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.

• 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.”

Visitors examine wine at Vinexpo Asia-Pacific held at the Hong Kong Convention and Exhibition Centre May 25, 2010.

Credit: Reuters/Bobby Yip (CHINA – Tags: BUSINESS SOCIETY)

By Farah Master

SHANGHAI |Reuters Tue Jan 4, 2011 10:15am EST

SHANGHAI (Reuters) – Following the explosion in demand for designer bags, Italian suits and fast cars, expensive French and Italian wines are set to be the next must-have accessory for the wealthy Chinese consumer.

Wine bars are proliferating rapidly inShanghai, the country’s glitzy financial capital, where young Chinese professionals congregate after work and regularly splurge around 1,000 yuan on a bottle of wine.

“Chinese people are very aspirational and materialistic so once they have bought the best local brand then they start looking for something even better and more expensive,” said Ch’ng Poh Tiong, wine columnist and publisher of The Wine Review publication, based in Southeast Asia, Hong Kong and China.

WhileChinahas a growing domestic wine market, industry experts say it is more fashionable to drink wine made abroad and predict consumption will double within the next five years.

Favourites include wines from French estates Chateau Lafite Rothschild, which starts around $1,000 a bottle, and Chateau Latour.

“There are at least two layers of wine appreciation inChina. If the person is buying and serving the wine to say thank you very much for someone who has done them a favour, then there is a social going rate which means they will pull out the expensive wine,” said Ch’ng.

“Then you have the same person drinking with friends and family and there is no more status attached to the bottle of wine.”

Wine aficionados say that wine consumption in the mainland has grown in double digit figures over the last 10 years, triggering strong incentives for winemakers and companies to target the lucrative Chinese market, set to strongly outpace Western demand in the coming years.

“AUSPICIOUS” WINE

Chateau Lafite Rothschild has incorporated the Chinese character of the number eight on its vintage 2008 bottles, set to ship in 2011.

The winemaker has not only used the auspicious number “eight” but also the colour red, considered lucky by Chinese custom, to help boost sales.

Chateau Mouton Rothschild has used a design by Chinese artist Xu Lei for its 2008 vintage bottle.

In cosmopolitan cities such asShanghaiandBeijing, there is also robust appetite for wine as an investment class.

Tim Tse, of the House of Roosevelt, a private wine cellar and vault inShanghai, said a select proportion of wealthy Chinese were increasingly starting to collect expensive wine.

“People inShanghaidon’t only drink the wine but they are making an investment in wine. People appreciate wine far more than before. It seems like they have been studying and doing tours in theBurgundyarea,” said Tse, President of Roosevelt China Investments Corp.

Despite this, experts note that many people are drinking expensive wine simply because it is expensive, rather than appreciating the taste.

Vivian Tian, Chief Sommelier at the Waldorf Astoria inShanghai, said the majority of Chinese consumers were still far behind their western counterparts in understanding and appreciating wine.

“The Chinese population is huge, we are still in a developing phase. They are not sophisticated. I don’t know how many yearsChinawill need,” she said.

For the majority of young Chinese professionals, kitted out with their iPads and designer suits, wine is just the latest way to display upward mobility in the increasingly consumer driven society.

“The key inShanghaiis, it is fashionable to drink wine. Every year the growth rate should be double digit, there is no question about that,” Tse said.

22 January 2011

Lloyd Webber chose to sell his wine inChina

Composer Andrew Lloyd Webber’s wine collection has sold for US$5.6m (£3.5m) at an auction inHong Kong.

Among the 746 lots, the most expensive case of wine was a Chateau Petrus 1982, 12 bottles going for $77,564 (£48,500).

The collection’s sale price beat previous price expectations and Lord Lloyd Webber said he was pleased.

“I hope the new owners enjoy my wines as much as I have and I look forward to reacquainting myself with them in restaurants all overChina,” he said.

Lord Lloyd Webber, who lives inBerkshire, has collected wine since he was a teenager – when he was said to have had it delivered to his public school, the Telegraph reported.

He said that he sold the wine on Saturday because he did not have the space to store it.

