunity to diversify andstrengthen your fine wine portfolio.

Understanding the changing trends indemand for specific wines of differentregions is an important factor whenportfolio planning. Key considerations will again include production levels, i.e. supply and liquidity in terms of demand and howactive the secondary market is in these wines. Liv-ex publishes regional benchmarks which track the performance of the mostactively traded wines of key fine wine making regions. See an explanation of the Liv-ex regional indices on page 12 of this guide.

Bordeaux

Bordeaux is still the most important fine wine-growing regionin the world, accounting for about 60 per cent of the winetraded on Liv-ex, and home to the world’s most famous finewine brands. Production of wine in the region dates back twomillennia, with the origins of international trade in fine winecommencing under the reign of Eleanor of Aquitaine in the12th Century.

There are thousands of wine producers in Bordeaux, but onlya very small number produce investment-grade wine ofextremely high quality with the ability to age and improveover decades, commanding high values and an activesecondary market.

Bordeaux’s five First Growths are the most actively tradedfine wines in the world and due to their quality, brandreputation and production levels (supply) benefit from asecondary market so strong that they are referred to as‘blue-chip’ and are the staple components of any fine wineinvestment portfolio.

The Official Classification of Medoc and Graves of 1855 wasinstigated at the request of Emperor Napoleon III, to providea ranking system for Bordeaux’s finest wines and is still keyto guiding the global market today. The classification focuseson the producers of the greatest wines located in theappellations on the Left Bank of the River Garonne, i.e. those

of Pauillac, Margaux, St Julien, St Estephe and Pessac-Leognan, see Classification detail opposite.

THE KEY FINE WINE GROWING REGIONS:

• Haut Brion

• Latour

• Lafite Rothschild

• Margaux

• Mouton Rothschild

BORDEAUX FIRST GROWTHS

Chateau d’Yquem

THE INVESTMENT-GRADE WINES OF THE OFFICIAL CLASSIFICATION OF MEDOC AND GRAVES OF 1855

First Growth4 Château Lafite-Rothschild5 Château Mouton-Rothschild6 Château Latour10 Château Margaux12 Château Haut-Brion

Second Growth1 Château Léoville Las Cases2 Château Montrose3 Château Cos d’Estournel7 Château Pichon-Baron8 Château Pichon-Lalande9 Château Ducru-Beaucaillou16 Château Léoville-Poyferré18 Château Léoville-Barton

Third Growth11 Château Palmer

Fourth Growth13 Château Duhart-Milon17 Château Beychevelle

Fifth Growth15 Château Lynch-Bages14 Château Pontet-Canet

Premier Cru Supérieur19 Château d’Yquem

AppellationPauillacPauillacMargauxPauillacPessac Leognan

St JulienSt EstepheSt EstephePauillacPauillacSt JulienSt JulienSt Julien

Margaux

PauillacSt Julien

PauillacPauillac

Sauternes


■ Chateau Cheval Blanc 1947 - £192,000, (6 litre bottle)

■ Chateau Cheval Blanc 1947 - £168,000, (12 x 75cl),2017

■ Chateau Lafite-Rothschild 1869 - £163,000, (3 X 75cl)

■ Chateau Margaux 1787: Thomas Jefferson collection- £157,200, (1 x 75cl bottle spilled, insurance paid)

■ Chateau Margaux 2009 - £122,380, (12 litre 2009limited edition, 1 of 6 produced)

■ Chateau Lafite-Rothschild 1787: Thomas Jeffersoncollection - £109,300 (1 x 75cl acquired by Malcolm Forbes in 1985)

■ Chateau Petrus 1961 - £100,800, 2011

■ Chateau d’Yquem 1811 - £75,000 (1 x 75cl), 2011

■ Chateau Mouton-Rothschild 1945 - US$114,614 (1 x Jeroboam), 1997

■ Chateau Petrus 1947 - US$49,000 (12 x 75cl), 2017

EXAMPLES OF TOP BORDEAUX WINE SALES

ST EMILION – Grand Cru Classe A

• Ausone

• Cheval Blanc

• Angelus

• Pavie

TOP RIGHT BANK WINES

POMEROL - unclassified

• Le Pin

• Petrus

The Right Bank wines were not included in the 1855Classification. St Emilion has its own classification system,of which Ausone and Cheval Blanc were originally the onlytwo awarded St Emilion Premier Grand Cru Classe A status,until 2012 when Angelus and Pavie were promoted.

