Fine Wine Invest

8/12/2019 Fine Wine Invest

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I founded Vin-X with a team of investment and wine

specialists as a result of my own experience of

investing in wine. The potential of the market is

significant, particularly when compared with stocks

and shares, and yet for many this is not well

understood.

The analytical and economic treatment of ne wine

as an investment class employed at Vin-X improves

an investors ability to access wines with the

potential to deliver strong returns. Vin-X has proven

success in outperforming the market trend by at

least 10 per cent in 2011.

We keep all of our clients informed about the key

news and events in the industry which may affect

price, update on specic performance and ultimately

assist with the nal sale of their wine.

I hope you nd the information enclosed of interest

and that you are also inspired to get involved in this

rewarding investment class.

Yours truly

Peter Shakeshaft

Founder

Welcome to Vin-X

Liv-ex has made12.5% over the

last 24 yearscompound, that beats

virtually everythingincluding goldand oil. For me its

a good investment.Austin Healey, England, Leicester andBritish Lions rugby player, July 2012

1www.vin-x.co.uk


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Fine wine consistently out-performs

shares, bonds and other asset classes

Historically ne wine has consistently

delivered annual double digit growth

Fine wine investment is less volatile than other

asset classes such as equit ies, gold and oil

The correlation between nancial and

ne wine markets is relatively low, providing

greater resilience to recessionary conditions

Tax efcient - potential exemption from Capital

Gains Tax - speak to your nancial advisor

Fine wine is a tangible asset

A nite and reducing supply as vintages

are consumed versus increasing demand

Currency dynamics ne wine provides

the ability to off-set currency inuences

Inationary pressures may drive demand

in physical commodities to hedge against

devaluation.

Why invest in wine?Vin-X invest ment selection strategy

beat the market in 2011 by 11%

Vin-X operates market-leading practices

designed to protect the i nvestor and their

investment.

Dedicated personnel who specialise

in fine wine investment

Market information to maximise

investment potential

Client wines stored at fully insured

industry-leading facility

Independent audit to verif y client wine

by Chartered Accountants Kn ill James

Condition reports available on client wines.

Why invest with Vin-X ?

2 www.vin-x.co.uk

100 [invested in 1952]could today be worth as

much as 478,000 tax freewww.thisismoney.co.uk, June 2012


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Investors in ne wine see10% annualized returnsover the past 5 years

compared to FTSEs 0.03%Emma Wall, The Telegraph, March 2012


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My Vin-X consultanthas provided excellentprofessional support

with my ne wineinvestments and hisstrong knowledge ofthe market has givenme a lot of condence

as a relatively newinvestor in ne wine.

Mr Power, Ireland, April 2012


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History

Fine wine has a distinguished history with production

dating back some 6,500 years; Bordeaux has been

producing wine for two millennia and the famous

chteaux, or brands of Bordeaux, have been around

for centuries. As long as ne wine has been produced,

traded and consumed, it has been invested in.

PerformanceThe global ne wine market was valued in November

2011 by Liv-ex, the industry exchange, as having

annual worth of US$4bn. In terms of the focus of

that value, it is primarily on the top 25 chteaux

in Bordeaux and the predominance of value sits

with the ve First Growths plus Super Seconds

and premier Right Bank wines, which are thought

to generate as much as 95% of the secondarymarket trading in ne wine.

Fine wine consistently delivers annual double-digit

returns and its historical performance over the medium

to long term has been outstanding when compared

with many traditional and alternative asset classes.

Supply anddemandA further dynamic of the ne wine market is thenite amount of commodity available. This supply

reduces further over time as wine is consumed.

Contrast this with the varying inuences of demand

within the market. In some circumstances volume

may have declined in recent years in the traditional

markets of the US and Europe, however new entrants

from the growth economies of China, Brazil, Russia

and India have created signicant demand with

reported 40% of production in some key brands

now being taken up by consumers in Asia.

The ne wine market

BrandThe wine investment market comprises the nest

Bordeaux wines, the key brands are the First

Growths and a number of the Super Seconds.

Such is the value of brand within this sector that

much of the market dynamic may be inuenced

by one particular wine. For example Chteau

Late-Rothschild led the wine markets bull run

post February 2008 and achieved extraordinaryprices during 2009 and 2010. Late saw its prices

decline in 2011 affecting the total market value.

