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Fine Wine Investment Report, Volume Two, 2020 Bordeaux Edition
Fine Wine Investment Report, 2020 Bordeaux Edition
For those looking for a reliable fine wine investment, Bordeaux—especially when purchased en primeur—is hard to beat. The 2020 vintage released this summer is of extraordinary quality and value. Vinfolio’s investment guide explores the recent vintage and the best wines to invest in today for future growth.
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Vinfolio Investment Report Volume One, 2021
Vinfolio Investment Report Volume One, 2021
As one of the country’s leading fine wine companies, we are thrilled to share the first volume of our comprehensive Fine Wine Investment Report outlining the current state of global wine market investments. This guide will explore the best regions to watch, wines with impressive recent growth, and Vinfolio’s predictions for what wines will do well in the future.
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With a long-run return of >10% pa, fine wine boasts an impressive track record. Furthermore, the combination of fast-growing global demand and dwindling supply that drives price growth is arguably more acute today than at any point in recent decades. The expansion of international HNWIs, increasing consumption and a focus on alternative assets are just some of the key dynamics that suggest further compelling performance in the years to come.
A Global Perspective
With an unparalleled network of private clients across the US, privileged access to major European producers, traders and exchanges as well as a fast expanding Asian business, Vinfolio is perfectly positioned to manage your wine portfolio. Our international exposure and contacts give us the broadest dataset for analysis, the most consistent liquidity and help us maximise returns throughout your investment.
Unparalleled Investment Expertise
Our strength lies not just in the sourcing of fine wines at the best prices, but also in our use of technology to create a platform that provides both buyers and sellers with all the requisite tools and intelligence to successfully build and liquidate a wine portfolio.
In addition to our Marketplace platform, we have proprietary access to crucial flow-data which lies at the heart of all our decision-making. Our algorithm dynamically looks at current US retail listings, auction sale prices, and sales on our own platform to determine what is the current fair market value of a given wine. From there, we can trigger buy or sell activities to ensure a sound investment and a healthy return.
It is for all these reasons that we firmly believe that Vinfolio is home to the most comprehensive, reliable and honest investment service available.
Investment Grade Wine Performance
Investment grade wine has performed extremely strongly against just about all major asset classes over the last three decades. With the exception of a few outlier years where returns exceeded 20+% per annum, the long-run character of the market is one of stable, attractive returns and low volatility. Analysis of a representative selection of the foremost traded IG wines reveals a Compound Annual Growth Rate of 11% since 1988. In context, the returns for US Equities (DJIA), UK equities (FTSE), Asia equities (Hang Seng), Gold, and Oil for the same period were materially lower.
Furthermore, wine has a pleasingly low correlation with other assets during periods of market disruption, a valuable support to a diversified investment portfolio. The search for diversification is a prominent feature of today’s investment landscape as investors, large and small consider afresh S.W.A.G and other ‘passion investments’.
Traditionally, the Wine market had been absorbed by only the most celebrated Bordeaux properties. However, over the last two decades global demand has shifted sufficiently to support iconic wines from Burgundy, Champagne, Italy and the US.
These changes have further underwritten diversification and created a more rewarding investment environment.
“Wine has an attractively low correlation with other assets during disruptive market phases, making a valuable addition to a diversified investment portfolio”While Vinfolio cannot provide tax advice, note that wine investment is generally considered to be exempt from US Capital Gains Tax and similar benefits may exist in other regions.Source: Bloomberg
Supply & Demand
As for any asset, wine prices are driven by the interaction of Supply and Demand.
Uniquely, the consumption of wine (increasing rarity) and the improving nature of wine as it ages means that the balance shifts heavily towards Demand over time, applying upwards pressure on prices.
Unlike bottles for everyday drinking, investment grade wines operate in the context of a structural market shortage. With iconic estates (often legally) constrained by the link to particular physical vineyards, the weather and a relentless pursuit of quality, only a small amount of truly IG wine is produced. We estimate the cumulative global pool to be $50bn, around 5% of global production.
Established track record, real estate costs and availability, legal classification (e.g. AOC,AVA, DOCG etc ) and collective critical assessment creates extraordinary barriers to entry for new IG wines. In short, disruptive increases to supply in the form of new properties are impossible. Finite and often diminishing production with increasing consumption over time as the wines improve, makes for acutely constrained availability as wines mature.