Pomerol wines remain unclassified but the appellation ishome to some of the most sought after wines in the worldincluding the iconic Petrus and Le Pin. The top Right Bankwines and the First Growths represent the most valuable andfrequently traded wines of Bordeaux.

20


Burgundy

Burgundy has been the top performing region in terms ofgrowth in fine wine values in recent years. Trade and marketshare on Liv-ex in top Burgundies has increased since 2011with a broadening market in the fine wines of this region.

Archaeological evidence records viticulture in the Burgundyregion since the second century with the Roman CatholicChurch noted as having a significant influence from the 6thCentury right through to the French revolution in 1789. TheNapoleonic inheritance laws subsequently enforced thecontinued sub-division of the most precious vineyardholdings which has resulted in the region’s land ownershiptoday being held in small family owned ‘Domaines’.

Burgundy’s Cote d’Or is home to the region’s Grand Cruwines, a few of which are some of the most highly prizedwines in the world, including the outstanding Domaine de laRomanée Conti (DRC).

DRC’s annual production is very small, especially whencompared to Bordeaux’s First Growths. This relative rarity,especially as wines start to be consumed, can support verysignificant price growth.

■ Domaine de la Romanée-Conti, Romanée-Conti 1945 (1 x 75cl), 2018 US$558,000

■ Domaine de la Romanée-Conti, Romanée-Conti 1945 (1 x 75cl) US$496,000

■ Domaine de la Romanée-Conti Romanée-Conti1988 - £264,000 (12 x 75cl), 2018

■ Vosne Romanée, Cros Parantoux 1990 HenriJayer - US$157,051 (12 x 75cl), 2017

■ Hermitage, La Chapelle 1961 Paul JabouletAîne - US$157,051(12 x 75cl), 2017

■ Domaine de la Romanée-Conti Romanée-Conti1996 - US$134,750 (6 X 75cl), 2017

■ DRC Montrachet 1990 - US$104,125 (12 x75cl), 2017

■ Domaine de la Romanée-Conti, Romanée-Conti 1990 - US$98,000 (3 x 75cl), 2017


Bordeaux Wine

Max. annualprod (btl)

BurgundyWine

Max. annualprod. (btl)

Le Pin

Petrus

Lafite

7,200

60,000

240,000

Leflaive: LeMontrachet

DRC, Romanée-Conti

Rousseau

400

5,000

8,800

PRODUCTION LEVELS BORDEAUX COMPARED TO BURGUNDY

Source: Liv-ex Burgundy Report 2018

LIV-EX BURGUNDY 150: TEN YEARS 2009 - 2019

Wine Av. Value

DRC, Romanée-Conti

Domaine Leroy, Musigny

DRC, Tache

Domaine Leroy, Latricieres Chambertin

DRC, Richebourg

Georges Roumier, Chambolle MusignyAmoureuses

DRC, Romanée Saint Vivant

Armand Rousseau Chambertin

Meo Cumuzet, Vosne Romanée Cros Parantoux

Armand Rousseau Chambertin Clos de Beze

£235,734

£123,754

£46,120

£32,590

£29,085

£28,833

£23,314

£23.138

£21,656

£21,165

LIV-EX TOP TEN FIRST TIER BURGUNDY WINES 2019

Source: Liv-ex Classification 2019 (12 x 75cl)

Data source: Liv-ex.com

EXAMPLES OF TOP BURGUNDY WINE SALES

21

Champagne

The Romans were the first to plant vines in the Champagneregion of France, however the signature ‘sparkling’ wines, didnot evolve until the 17th Century. The monk, Dom Perignon,is regarded as instrumental in the development of theregion’s wine production.