Vintage appealGenerally, the finest wines from the most

outstanding vintages have delivered the best

returns to investors. There have been some

outstanding vintages over time and recently 2009and 2010 have been critically acclaimed as very

significant.

The role of the criticFundamentally the market expects the great

brands to produce the best wines, but ultimately

the final t ick in the box is the independent critical

view by a handful of industr y experts f rom around

the globe. Currently the most inf luential of these

is Robert Parker Jnr.

Fine wineconsistently

delivers annual

double-digitreturns

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Historically, when investing at a time when the

previous five years had returned a CAGR of less

than 5%, the average compound return achieved

in the following five years was 17.6%.

Vin-X per formanceVin-X clients benefit from a market-leading,

professional service adopting many of thepractices and s ystems operated by a stockbroker.

The team includes both investment and w ine

specialists and analy tically appraises the market

opportunities in line with economic, political

and wine specific factors. The Vin-X wine

selection strategy for clients has meant that

the collective client portfolio beat t he market

average by 11% in 2011.

When is the right time to buy?The Liv-ex Investables Index tracks 200 wines

from 24 top Bordeaux chteaux, with data going

back as far as January 1988, and mirrors the

performance of a typical wine investment portfolio.

The chart above shows the ve-year compound

annual growth rate (CAGR) over the life of the

Liv-ex Investables Index. Key points include:

The long term average CAGR is 14.9%

Over the last 24 years the CAGR has been 12.5%

For 60% of the time returns have exceeded 10%

For 75% of the time, returns have averaged more than 5%

CAGR in July 2012 was circa 4% - the lowest

it has been since 2006

The CAGR has only been negative once.

Source: www.liv-ex.com J uly 2012

7www.vin-x.co.uk

LIV-EX INVESTABLES INDEX VMARKET AVERAGE

FiveYearCompoun

dAverageRetu

rns

40%

35%

30%

5%

0%

-5%

JAN-

93

OCT-93

JUL-94

APR-95

JAN-

96

OCT-96

JUL-97

APR-98

JAN-

99

OCT-99

JUL-00

APR-01

JAN-

02

OCT-02

JUL-03

APR-04

JAN-

05

OCT-05

JUL-06

APR-07

JAN-

08

OCT-08

JUL-09

APR-10

JAN-

11

OCT-11

30%

25%

15%

10%

LIV-EX INVESTABLES INDEX - 5YR CAGR LONG-TERM AVERAGE

JUN-

12


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The ne wine market is primarily focused on

the best wines of Bordeaux, which represent 95%

of the secondary market in ne wine.

HistoryTheBordeaux Wine Ofcial Classication

of 1855which guides on wine quality was

established during the 1855 Exposition Universelle

de Paris when Emperor Napolean III requested

a classication system for Frances nest

Bordeaux wines.

The First GrowthsThe premier investment wines come from the ve

greatest wine producing chteaux in the world

all located on the Left Bank of the River Gironde:

Chteau Lafte-Rothschild

Chteau Latour

Chteau Margaux

Chteau Mouton-Rothschild

Chteau Haut-Brion

The Big 9

Along with the First Growths listed above the

following four chteaux make up The Big 9, these

represent the most valuable and frequently traded

investment wines in the secondary market and are

traditional investor favourites:

Chteau Cheval Blanc

Chteau Ausone

Chteau Le Pin

Chteau Petrus

The importanceof Bordeaux

1. Ch. Cos dEstournel

2. Ch. Pontet-Canet

3. Ch. Pichon Lalande

4. Ch. Loville-Poyferr

5. Ch. Loville Las Cases

6. Ch. Palmer

7. Ch. Malescot St-Exupry

For more information on these wines, please visit the Vin-X website

at www.vin-x.co.ukor speak to a Vin-X consultant on 0203 384 2262.

