Investing in wine: a sustainable choice
By Prof. Robert Anthony, Anthony & Cie
Who can boast of having had an average annual growth of 15% for the last 25 years? Those who have decided to invest in wine.
Recent years have been wonderful, boosted by exceptional vintages and an increasingly strong demand from the BRIC countries (Brazil, Russia, India and China). Certainly we are facing a market correction as was the case in 2008, but historically wine has never lost value over a 5-year period. At end of June 2012, the Liv-ex 500 index still shows a performance of 36% for the last five years!
These indicators, combined with a 2011 vintage, were better than expected. The vitality of the vineyards of Burgundy as well as in Italy give an augur of an imminent return to higher prices, after several months of decline. Our recent tastings in the major domains in Burgundy, including the Romanée Conti, forecasts a great vintage in 2011. It predicts a vintage from winegrowers with small quantities but significant aging potential.
The central question is how to think about investing in wine. Has it become a financial product like any other? Are brand and pure performance the only goals? We don't think so. We never advise buying wines that one would not like to drink. The main objective of quality wine is the taste, which will directly reflect the investment performance. Quality wines are produced by knowledgeable, passionate individuals who will vigorously defend their heartland and ancestral practices adopted there.
Wine is the heritage of the French. Through their code of ethics, they are considered to be the foremost wine professionals, giving the wines of our wine growers priority. This focuses on transparency and the sustainable development of human relationships. Therefore investing in wine is a commitment that benefits not only investors, but also the promotion of winemakers. They share their expertise and conduct, and develop organic and biodynamic practices. This is in response to technological and sometimes fraudulent behaviour of some merchants and producers in the New World.
Since Bordeaux does not have the prerogative in respect of this knowledge, it is believed that a diversified portfolio is necessary with a different risk policy. Depending on the vintage, regions and countries, it can have an optimum SRRI index (synthetic risk and reward indicator). This is by pooling the risks without cutting back on performance. Working closely with us, our board of Michelin Star sommeliers and winemakers allows us to be closer than ever at the heart of vineyards and thereby capture all investment opportunities and real-time adjustments. Because we absolutely want the wine to eventually be consumed, which is its magnificent destiny, storage conditions are optimal as is the provenance. These are our main concerns for domains and partners who have subscribed to our code of ethics.
Finally, at a time when all that is offshore will become onshore in Europe, it is important to stay in a regulated market, with the certification of CSSF and the pursuit of the quality seal of approval of Luxembourg, and in anticipation of the AIFMD Directive which comes into force in July 2013.
So making an investment choice in wine is about defending the values of honesty, transparency, ethics and heritage; that is putting a social and environmental dimension to the investment for the satisfaction of all stakeholders.
Wealth Management and Wine
Prof. Robert Anthony
Anthony & Cie, International Trust & Estate Planning, Tax Consulting
Sophia Antipolis, France