Speaking before the six-hour sale, Serena Sutcliffe, Sotheby’s worldwide head of wine, said: “It’s a great collection and an obvious one for Hong Kong because there is a great love of French wines such asBordeauxandBurgundy.

“It happens to be a category appreciated so much in this region.”

Hong Kong has emerged as the world’s third-largest auction centre afterNew YorkandLondon, helped by the growth ofChina’s economy and the increasing number of millionaires there.

Wine sales have been particularly successful in the former British colony.

Sotheby’s sold about $52m (£32.5m) worth of fine wine in Hong Kong last year, more than twice as much as inLondonand three times as much asNew York.

By Tanya Ashreena

Published: January 4 2011 17:08 | Last updated: January 4 2011 17:08

Wine is proving to be a stellar investment, far outperforming its rival assets over the past year.

In December the price rise for wine was limited to just one per cent, in contrast to gains in equities of 6.7 per cent, gains in gold at 2 per cent and gains in oil of 8.7 per cent. But over the whole year in 2010 wine outperformed all the other asset classes for the second year running.

Wine investors are now enjoying returns of 32 per cent, much higher than the 22 per cent return on the classic safe haven, gold. Over the last 15 years, the average annual return on fine wine has been 15 per cent.

“A classic Christmas rally sent equity markets to the year’s highs as traders bet on continuing strong growth for emerging markets and a firmerUSrecovery in 2011,” said Gary Boom, founder of Bordeaux Index, a fine wine merchant.

“With cyclical bulls viewing the surge in the US 10-year Treasury Note as a sign that growth could be about to take off and yet more talk of further monetary stimulus in the spring, analysts are predicting both commodities and equities to show well in 2011.”

Festivities, such as next month’s Chinese New Year are expected to keep the fine wine prices growing in the first quarter.

• 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.”

Experts say it never falls in value if stored long enough.

With just about one per cent of the world’s wines considered investible, wine is on its way to become the new liquid gold for Indian investors. “It is recommended that they hold on to antique wines for a minimum of three years to enjoy high returns,” advises Ayesha Chenoy, director of Drayton Capital, the country’s first fine wine collection and investment company. Backed by an international advisory council, which includes Gautam Singhania and Suhel Seth, among others, Drayton Capital estimates the fine wine market to be worth $2-3 billion annually.

SonalHolland, a renowned wine educator and a representative of Antique Wine Company, agrees that Indians with high net worth have begun to invest in wines. “There has been a lot of interest and business coming from business industrialists, CEOs, business leaders, investment bankers and also luxury hotels that are very keen to make available valuable wines to their patrons,” she says.

Having recently picked up a case of 1998 Lafite wine,Hollandbelieves, “I thought it is still quite undervalued. Given how much the Chinese love anything with Lafite and the No 8 on the bottles, I am expecting it to at least double in value in the near term.” Several economic studies have shown that over the past 30 years, investments in fine wines outperformed equities, bonds and even gold, and survived every recession.

‘You can’t lose’
Experts insist that in no three-year rolling period have fine wines ever lost money. “The correlation between wine and equities is less than 0.03, i.e. negligible, making it the perfect portfolio hedge,” says Ishaan Ahuja, director of Drayton Capital. He says for a five-year period to June this year, an investment in the top fine wines yielded its investors 29 per cent per annum, while a similar investment in the share market would have returned 18 per cent and in the Nasdaq, less than one per cent annually.

“If we factor out the recent bullish recovery, the facts are more startling. In the two-year period of January 2007-2009, taking the worst of the sub-prime, an investment in the Sensex would have lost 18 per cent annually and the Nasdaq would have lost 23 per cent per annum. In this same period, an investment in the top fine wines still yielded 10 per cent per annum,” says Ahuja, who is also advising several clients inIndia.

The only caveat here is the high taxation on spirits. An Indian is allowed up to $200,000 (Rs 80 lakh) worth of investments abroad.Hollandsays, “Wine imported intoIndiagets taxed quite heavily, as duties on wines are very high. Investors who are buying and selling wines for speculative purposes are advised to keep their wines overseas, either inLondon,FranceorHong Kong, in bonded warehouses where they do not attract any VAT (value-added tax) or duty.”

