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12 | International investment
Comment from Peter Lunzer, one
The biggest single change to the market in the Burgundy and Champagne are equally well
of the world’s leading fine wine
past six years has been the Chateau keeping back established brands?
investment experts.
a higher than ever percentage of production, “Bordeaux production levels are sufficiently
notes Peter. This has especially been the case high to create a truly global secondary market,”
since the 2005 vintage which was in such short explains Peter. “Burgundy by contrast is
supply that prices rose steeply for longer than produced in very small quantities with
normal. traditional buyers tending to buy for
There are a number of developments which consumption rather than resale. There are
will influence the future of wine pricing and some exceptions but for large scale investment
availability. Burgundy is too scarce. Champagne qualifies
in terms of quality and production volume
Emergence of new wine funds but the problem for me is that houses can
“Bordeaux will remain of prime importance increase production to match demand –
compared to Burgundy, Champagne and wine something impossible from a Bordeaux
from the New World.” Why is this? Surely Chateau.”
Global transparency of pricing
Peter was formerly Chief Investment Officer
for the Wine Investment Fund, which he co-
founded. From 2003 to 2008 the fund returned
an increase of 108% net of all fees. Peter
Some prices from Liv-ex as at 30th November 2008
launched Lunzer Wine Investments on 1
November 2008.
Outlook for Wine Investment
in 2009
“There are a number of key areas to consider
regarding the prospect of predictable returns
from investment grade wines. These can be
d
circle6
efined as:
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Assessing demand.
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Any significant changes to supply.
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Key developments in the market.
Looking for signs of an overheated market.
“But the most important factor to bear in
mind is that there is a finite supply for a global
demand.” Funds created by Lunzer Wine Investments are set up to deal with only one asset class –
the finest wines of Bordeaux. Wines from the great Bordeaux Chateaux have been proven
Assessing demand to generate and deliver sustainable investment returns in excess of many other more
There is a constant and growing global demand traditional asset classes such as equities and bonds.
for a finite and diminishing supply, notes Peter. The Lunzer Wine Investment philosophy is to buy predominantly world famous wines
“Wine features very humbly among all the from Grand Cru Classé and Pomerol Chateaux. These are wines of exceptional reputation
extravagances enjoyed by wealthy individuals. that are traded on a truly global secondary market and increase in value over time as the
For example, a Lear Jet 60XR could cost wine is drunk and the levels of stock available worldwide is reduced.
£12,500,000, and a Sunseeker Yacht 105 in the These great wines have become traded on a frequent basis and the analysis of prices
region of £4,900,000. and price patterns has become increasingly transparent. Moreover, using Peter Lunzer’s
“By way of contrast, Chateau Petrus 1990 costs unique Wine Price Ratio, the firm’s fund managers believe it is possible to know when to
approximately £28,500 per case, and Chateau buy and sell individual vintages for optimum capital growth.
Lynch Bages 1990 would be in the region of Investors buy into Funds on a unitised basis. There is a five year investment horizon,
£1,500 per case. with tax-efficient open- and closed-end offerings. This is not a wine club – investors never
“There is a consistent demand for wines that get to drink or even see the wines which are stored in secure Government Licenced,
have a brand. Consumers are looking to impress Bonded Warehouses. The Funds are open to both corporate and individual investors.
others as much as enjoy the content of the bottle.
Brands such as Chateau Lafite are powerful and
Steady and predictable growth
growing in popularity.” All wines held by Lunzer Wine Investments Funds will be actively traded on Liv-ex - The
London International Vintners Exchange. Founded in 1999, Liv-ex is the leading exchange
How much wine is there in the for fine wine running a trading and settlement platform for fine wine merchants, collectors
market place and how is the and investors. It also provides valuation services and sells data to both professional
supply changing? traders and wine collectors.
The current estimate is that there is between Historical data taken from Liv-ex shows that the finest vintages of Bordeaux consistently
£6bn and £8bn globally of investment grade appreciate in value over time. Combining this with real time bid-offer data has allowed the
wine stock. The annual contribution from a high development of the Wine Price Ratio, the basis on which Lunzer Wine Investments makes
quality harvest is estimated to be between £1.5bn its stock picks.
and £2bn.
January 2009 Investment International www.investmentinternational.com
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