A select few Champagnes are considered to be investmentcalibre for their quality, stable price growth and value. MostChampagne is made in very significant volumes andgenerally from a blend of grapes from different years, readyto drink immediately. Great vintages of the most prestigiousChampagnes left to age and become increasingly rare havegenuine investment potential.

Champagne’s historic price performance has delivered longterm stable growth and the Liv-ex Champagne 50 isregarded as having the least volatility of the Liv-ex regionalindices and had grown 48.43 per cent over five years at theend of August 2019.

■ Heidsieck 1907 - £189,750 (bottles rescued in1998 from a ship torpedoed in WW1)

■ Krug 1928 - £14,800, 2009 in HK

EXAMPLES OF TOP CHAMPAGNE WINE SALES


The old Champagne story

holds true: it gives an almost

guaranteed 10% return per

annum regardless of market

conditions.

Key wines of Champagne

■ Dom Perignon

■ Krug

■ Louis Roederer, Cristal

■ Pol Roger

■ Taittinger

Liv-ex Director Justin Gibbs

Commenting on the importance of the inclusionof Champagne in a fine wine portfolio.

22

Rhône

The investment-grade wines of the region are grown in CôteRôtie in northern Rhône. Guigal’s single vineyard ‘Cru’ wines;La Mouline, La Turque and La Landonne are internationallyrenowned and have received exceptional recognition byindustry critic, Robert Parker Jnr. There have been fiveoccasions when all three of Guigal’s top wines have received100 point scores, and they have a significant number ofmaximum scores on record. Such excellence is highlyregarded but the Rhone is a relatively new and small marketin investment terms. 2019 has seen a growth in demand andthe wines of Northern Rhone have seen an uplift in priceperformance and trade on Liv-ex.

Key wines of the Rhone

■ Guigal La Landonne

■ Guigal La Mouline

■ Guigal La Turque

■ Chateau Beaucastel

■ Jean Louis Chave

■ Paul Jaboulet, Aine Hermitage La Chapelle

Italy

The finest wines of Italy are increasingly being used todiversify and strengthen fine wine portfolios. Theinvestment-grade Italian wines are grown in the Tuscany andPiedmont regions of Italy. Italy’s share of trade on Liv-ex hasgrown to 8.5 per cent of total value, up from 2 per cent in thelast ten years. The market is broadening beyond the fiveSuper Tuscan’s wines to include the top wines of Piedmont.Liv-ex’s Italy 100 has been the leading index on theexchange during 2019 and has seen 28.3 per cent growthover the last three years. With Italy’s finest wines achievingsimilar quality scores to the top wines of Burgundy andBordeaux, the region offers investors a much lower entrypoint, value and the opportunity to diversify.

Key wines of Italy

The Super Tuscans:

■ Masseto ■ Ornellaia

■ Sassicaia ■ Solaia

■ Tignanello

Piedmont:

■ Gaja Barbaresco

■ Giacomo Conterno Barolo

California

California has over 1,000 wineries and produces around 90per cent of the wine made in the USA. The first vines wereplanted in the 18th Century by Spanish missionaries. Later,the Californian gold rush brought new settlers, increasingdemand for wine in the state. The key wine growing regionsof Sonoma and Napa are home to California’s Cult wineswhich are now some of the most highly prized wines in theworld. With low production levels and waiting lists for newvintages, they are often hard to come by and command veryhigh prices. Since 2017 California has been the secondstrongest regional performer on Liv-ex behind Burgundy with25% growth.