8 www.vin-x.co.uk

8. Ch. Pape-Clment

9. Ch. Haut-Bailly

10. Ch. Anglus

11. Ch. Trotanoy

12. Ch. La Conseillante

13. Ch. Pichon Baron

14. Ch. Lynch-Bages

15. Ch. Smith-Haut-Latte

16. Ch. La Fleur-Petrus

17. Ch. Clos Fourtet

18. Ch. Rauzan-Sgla

19. Ch. Brane-Cantenac

20. Ch. Le Gay

Parkers Magical 20

Tipped by critic Robert Parker Jnr. as the hottest wine investments

for the future and some Vin-X favourites:

FIRST GROWTHS 4. Chteau Lafite-Rothschild 5. Chteau Mouton-Rothschild6. Chteau Latour

10. Chteau Margaux12. Chteau Haut-Brion

SECOND GROWTHS 1. Chteau Loville Las Cases 2. Chteau Montrose

3. Chteau Cos dEstournel 7. Chteau Pichon-Baron 8. Chteau Pichon-Lalande 9. Chteau Ducru-Beaucaillou16. Chteau Loville-Poyferr18. Chteau Loville-Barton

THIRD GROWTHS11. Chteau Palmer

FOURTH GROWTHS13. Chteau Duhart-Milon17. Chteau Beychevelle

FIFTH GROWTHS15. Chteau Lynch-Bages14. Chteau Pontet-Canet

PREMIER CRU SUPRIEUR19. Chteau dYquem

Bordeauxs newine locations


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CLOCKWISE, FROM ABOVE:CHTEAU LA MISSION HAUT-BRION; CHTEAU MARGAUX;THE CELLARS OF CHTEAU LATOUR; CHTEAU PONTET-CANET.


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Vin-Xs wine

selection policyis geared to

Parkers scoringsystem and most

ne winesoffered to clientshave a score

of 95 pointsor more.

The role of the professional critic within the wine

industry is very signicant. They provide an

independent evaluation on the quality and potential

value of wine and publish scores at key times within

the industry calendar. A select number of critics have

such an inuence that they have historically moved

the market in key wines. The most pre-eminent critic

with global inuence is American Robert Parker Jnr.

Many merchants, critics and auction houses have

scoring systems to rate the quality of a wine but

Parkers is the most universally adopted system.

Since rst publishing in his newsletter, The Wine

Advocate in the late 70s the Parker score has

proved to be the most denitive system, rating

wines out of 100 points.

Wine critics, scores

and Robert Parker Jnr.Vin-Xs wine selection policy is geared to Parkers

scoring system and most ne wines offered to clients

have a score of 95 points or more. There are

exceptions to this rule and investment potential

does extend to some wines with lower scores.

Wines of an investment grade are scored by

Parker as follows:

96-100:

An extraordinarywine of profound and complex

character displaying all the attributes expected of a

classic wine of its variety. Wines of this calibre are

worth a special effort to nd, purchase, and consume.

90-95:

An outstandingwine of exceptional complexity

and character. In short, these are terr ic wines.

Other notable critics including the following:

Jancis Robinson OBE MW (UK)

www.jancisrobinson.com

Neal Martin (UK)

www.erobertparker.com

James Suckling (USA)

www.jamessuckling.com

Jeannie Cho Lee MW (HK)

www.asianpalate.com

10 www.vin-x.co.uk


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Investors are often confused by sweeping statements made

with reference to tax and ne wine. To address th is Vin-X

commissioned an independent tax specialist to review any

possible implications for Income, Capital Gains and Inheritance

Tax with respect to ne wine investment. The following detail

points to key areas for consideration. For further information

please contact a Vin-X consultant. Investors should always

consult their tax or nancial advisor.

Value Added Tax and DutyGenerally it is understood that, whilst stored in a Government

Bond warehouse, wine does not incur VAT or Duty payments,

these are chargeable once the wine is shipped out of Bond.

VAT and Duty costs will be charged at the rates prevailing

at the time of transfer from Bond.

Income Tax

A dening position in regards to attracting Income Tax iswhether the investor is perceived to be trading in wine as an

asset, i.e. acquir ing wine with the intention to trade on and

take prot. In this case one should refer to case law where it

exists as well as having regard to what are referred to as the

the badges of trade.

An interesting interpretation in regards to the Income Tax

treatment is the potential to v iew not just prot but also loss,

which could potentia lly be tax deductible. If this stance wasadopted, however, future investment would naturally be

presumed to fall into the activity of trade and Income Tax

would therefore be deemed to be applicable.

