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A General Overview

It is important, firstly, to make a historical point about the fine wine market. London has always been the 'clearing house' for French fine wine. The English were the first to drink these wines and with the establishment of the world famous auction houses, Christies and Sotheby's, the die was cast. In addition, many of Bordeaux most famous properties were named after and/or owned by Englishmen. Although this is less the case today, Chateau Palmer is still owned by the Sichel Family and Chateau Leoville Barton is still owned by Anthony Barton. Indeed much of Chateau Palmers production in 1961, one of the greatest Bordeaux ever made, was shipped in bulk to London and bottled under the Berry Brothers and Rudd label. It now sells for around £700 a bottle.

Arguably, one person drives the global wine investment market. The American journalist Robert Parker has built such a reputation for himself that the whole fine wine industry hangs on his every word. He produces a bi-monthly magazine called the Wine Advocate in which as well as remarks on the state of the wine trade, he tastes and marks wines out of 100 points. If there is a general rule, although a little tenuous, it is that any wine scoring between 95-98 points will see its price rise significantly in a week or two. Should a wine score 99-100 points the price will increase dramatically in the same space of time and continue to rise over the ensuing months. We have listed below a few examples of the Parker Effect. We should also mention a glossier American Magazine called the Wine Spectator. It also marks wines out of 100 points, and is becoming more and more influential on the global scene.

Historically, as well as one man, one region has dominated this market. Bordeaux. It is still at the top of the hierarchy but is slowly being caught up. Many of the other great wine growing regions such as Italy, Australia, America and Spain are striving to produce Bordeaux style-wines, which can compete with this unique area. More importantly though, Parker enjoys this and he is giving out some huge scores, in the high nineties, for wines produced in these countries. Needless to say, at the top level, the prices have begun to rocket. In fact, the wine of the year in last years Wine Spectator was a 1998 "Super Tuscan" called Ornellaia.

En Primeur

Each year the Bordelais release their wines onto the market as futures in early Spring. Historically, this was done to raise money for all the costs incurred as a result of the harvest. The wines were available for tasting in Bordeaux in late March & were then released to the trade. However, a new pattern has been emerging over the last few years. Owners have been waiting to see how Parker scores their wines before releasing them onto the market, to enable them to take advantage of the Parker effect, at inflated prices. It must be said though, that these days, many do not and that is where we believe there is the greatest opportunity for investment. It is important to add though, with so many customers buying futures for the first time, the actual consumer base has increased dramatically. However, the region is not allowed to produce any more wine & as a result there is obviously far more pressure on the prices.

The Investment

The original investment sum should start at about £5,000 & be held for a minimum of five years. All wines that are not futures will be held in bond at London City Bond in our Client account, or we will organise for a personal account form to be sent to you. Our own storage charges are £7.50 per case/per year excluding VAT, this includes insurance. If customers opt to take out their own account at LCB, it should be made clear that the price does not include insurance, but once again, we can advise customers of the associated costs & names of wine insurance specialists.

For further details on individual portfolios & the rates of commission involved, please contact either Mark or Guy at the office or by e-mail & we will endeavour to give the answers to any questions you may have.

Why Invest?

Any profits are capital gains tax free.
Regular outperformance of traditional investment markets.
A guaranteed dividend in the form of wine to drink if the portfolio drops in value. Try doing something with share certificates in the same event!

Why Claret-e?

Fifteen years experience in both wine & City investment markets.
Strong relationships with established suppliers in Europe, especially negociants in Bordeaux.
Entry prices to the portfolios at market levels.
Preferential rates for sales of stock if the money is to be re-invested.

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