Key wines of California

■ Dominus ■ Harlan Estate

■ Opus One ■ Scarecrow

■ Screaming Eagle ■ Sine Qua Non

■ Screaming Eagle Cabernet 1992 - US$500,000

6 litre bottle sold at Napa Valley Auction), 2000

■ Screaming Eagle Cabernet Sauvignon -

HKD1,163,750 (US$149,007) 43 bottle

consignment, 2017

■ Inglenook Cabernet Sauvignon Napa Valley 1941

- £17,250 (1 x 75cl), 2004

EXAMPLES OF TOP CALIFORNIA WINE SALES



23

Spain

Spain is the most widely vine planted country in the world,with nearly 3 million acres of vine, and the third largestvolume producer after France and Italy. Despite this thereare only really two fine wine producers recognised ascreating investment-grade wine. Vega Sicilia and Pingus areboth situated in the Ribera del Duero region with winesproduced primarily from the Tempranillo grape. The volumesof Vega Sicilia Unico and Pingus wines produced aregenerally so low to drive very high prices.

Key wines of Spain

■ Vega Sicilia Unico

■ Pingus

Australia

Australia has over 2,000 wine producers, most are smallwineries and vines are grown in every state but the mostimportant wine regions are in Southern Australia. The firstwines were produced for the domestic market in the 1820sand the arrival of European settlers in the late 19th Centurysaw the volume and quality of wine produced increasesignificantly.

In terms of fine wine, Australia’s Barrossa Valley is the mostimportant region and Penfolds Grange the only wine to beconsidered investment-grade. First made by wine-makerMax Schubert in 1951, implementing techniques learned inBordeaux, the early ‘Grange’ 1955 and 1971 vintages woninternational awards and 1976 and later vintages werescored 100 points by Robert Parker Jnr.

Penfolds Grange today commands extremely high prices andis one of the world’s most sought after fine wine brands.

Key wine of Australia

■ Penfolds Grange

■ Penfolds Grange Hermitage 1951 - US$38,420 (1 X 75cl - 1 of only 20 bottles in existence), 2017

■ Penfolds Grange 2004 block 42 - 1 X 75cl in NickMount designed glass ampoule - AUS$168,000,collector’s item - limited edition 1 of 12

EXAMPLES OF TOP AUSTRALIA WINE SALES

The fine wine market

today is global in terms

of demand, but the

supply of investment-

grade wine represents

less than 1 per cent of

the world’s production


24

Fine wine experiences

Our experienced team creates bespoke events includingthe following:

Meet the world’s top wine makers, chateaux owners andproducers

Visit Bordeaux’s finest chateaux and the key wine estates inChampagne, Burgundy, Rhone and Tuscany where you canmeet the wine-makers and owners. Alternatively, join us atour wine tastings at extraordinary venues in the UK, whereyou can experience and learn more about fine wine.

Enjoy world-class sport with the world’s finest wines

Members of our team have worked in professional sports andassociated hospitality and travel businesses. They createsensational events which provide the opportunity to meetsporting heroes, attend international competitions and enjoyit all with first class wine experiences in the UK and abroad.

Exclusive lunches and dinners with top wine producers

Some of the top wine makers and estate owners willwelcome you to their vineyards for private lunches, dinnersand tastings or host an event for you at a venue of yourchoice where you will have the opportunity to share theirknowledge of some of the finest wines in the world.

Wine-tasting events

Whether you wish to create a fun occasion for friends orfamily, team-building for colleagues or a client event with adifference Vin-X Wine Tastings are the perfect way to enjoyand learn more about wine at a venue of your choosing.

Wine investment seminars

Learn about wine as an alternative investment and how tocreate a rewarding wine portfolio at a Vin-X Wine Investmentseminar. These events can also be arranged privately foryour friends, colleagues, club or association.

Château Pavie


We had the most wonderful timeand thank you and the ChateauPavie team for this wonderfulexperience. It was very wellorganised, the food, wine andvenues were amazing and it wasmade all the more enjoyable byhaving such wonderful companyin respect of the group. We do lookforward to experiencing this again.