Capital Gains Tax

Investment in ne wine should normally be exempt from

exposure to Capital Gains Tax (CGT) due to HMRCs treatment

of Wasting Assets and Chattels.

The tax treatment of ne wineIs wine a wasting asset and tax free?

A wasting asset is dened in tax law as having a predictable

life at the time of acquisition not exceeding 50 years. With wine

this reasonably would be the case and there is every incentive

for the wine investor to demonstrate that his wine investment

had a useful life of 50 years or less at acquisition.

Chattels exemptionThis exemption is based on value, i.e. where wine is sold for

proceeds of less than 6,000, notaxable gain will arise. Thepolicy objective behind the exemption is presumably to prevent

a taxpayer having to make detailed calculations every time any

small asset is disposed of. However, it may assist the wine

investor in making small tax effective disposals to take

advantage of the exemption.

Where the prots made on wine investment sales do attract CGT,

the investor will normally pay the current 28% rate on any gain

after taking into account the CGT annual exemption of 10,600.

Inheritance TaxUpon death, Inheritance Tax (IHT) will sadly be charged on

wine investments, however as with al l IHT planning steps can

be taken to manage this in a tax efcient manner with advice

from your tax advisor.

CompaniesCompanies have the potential to use retained earnings to invest

in wine and enjoy the potential tax benets, appropriate advice

should be sought from a tax advisor.

ConclusionWine enjoys favourable treatment compared to other tax

efcient investments. One signicant advantage is that it can

be liquidated, one way or another, quickly and there are no

penalties for early encashment.

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12 www.vin-x.co.uk

Vin-Xclients benet from market leading

professional operating standards that

ensure the investor is protected.

Vin-X representatives are working with

other members of the ne wine industry

to encourage the unilateral adoption

of similar measures:

All telephone calls with Vin-X are recorded for

training and quality purposes and to ensure anaccurate record of the call

Vin-X clients are entitled to a seven day cooling-off

period to be certain of their decision to invest and have

the opportunity to cancel the transaction within this

period by notifying Vin-X administration accordingly

Vin-X client wines are stored at London City Bonds

Vinotheque facility and are clearly labelled with theClients HM Revenue & Customs approved individual

rotation number and are logged in the clients name,

ensuring a correct record of title of ownership with

the investor

The provenance of the wine is protected, by storing it

within our chosen bonded storage facility, at London

City Bond. This ensures the perfect conditions to

protect the integrity of a clients wine and is an

important factor in determining the future value of it

All client wines are fully insured with a limit on

an individual claim to a value of up to 150million

Knill James Chartered Accountants undertakes

an independent audit under Financial Reporting

Standards every year to determine the correct

recording of investment transactions. Knill James

checks that the Vin-X Client wines are stored and

referenced correctly

The Kni ll James independent review also checks

wines bought en primeur that have been bottled and

shipped and that these wines have been physically

received into London City Bond and ownership

correctly referenced to the client

Clients are able to visit London City Bond to view

their wine and we can also provide condition reports

with digital photographs of their wine on request

Vin-X employs its analytical expertise in appraisinginvestment wines for clients and selects wines they

believe offer grow th potential in line with an

investors goals

Vin-X provides regular performance updates to

clients on their ne wine investment with a view to

assisting the client achieve their investment goals

Vin-X provides its clients with regular news feedson industry issues and events, which may impact

on wine values along with specic information

on chteaux and individual wine details.

Wine selection strateg y

and managing your portfolio

The Vin-X team includes analysts, fina ncial

experts and wine specialists, collectively they

review economic, political and financial

information alongside wine industry specific

data such as indiv idual brand performance,

climatic effect and supply and demand dynamics

to determine the most promising opportunities

for our clients. Our selection strategy has

outperformed market trend to date. Our specialist

brokers work with indiv idual clients to assemble

a collection of wines in line with their investment

goals in terms of capital to invest, investment

term and attitude to risk.

