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Monday 1 December 2008

Opportunities for vintage growth

Christopher Silvester says you don’t have to be rich to invest in fine wine, and the rewards can be handsome

Indeed, one reason why growth in prices of fine wine has been so spectacular over the past decade is that the new rich of China and Russia are buying all the top wines for drinking, not investing. In a recent gangster movie set in Macau, one of the bosses ostentatiously demands to be served Chateau Lafite ’82 as if it’s a cocktail. Eight and two are both lucky numbers for the highly superstitious Chinese, which may explain the popularity of both the Lafite ’82 and 2000 vintages beyond their intrinsic merits. ‘There are 280,000 millionaires in China,’ explains Alan Rayne of Magnum Fine Wine plc. ‘These guys are just getting started.’ One of Rayne’s oldest clients, a businessman who owns substantial chunks of Hong Kong, drinks Pétrus with lemonade.

There are three well-established wine investment companies worth looking at, and three wine investment funds. The oldest player in the business, with 1,000 clients and 15,000 cases in bond, is Magnum Fine Wines Plc (www.magnum.co.uk), founded in the mid-1980s by Rayne, who prides himself on never selling anything to investors ‘that I haven’t tasted myself, usually on at least two or three occasions’. Rayne still has clients who started buying through him in the late 1980s, but the private banking division of Lloyds TSB now recommends Magnum to its customers. Immensely respected by the Bordelais wine producers, Rayne was made a Commandeur d’Honneur of the Grand-Maître de l’Ordre du Bontemps de Bordeaux, on the recommendation of two of the most famous chateaux, Lafite and Margaux.

With somewhere between 800 and 1,000 clients, Premier Cru Fine Wine Investment Ltd (www.premiercru.com) is operated by the mother-and-daughter team of Paula and Stacey-Lea Golding and has been in business since 1992. ‘We look at wine as a commodity, not a beverage,’ says Stacey-Lea. ‘Each investment is tailor-made for a client’s individual needs.’ Premier Cru’s client base used to be top-heavy with City boys, but it is now working with one of Asia’s largest financial advisers, Pacific-Asia Capital Management, which has offices in Shanghai and Taiwan. ‘They’re introducing many Chinese investors to us, as well as investors from Taiwan, Indonesia and Japan,’ she explains.

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