Back Vintages.

Back Vintages, is the wine markets term for wines which are in the bottle. In the case of Bordeaux fine wines this would be 2008 and before, the top wines of 2009 vintages will be bottled in early 2012 by most of the chateaux.

The collecting investing and trading of the more recent back vintages whilst still in their growth phase is usually done in OWC (original wooden cases) in the normal 750ml format, this is the most common size of bottle; cases are usually 6 or 12 bottles.

With much older and rarer wines, trading is often carried out on a bottle by bottle basis, this is because the older vintages have been consumed and it is much harder to find wines in OWC if found in OWC they will realise the highest market value on the secondary market. Warning; if investing, watch out for cases made up from different suppliers, you will never be able to prove provenance and may find it hard to sell.

Back vintage trading is done after the bottling stage. There is always some trading at the En Primeur stage (wine in the barrel) but this is limited as the wines at this stage are sold to collectors and investors on certificate. The Chateau also limits the supply into the market maybe releasing about 20-30% of it stock at En Primeur. Holding back their own stocks limiting the supply only releasing some of the remaining stock once bottled, they will do this slowly to ensure prices rise.
Due to the long maturity phase of classified Bordeaux wines, drinking is often recommended 10-12 years after bottling depending on the wine. These wines will mature and improve over 25-50 years or more; this is often referred to as the growth phase. The Châteaux will hold back a certain amount of each vintage and put them out in to the market thought out the growth phase to maximise their own profits.

The fundamentals of back vintages as an investment are simple, dwindling supply due to consumption and collectors holding their wine stocks, this in turn leads to increasing demand and more limited trading on the open market. The result is increasing prices, especially for the top Chateaux best vintages. Look out for wine coming into there drinking window maybe, maturity phase, these wines could hold huge potential for growth as they will be consumed and the supply to the market rapidly drops. Be careful not to buy wine that have past there peak and are in decline quality wise.
Pay close attention to the 3-5 year prices, and then take a look at what happens as the supply diminishes.

In summary, there are options for the investor, to purchase wines in the growth phase or opt for the En Primeur, to purchase wines in OWC (original wooden cases) would be the best move for investment and 750ml or Magnum 1500ml would be our recommendation as these tend to be the most traded. En Primeur being a very seasonal part of the industry gives a limited window of opportunity for investment. Back vintages however are traded year round.

Moncharm Ltd moncharm.co.uk

By James Pomfret and Stefanie McIntyre

HONG KONG| Sat Jan 22, 2011 7:43am EST

HONG KONG(Reuters Life!) – Some $5.6 million worth of fine wines from the cellars of British composer Andrew Lloyd Webber were hammered off in a sale at Sotheby’s Hong Kong on Saturday amid ebullient demand from Asian and online bidders.

With the former British colony of Hong Kong emerging as a global wine auction hub overtaking stalwarts likeNew YorkandLondon, the Lloyd Webber sale — 100 percent sold by lot — again underscored a voracious and growing thirst for the world’s finest vintages amongst minted Asian and Chinese buyers.

In another telling sign, a two-day auction in Hong Kong by leading U.S. wine sellers Acker Merrall & Condit fetched a bumper $10.8 million for 1,200 lots of wines, with rare Chateau Petrus and Lafite vintages shining through. At the Lloyd Webber sale in the luxury Mandarin Oriental Hotel, a mix of Western and Asian collectors, some sipping wine, from Webber’s personal collection and feasting on a gourmet buffet spread, seemed in high spirits to propel sales of the 746 lots well above the pre-sale estimate of $4.1 million. 53 percent of lots were bid on by online bidders.

“We sold Andrew Lloyd Webber’s wine collection before in 1997 inLondonand that was an inflection point in the wine market when wine prices really took off,” said Robert Sleigh, Sotheby’s senior director of Asian wines.

“It’s obviously taken until 2011 for him to realize that once again, he has unfortunately too much wine that he’s never going to drink and so we’ve been offered the opportunity to offer this wine in Hong Kong, which is the logical location as the world’s strongest wine market right now.”

All top ten lots went to Asian private buyers, including a 12-bottle case of 1982 Chateau Petrus hammered off for $77,564, while a dozen bottles of 1982 Chateau Lafite fetched $58,949.

“I hope the new owners enjoy my wines as much as I have and look forward to reacquainting myself with them in restaurants all overChinawhen ‘Cats’ starts its national tour in Mandarin, Lloyd Webber said in a statement after the sale.

The millionaire composer of some of the biggest and most commercially successful musicals in recent decades such as “The Phantom of the Opera” and “Cats” is also well-known as an art and wine collector.

 Story by: Donia O’Loughlin

• Magazine: FTAdviser
• Published Thursday , January 06, 2011

The Wine Investment Fund (TWIF) has predicted the main wine index will finish 2011 at around 407, a rise of 21 per cent compared to its 2010-end level.