Over the last 15 years the fast growing market economies of China, South Korea, Taiwan and wider South East Asia have established themselves as important regional players in the international fine wine trade. With this expanding international support, the top fine wines are well established as some of the most exclusive global luxury goods. Fine wine demand overall is confidently global as traditional markets in the US, UK and Europe continue to consume greater volumes and passion for collecting and appreciation grows unabated.
A feature of today’s improvements in viticulture and winemaking is to make many of the worlds most iconic wines more accessible throughout their life cycle. Indeed shifts in consumer habits regarding drinking dates can offer notable opportunities from an investment perspective.
Know Your Market
High Parker scores, Wine Spectator awards and expensive marketing do not guarantee investment grade wines in isolation. Even amongst age- worthy, highly regarded estates, only a small proportion have the accumulated characteristics to achieve consistent, meaningful capital growth.
Vinfolio’s proprietary program allows us to define the most in- depth view of market dynamics available – including trading flows, inventory and prices across all key global markets. Combined with our analysis of critics’ assessments, brand and vintage strength and local and international market trends, we have both the information and expertise to make the right decisions for your portfolio.
With this expanding international support, the top fine wines are well established as some of the most exclusive global luxury goods
In many respects, the Standard & Poor’s or Moody’s of the wine world. Where traditionally, Robert Parker and his eponymous Wine Advocate went largely unchallenged as the dominant voice, today a slew of newer publications compete both regionally and by product. With more information available than ever before, it’s critical to be able to define where confluences of critical opinions interact with the market.
Vintage affects both the overall level and shape of the price curve over time. Clearly great vintages are more celebrated and collectable but even amongst qualitatively comparable years, individual ‘halo’ vintages can command an enduring premium. Qualitative characteristics also affect rate and timing of consumption.
Soft Data Trends
The balance of demand from consumption and investment passive or otherwise,) regional price discrepancies, opening up / barriers to trade, changes of ownership and outlook for key estates and the ever evolving tastes of different global markets.
History, ownership, market presence and size - brand is an important factor in contemporary investment decisions. Of particular importance in navigating demand patterns in the emerging markets.
An estimated measure of production, distribution and depletion. A universal data set is almost impossible to acquire, but accurate assessments of inventory are critical to projecting likely price development.
Our models use a variety of headline economic data to help inform our overall outlook.
Vinfolio’s Investment team
Vinfolio is majority-owned by Executive Chairman Don St. Pierre Jr. and his business partner and good friend Allan Warburg, co-founder and co-CEO of Bestseller Fashion Group China. Vinfolio’s ownership also includes Jean-Michel Valette MW, who chairs the Education and Examination Board (EEB) of the Institute of Masters of Wine and is former chairman of Robert Mondavi Corporation and Peet’s Coffee, and Jon Moramarco, former CEO of Constellation Brands.
Don St. PierreExecutive Chairman
In 1996, Mr. St. Pierre co-founded ASC Fine Wines, which he built into Greater China's leading importer of premium and fine wines. In 2010, he sold the company to Suntory Holdings. At the time of the sale, ASC had 1,200 staff in 26 offices, and over 100 exclusive importing relationships with elite international wineries. After selling ASC to Suntory Holdings, he stayed on as CEO until 2012, and remained as a Board member and Senior advisor to Suntory Wine International until December 2015. Don is the recipient of numerous wine industry accolades, including being named No. 7 on Decanter magazine's 2011 Top 50 global wine industry power players and being selected by Wine Enthusiast Magazine as the 2011 International Man of the Year.
Jean-Michel Valette, MWBoard Member & Investor
Jean-Michel has held various executive roles in the wine industry, including CEO of Franciscan Estates and Managing Director of Robert Mondavi winery. He is currently an advisory board member to a number of wine families in Napa and serving a term as chair of the MW exam and education board. He also sits on the board of Peet's Coffee, Boston Beer Co, and Sleep Number Corp. He has been a board member and investor in Vinfolio for over a decade.
Adam Lapierre, MWPresident
In addition to being one of fewer than 380 Masters of Wine in the world, Lapierre has an impressive background playing various industry roles both, as a supplier and a buyer. Adam also serves on the Education Committee for the Institute of Masters of Wine and regularly judges at top wine competitions around the world.
Decide how much would you like to invest.
We advise on an initial investment greater than USD25k to achieve optimal allocation
Consider the term and your risk appetite.
We recommend a 5+ year horizon for portfolios as representative of a full market cycle. You then need to decide if you would like a higher, medium or lower risk portfolio.