William Dubreuil explains how putting your money in AOC vintages is good for both investors and growers
Who can boast of having had an average 15% growth per year over the last 25 years? Those who have decided to invest in wine.
The recent years have been wonderful, boosted by exceptional vintages and an increasing interest in wine in the BRIC countries: Brazil, Russia, India and China. As in 2008, we are facing a market correction, but historically wine has never lost value over a five-year period. The Liv-ex 500 index still shows a performance of 36% growth over the last five years!
These indicators 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 domaines in Burgundy, including the Roman�e Conti, forecast a great vintage last year. It indicates a vintage of winegrowers, with small quantities but a significant ageing potential.
PASSION & PROFESSIONALISM
The central question is how to consider 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 anyone to buy wines that they would not like to drink. The objective of a quality tasting is an essential element, which directly serves the performance. This is because wine is produced thanks to the knowledge of passionate men and women, in the heart of their land and according to ancestral practices that they intend to defend.
Wine is a major part of French cultural heritage. Within their code of ethics the French pride themselves on being the first and foremost wine professionals, which is reflected in the traditions and the expertise of the winegrowers, and the quality of the wine produced. Investing in wine is a symbiotic act that benefits not only the investors but also the future prospects of the winemakers. In return, they share their expertise and develop organic and biodynamic practices.
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When it comes to investing in wine, it is generally believed that a diversified portfolio works best with a different risk policy that depends on the vintage, regions and countries, and works according to an optimum SRRI index (Synthetic Risk and Reward Indicator).
This is created by pooling the risks without cutting back on performance. For example, we work closely with Michelin-Starred sommeliers and winemakers to ensure that we know exactly what is going on rather than hearing it on the grapevine. In this way, potential investors in wine can be better informed.
What’s more, because we want wine to be drunk one day, for it is its destiny, storage conditions and provenance are paramount.
Finally, it is a source of reassurance for investors to be in a regulated market, with the certification of Commission de Surveillance du Secteur Financier and the pursuit of the quality seal of approval of Luxembourg, and the anticipated Alternative Investment Fund Managers 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; putting a social and environmental dimension to an investment in wine for the satisfaction of investors and the continued prosperity of winemakers.