Chateau Pavie 2018 En Primeur Tasting, May 2019

A Kalyan

25For more information visit www.vin-x.com Call 0203 384 2262

Special relationships

Lawrence Dallaglio’s RugbyWorks

Vin-X is proud to support RugbyWorks, a charity establishedby former England International rugby professional,Lawrence Dallaglio. The charity provides an intensive, long-term skills development programme based on rugby, throughwhich it aims to help teenagers outside of mainstreameducation into sustained education, employment or training.http://www.dallagliorugbyworks.com

European Legends Links Championship, Trevose

We were proud to sponsor this inaugural competition in June2019 hosted by Ian Woosnam OBE with Ryder Cup athletes.

The Professional Cricketers’ Association

We are delighted to support the Professional Cricketers’Association (the PCA), which represents professionalcricketers throughout their playing career and providesongoing personal development and assistance into a newsecond career post cricket. For more information, please visithttps://www.thepca.co.uk

Events at the Wormsley Estate Vin-X was proud to sponsor the Chateau Impney Hill Climbs 2017 and 2018

Vin-X is proud to be involved with a number of charitable projects and has also supported the following initiatives:

• Lloyds Wealth Management charity fund raising for Mental Health UK

• Momentum Childrens’ Charity https://www.moment-um.org/home/

• Austin Healey and Will Greenwood’s Charity Fundraiser ‘Battle of the Commentators’ in aid of a number of charities


The Directors

Austin Healey - Non-Executive Director

Austin Healey joined the Vin-X team in Autumn 2013, having been a client since2011. A rugby union professional, Austin was a core member of the Leicester Tigersteam and recorded 51 caps for England, and 2 for the British and Irish Lions.

Following retirement from Leicester Tigers at the end of the 2005/6 season, Austincommenced a new career with Credit Suisse and continued working as a rugbyanalyst with the BBC. Recognised as a versatile professional, Austin furtherenhanced his growing “celebrity status” in 2008, when he took part in the BBC’shit show, Strictly Come Dancing. He has broadened his professional interests intorenewable energy and continues as a professional rugby commentator with BTSport.

Austin’s role as non-executive director is to assist the senior team with its businessdevelopment strategy.

Peter Shakeshaft - Chairman and Founder

A corporate financier with 20 years’ experience in the enterprise sector, Peterpreviously established a financial services company, which grew to over £100million in investments in private and public companies. He has been a majorityshareholder in a logistics firm and through his business interests has employedover 500 people.

Having observed the potential of the fine wine sector as a private collector, Peterfounded Vin-X in March 2010 and the Company is now one of the UK’s leading finewine investment specialists.

Peter is also a founding director of the Wine Investment Association, launched inFebruary 2013, which aims to provide protection for investors in fine wine. Peterhas been involved in a number of philanthropic projects including acting as atrustee of a specialist dyslexic school, fundraising for a nursery and on the boardof an environmental protection project in Surrey. He is passionate about sport andhas formerly held the position of Chairman of the British Bobsleigh Association.

Patrick McConnell - Chief Executive Officer

Patrick is an experienced Business Leader and Entrepreneur who has held bothsenior positions in global corporations and has achieved success in creating andmanaging multiple business startups. He has extensive board level experiencewithin the service industry.

With 20 years’ experience, running a number of start-up businesses Patrickestablished his career in the IT outsourcing industry working for Fujitsu Services.He was responsible for running a number of complex Outsourced IT Infrastructureand Change Management contracts valued in excess of £70 million.

He went on to work for Vodafone and was responsible for managing their UK ITinfrastructure and was head of their UK IT Outsourcing program. As part of hisresponsibility he managed a team in excess of 1000 personnel and outsourcedmore than £100 million worth of contracts.

In 2003, Patrick started his own Tech IT Services business, which he ran for 12years. Clients included UK National Lottery, Shell, Post Office Counters, DWAP andMarks & Spencer.