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.

By Alex Wright

Published Apr 21, 2011 at 8:00 am (Updated Apr 21, 2011)

A wine fund scheme started in Bermuda has become a truly global business with its vintages being sought from the US to as far afield as China, while being able to offer double digit returns to its investors consistently on an annual basis.

The Wine Investment Fund (WIF), which was launched in 2003, produced an annualised return of 14.8 percent, outperforming the Liv-ex (London International Vintners Exchange) 100 which offered a growth rate of 14.56 percent.

Currently the fund has approximately $80 million assets under management in an industry with a market capitalisation of $10 billion.

The mutual fund, which is Bermuda based and administered on the Island, is run by directors Rodney Birrell, Sharon Beesley, cofounder of The ISIS Group, and Fabian Schonenberg, president of Tromino Financial Services Ltd, and its aim was to provide an absolute return to its investors.

It is the oldest and largest absolute return fund which offers five-year investment cycles, four of which it has already paid out on, with two payouts per year in the Spring and Autumn.

The fund has a large component of Bermuda-based investors including Bermudians and expatriates from politicians and re/insurance executives, while 70 percent of its subscribers are multiple investors and 80 percent of those invested have either reinvested their total payout or their initial sum.

“For the first two or three years it was essentially Bermudian friends and family that invested a lot,” said Mr Birrell.

“Now we have a five-year track record and have reached minimum assets under management of £50 million, or $80 million – two prerequisites for being considered an established fund.”

Mr Birrell’s confidence in wine as an investment has been borne out by the fact that while gold increased four-fold in value since 1993, wine had risen 16-fold over the same period.

And what makes his fund even more attractive is that it only invests in the top wines fromBordeauxin the south ofFranceand it has been proven to offer the largest return with the least volatility compared to other investments such as stocks and oil.

“There is no question that wine is marginally to neutrally correlated to the stock market,” he said.

“In 2008 (following the financial collapse) we recouped five percent within three to four months compared to the stocks market which fell 30 to 40 percent and are still recovering.”

Unlike wine clubs which invest for the love of the product, WIF has a specific investment philosophy called the price step theory which sees wine increase in value over time and because it is a tangible asset, Mr Birrell believes it will always be worth something.

Held inUKgovernment bonded warehouse means that there is noUKduty or value added tax (VAT) to pay on the wine, and it doesn’t cost much to insure.

The other beauty of being such a select product, said Mr Birrell, was that as supply decreases demand increases and the value of the wine goes up as it becomes older and rarer.

“Demand has been going up from the Chinese and American markets,” he said.

“This is a truly global market now and a very broad-based investment climate.”

At any one time WIF reviews 35 chateauxs focusing on 10 vintages in each meaning that it monitors 350 wines on a daily basis, according to Mr Birrell.

“I can’t think of another asset that has all the attributes of wine as an investment,” he said.

“We only buy wines that are four years old meaning that there are no problems with tampering, we only buy original wooden cases and take photos of the bottles and cases and we only buy the standard size 750ml or magnum bottles meaning there is no issue with fakes.

“Also it has been shown that two glasses of wine a day are beneficial to your health or therapeutic and wine has always stood the test of time as well as our wines being theft insured.”

Mr Birrell, who was giving presentations to investors at LOM and the Royal Hamilton Amateur Dinghy Club this week, estimates that the next tranche of investment from 2006 which is due to come to maturity soon will offer a return of approximately 13 percent with future tranches on target for double digit returns.

“I believe that the fine wine market will continue to grow and perhaps the investment pyramid will expand over time,” he said.

“I don’t think there’s going to be aChinabubble and their economy is growing at the moment, as are the numbers of buyers there because wine has become a status symbol that you have to have.”

He said another key selling point is that the fund is easy to understand unlike many complicated investments which even their managers did not comprehend.

Investors can also look forward to raising a glass at WIF’s annual dinner held at theOxfordand Cambridge Club inLondonin June.

The next tranche of investment is available to subscribers until the end of this month. The minimum investment is £10,000.

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