Using the benchmark Liv-ex 100 index, fine wine returned 40.5 per cent in 2010, with very limited volatility, according to TWIF.

The wine investment specialist claimed the returns compare favourably to equity markets; the FTSE 100, rose by nine per cent over the year and FTSE All-Share by 11 per cent.

Looking back at the last year and forecasting for 2011, there were, according to TWIF, four main influences on the fine wine market.

First, the economic performance of the main wine purchasing countries, particularlyChina, followed by the ‘pull up’ effect on back vintages of the high prices for the 2009 wine futures.

Third was the increasing attractiveness of wine as an asset class, particularly to institutional investors; and lastly, the effect of exchange rate movements between the Chinese renminbi and sterling.

Andrew della Casa, director of TWIF, said: “A year ago we said that returns of 40 to 50 per cent in 2010 were possible and that has proved to be correct. It was another great year to be invested in fine wine.

“Prices of older vintages were pulled up by strong Asian demand and by the extremely high prices asked for the latest vintage which came to market.

“Demand fromChinadoesn’t look to be going away any time soon, and, with inflationary pressures rising, investors are increasingly turning to physical assets. So we believe that another good year could be in prospect.”

Less than six months since the announcement that the sweet wines of Bordeaux can be imported into China officially, what impact can we expect to see on the wine investment market place?

Lunzer Wine Investments, the renowned fine wine fund management specialists, predicts the change means Chateau d’Yquem will become the next big winner for the wine investment market. Wine expert Peter Lunzer, who invented the concept of the Wine Price Ratio, is tipping it could even outperform the current favourite wine inChina- Chateau Lafite.

“Chateau d’Yquem is probably the best known of the sweetBordeauxwines which have not been allowed to be officially imported intoChinadue to their large amounts of natural, residual sugar when compared to other wines which exceeded the limit set by the Chinese authorities. However, now these rules have been relaxed, we believe that demand for these sweetBordeauxwines will skyrocket. From our experience, Chinese wine buyers have a massive appetite to acquire top quality brands so given Chateau d’Yquem’s heritage, and the fact that it has a very limited production with an average of only 60,000 bottles produced each year, we believe it can only get more expensive,” said Peter Lunzer, Chief Executive and Chief Investment Officer of Lunzer Wine Investments.

Lunzer continued: “I expect the price of the good vintages – including 1990, 1996, 1997, 2001 and 2007- to double over the next few years and that this wine could challenge the high prices of other fine wines such as Chateau Lafite.”

Interestingly, the 2004 remains un-scored by renowned wine critic Robert Parker and so, despite its exceptional quality, languishes below the radar. With such an interesting potential for the future, we have been including a greater than normal proportion of Chateau d’Yquem in the portfolios we have acquired for recent investors.

In May 2010, the “Liquid Gold Collection” from Chateau d’Yquem became one of the most expensive lots of wine ever sold in Asia during a Christie’s auction inHong Kong. This collection of 128 bottles and 40 magnums was the largest collection of Chateau d’Yquem ever to come to auction.

Lunzer Wine Investments opened aHong Kongoffice in November 2010 and has since considerable interest from Chinese investors.

Notes to editors: If you are interested in learning more about Chateau d’Yquem and wine investment, Peter Lunzer is inHong Kongfrom 26th March to 1st April and is available for press interviews.

About the fine wine market

Fine Wine is an established form of alternative investment that can offer impressive returns. The wine market is based upon simple supply and demand economics.Bordeauxhas the most stable financial market of all wine producing regions, while in each decade only 3-4 vintages out of every 10 have wines of a high enough quality for investment purposes. A chateau can only produce a unique and finite amount of wine each year. As this is happening the wine is maturing and becoming more desirable, which leads to an increase in demand.

 Story by: Cara Waters

• Magazine: FTAdviser
• Published Monday , January 10, 2011

The Wine Investment Fund (TWIF) has maintained its payouts in double digits as its 2005 second tranche has matured.

Investors have received returns equivalent to 13.25 per cent per annum over the last five years after all fees and expenses.

TWIF said over the same period the FTSE 100 rose just 1.9 per cent or 0.4 per cent per a year.

The fund said fine wine has again shown itself to be low risk when compared to equities, oil or even gold, with the additional advantage of its performance being weakly correlated to the returns of other asset classes such as equities.

TWIF said its investors also benefit from the fact that its wine portfolios do not attract duty or VAT or forUKinvestors, capital gains tax.

Andrew della Casa, director of TWIF, said: “We are delighted to confirm that on a £10,000 investment, the 2005 second payout has returned over £18,630.

“With little evidence of a slowing in the increases in fine wine prices which we saw in 2010, we are forecasting that the market will rise by around 21 per cent in 2011.”