In recent years, Patrick has been working with a number of businesses helpingthem with a variety of challenges and strategies including Outsourced SupplyChain Management, Business Transformation, Restructuring and Integration. Hehas also held Interim Management roles at both Managing Director and CEO level.

27

Business services - key contacts

Fiona Patteson-Knight - Finance ManagerFiona is a Durham University graduate who went on to train as a Chartered Accountant with one of the UK’s large professionalfirms. She has over 25 year’s experience covering a range of businesses both in the UK and abroad. For 17 years she workedwith a commercial property company which held property all over the UK. Fiona joined the Vin-X team in November 2016 andmanages the company’s Finance Department.

E: [email protected] • T: 01403 595062

Mary-Anne Morgan-DeGray - Operations ManagerMary-Anne was a member of the founding team of Vin-X and brings a wealth of experience to the Vin-X management team.Her role as Operations Manager encompasses the management of all the Vin-X administrative systems and as a Charteredmember of the Chartered Institute of Personnel and Development, Mary-Anne supports the team by providing expert HumanResources advice. Mary-Anne is dedicated to customer service excellence and to the continued improvement of the servicewe offer to our clients.

E: [email protected] • T: 0203 384 2260

Martin Pruszynski - Head of ProcurementMartin is a PPE graduate of Keele University and our resident economist. He joined Vin-X in 2010 as a broker where hisbackground in Economics and Business Planning proved a valuable asset. Martin grew his role to encompass market analysis,researching the best wine acquisition opportunities and now heads up our procurement operation where he works to drivethe best buying strategy possible for our clients ensuring that they have exposure to the world's finest wines at prices whichoffer growth potential and rare wines which can be extremely difficult to source.

Martin is also responsible for ongoing evaluation of fine wine and financial markets and the review of general economicinformation providing key data for clients and Vin-X’s ongoing newsfeed.


Katie Souter - Marketing, Special Projects and EventsA qualified corporate financier with specialist experience in the enterprise sector Katie has successfully assisted a numberof small companies to attain approval from HMRC to qualify for the Enterprise Investment Scheme and raise capital. Katiepreviously worked with a financial services group where she was involved with the listings of over twenty entrepreneurial, EISqualifying companies on PLUS and AIM markets which collectively raised over £40M through IPO.

Katie has been working with the Vin-X team since 2011 and is responsible for the company’s brand management and marketingstrategy and the delivery of Vin-X’s specialist reports, guide, website and newsfeed. Katie also leads the Vin-X Events teamto deliver fine wine experiences, for more information see page 24.


Richard Boyle - Business DevelopmentRichard started his career in the City of London where he worked in the insurance market for 17 years, but following a year'ssecondment to Stellenbosch, he succumbed to the grape (not literally) and embarked on a career in the wine industry. Thishas encompassed working for both multiple chains and independent wine merchants. Richard joined the Vin-X team in 2011and, as a great all-rounder, is involved with procurement, client services, events and special projects.

As an avid sportsman, essential networking has been known to encompass mountain biking in the Surrey Hills, representingthe wine trade on the golf course and playing tennis, of the ‘real’ and ordinary kind - Richard is not unknown to be "very busy".



28

Frequently Asked Questions

1. How do I develop a fine wine investment portfolio?

Firstly, we would establish your objectives in regards toinvesting in fine wine i.e. how much capital you would seekto invest over what period of time, any “brand preferences”in terms of specific wines and any level of weighting within aportfolio in terms of price. With this in mind our specialistswill select wines and introduce them to you as portfoliooptions.

2. How long do I need to hold my investment in wine?

As fine wine tends to deliver stronger returns over the longterm we recommend that you plan for your wine investmentto be held for at least three to five years. Certain wines haveshown exceptional short-term gains in some years, but thisis not the norm.

3. What are the costs?

Our service includes the following:

■ Dedicated specialist Portfolio Manager who willadvise you on the acquisition of a portfolio of finewine with strong growth potential in line with yourinvestment goals.

■ Access to the finest wines in the world, selectedby our analysts for their investment potential.

■ Essential market information providing details onmarket trends, specific wines and price-sensitivenews and events which may affect values.

■ Storage management for the first five years in aGovernment bonded, specialist facility to protectthe quality and provenance of your wine andprovide tax benefits.

■ Specialist events providing unique experienceswith fine wine.

The Service fee is linked to the purchase price of the finewine bought from Vin-X and comprises a 3% annual fixed

rate charge for five years payable at the time of investment.For further information please see page 30 of this Guide, andvisit our website to see our terms and conditions www.vin-x.com.

4. Are there any risks to investing in fine wine?

All investments carry risk and prices may go down as well asup, fine wine is no exception. Fine wine prices vary so alwayscheck that you are paying a fair price.

Vin-X is a founding member of theWine Investment Association(‘WIA’), which has established acode of practice for companiesengaged in fine wine investmentwith the aim of protecting investors.

Collectors and investors must also take care when selectinga fine wine expert to work with. Sadly, there have been casesof mis-management and fraud within the industry and it isimportant to engage with a company with a trading historywith demonstrable expertise and a good reputation.

5. How is my ownership of the wine you have sold merecognised by the storage provider?

This is very important. When you have purchased your wineyou will receive a Certificate of Ownership from Vin-Xrecording the unique rotation number allocated to your wineby our nominated storage provider, London City Bond (‘LCB’).This unique reference is recorded in our and LCB’s systemsand correlates with your wine stored within LCB’s storagefacility. Clients may visit the In Bond facility and view theirwine by arrangement. Similarly, Vine operates Liv-ex’s winepassport system and all cases of wine stored with them areindividually assigned a unique reference which is recorded inVin-X systems and on client records. Vin-X has a custodialoversight to the storage arrangement and represents yourinterests with the storage provider.

In the case of buying wine en primeur, clients will receive aCertificate of Allocation, which will be replaced by theCertificate of Ownership once the wine is in bottle andshipped to In Bond storage in the UK.

6. What are the storage charges and arrangements?

The Vin-X Administration fee includes five years’ storage atLCB’s Vinotheque or Vine International, which specialises inthe storage of fine wine. Correct storage conditions areessential for protecting the good provenance and value ofthe wine. The payment of VAT and Duty on wine is deferreduntil such time that the wine is removed from bondedstorage. Should you sell your wine whilst still stored in bond


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you will not trigger the VAT and Duty payments. Our storagemanagement provides efficiencies in terms of cost and salestransaction.

7. What happens when the initial five-year storage periodends?

You will be notified of the completion of the initial five-yearservice period covered under the original purchasearrangement of your wine. After this, a small annual chargeis made for the on-going storage arrangements along withthe provision of the full Vin-X service as summarised in point3 above.

8. Can I store my wine at home?

We recommend that investment-grade wines are stored inbonded storage for quality control, provenance and taxpurposes. We will arrange the storage of any wine purchasedfrom Vin-X with our nominated storage partner. If you alreadyhave a private In Bond account, we can arrange the transferof any purchases into your own account, however, there maybe a handling fee for such transfers.

9. Is there any tax payable on profits?

In principle, fine wine is categorised as a ‘wasting asset’ ormaybe treated as a ‘chattel’ by HM Revenue & Customs andaccordingly any profit on sale is exempt from Capital GainsTax. For more information on the tax treatment of fine wineplease refer to page 9 of this guide and contact yourprofessional tax advisor.

10. Can you diversify a fine wine portfolio?

Yes, to optimise the performance of a wine collection, it isimportant to include wines enjoying strong demand andgrowth and to be positioned for cycles. Accordingly, werecommend that a balanced portfolio includes wines fromBordeaux, Burgundy, Champagne, Tuscany, California andthe other key regions. Diversifying by vintage is also anothermeans to spread risk and optimise performance.

11. How do I sell my wine?

Your Portfolio Manager will keep you informed on the priceperformance of your wine and will advise you on theoptimum time to exit. When you have decided that you wishto sell your wine your Portfolio Manager will advise you whatprice would be available in the market at the time and wouldundertake to broker the wine with an agreed target price. Vin-X cannot be liable to guarantee the level of return andwould remind you that the prices in all investments can godown as well as up. There is no charge for brokering the saleof wine acquired from Vin-X.

12. Can I meet my Vin-X Portfolio Manager?

You are welcome to visit the Vin-X office to meet yourPortfolio Manager, or alternatively external appointments canbe made at a mutually convenient time. Vin-X also holdsevents and wine tastings which clients are invited to attendto meet members of the team and get further information onthe market opportunities and the Vin-X service.


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Vin-X Service Guarantee

The Vin-X team is dedicated to providing a specialist portfolio management servicefor fine wine investors. We are a trading member of Liv-ex and a founding memberof the Wine Investment Association (‘WIA’), an organisation working to protectinvestors in fine wine. Our clients benefit from market leading, professional operating systems and expertise which creates rewarding fine wine portfolios and protects their investment.

Vin-X was established in March 2010 with the specific aimof helping private individuals, organisations and charities tobetter understand the fine wine market and how to treat wineas an alternative investment.

The Vin-X team have backgrounds in financial services andthe wine industry and we have developed specialistoperating systems for fine wine collectors which ensure wecan guarantee the following:

■ Our analysts are able to identify the best opportunities inthe market for growth.

■ A dedicated Portfolio Manager to help you build andmanage your fine wine collection safely.

■ Our buyers secure the fine wines we select for our clientsat the best possible price.

■ The safe delivery of those wines into our clients’ storageaccounts.

■ Ongoing management oversight of bonded storage for ourclients’ wines with the provision of correspondingownership documentation.

■ Information on the fine wine market; trends and eventsthat may influence buy and sell decisions, point to newopportunities, or affect the price of your fine wine. Thisincludes our regular email Newsletter, special marketreports and events.

■ Valuation information – we can provide a current valuationof your portfolio on request.

■ Fine wine events – our clients are invited to attend avariety of specialist fine wine events in the UK and abroad.

■ Sell your wine – as with all investments, there is noguarantee on price performance and the value of fine winecan go up as well as down. Once a client has decided tosell their wine, their Portfolio Manager will secure a buyer.There is no commission on sale for any wine acquiredoriginally through Vin-X.

Administration Fee:

The fee for the Vin-X service set out in the Guarantee aboveis charged as a commission payment on the purchase ofyour wines which represents a 3% per annum fee for the fiveyear fixed storage term. Please see our terms and conditionsfor more information at www.vin-x.com.

Members of Liv-ex and the WIA:

As a team, we are dedicated to providing a specialist portfoliomanagement service for fine wine investors. Vin-X is atrading member of Liv-ex and a founding member of the WineInvestment Association (‘WIA’), an organisation working toprotect investors in fine wine.


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When looking to secure yourown share of the fine winemarket, a savvy investor willkeep the following coreconcepts close at hand, and inmind:

1. Stay focused and buy thebest of the best 'brands’;

2. Buy those wines in quantityand in original packagingwhenever possible;

3. Don’t be afraid to pay up forthe scarcest brands; and

4. Store those wines properlyin optimal temperature andhumidity-controlledconditions.

Forbes.com

www.vin-x.com • email: [email protected] • Tel: 0203 384 2262

Vin-X Limited, Barclays House, 51 Bishopric, Horsham, West Sussex, RH12 1QJ.

Documents

Your guide to collecting and investing in ﬁne wine · 2019. 11. 7. · Your guide to collecting and investing in ﬁne wine Fine wine provides a great means for preserving wealth