Vin-X service guarantee

Our specialist

brokers workwith individualclients toassemble acollection ofwines in linewith theirinvestment goals


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As a registered Charity, it is extremely importantto the Victoria Foundation and its trustees thatour investments are expertly and transparently

managed. We have found that Vin-X offer a veryprofessional level of service which in many waysemulates the service that one could expect froma good quality advisory stock broker. This hasincluded timely reports both regular and ad hoc,valuations, portfolio structuring and buying advice.Graham Ball, Chairman of the Board of Trustees, The Victoria Foundation, May 2012


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14 www.vin-x.co.uk

En primeur

Dependent on the industry critics view and our own

analysis we may on occasion recommend that clients

invest in wines en primeur, i.e. buying wine at the

earliest possible stage, in barrel. Typically wines are

promoted through this Bordeaux invented system in

the Spring following the previous Autumn harvest.En primeur wines are launched onto the market with

scores from key critics and this is the markets rst

indicator of value potential. Many merchants may be

obliged to take a sizeable allocation at this stage, as an

independent broker Vin-X is free to guide its clients

only into the best opportunities. Buying en primeur

is deemed to be highly speculative as it is, in essence,

buying a future in wine and is therefore seen to be

a higher risk proposition. The benets are:

Price - typically wine will be bought at the lowest

market price

Provenance- the wine is still at chteaux and

when ready will be delivered to the clients bonded

storage facility

Age- acquiring at the earliest stage means youhave all the upside potential of the maturation

process and associated growth in value

Secondary market- There is a guaranteed

secondary market trigger when the en primeur

wine goes physical, i.e. the wine is scored again

by critics and bottled and shipped. From this point

they are acquired in the secondary market.

Wine storage

Vin-X client wines are stored with one of the

industry leading specialists for the secure storage

of ne wine, London City Bond at their Vinotheque

facility at Burton on Trent.

Storage conditions are carefully managed to ensure

the optimum environment for wine to be stored,

protecting the ongoing provenance of the wine and

accordingly its nancial value.

London City Bond provide an In-Bond storage

service, accordingly no VAT or Duty payments

on the wine are charged until the wine is removed

from bonded storage.

Client wines are recorded and labelled with HMRevenue & Customs approved rotation numbers

and logged to the clients name. Vin-X provides

a custodial oversight to client accounts ensuring

the correct general management of the service but

ownership title of the wine always rests with the client.

The independent review of client wines by Knil l

James veries the ongoing correct storage and

treatment of Vin-X client wines. This service isnew to the industry and we believe is an essentia l

measure to protect investors in ne wine.

The Vin-X management fee

The management fee encompasses the following

for each wine acquisition:

Analysis, selection and sourcing of ne wine

Provision of bonded storage and insurance

for three years from purchase

Market information essential for investors

Dedicated ne wine broker to guide and support

the client through the investment process.

The fee is 5% of the purchase price of the wine

per year for three years xed, i.e. 15% payable on

purchase. VAT is charged on the management fee

in accordance with English Law. Should the wine be

held in bonded storage beyond the rst three years

covered in the management fee further charges would

apply to cover the ongoing service detailed above.

For more information, please speak to a Vin-X

consultant on tel no. 0203 384 2262 or visit our

website www.vin-x.co.uk.


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How do I develop an investment

portfolio of wine?

Firstly we would need to understand

your objectives in regards to investing

in ne wine i.e. how much capital you

would seek to invest over what per iodof time, any brand preferences in

terms of specic wines and any level of

weighting within a port folio in terms of

price. With this in mind our specialists

wil l select wines and introduce them to

you as por tfolio options.

How long do I need to holdmy investment in wine?

While certain wines have shown

considerable short term gains in some

years, we recommend that you consider

your wine investment as a medium to

long term investment of at least 3-5 years.

Historically the longer the investment is

held generally the better the returns.

Frequently asked questionsWhat are your charges?

As set out on page 12, the Vin-X

service includes the following:

Dedicated specialist broker providing

information and wine selection tomeet your requirements

Market information essential to

understand opportunities and

market trends

Storage management for the rst

three years

Insurance

For this we charge a 5% annual xed

rate charge for the rst 3 years,

meaning a total management fee of 15%

payable at the time of investment.

Please see our terms and conditions

at ww w.vin-x.co.uk.

Are there any risks?

All investments carry risk and prices may

go down as well as up, ne wine is no

exception. Fine wine investment prices

vary so always check that you are paying

a fair price. Vin-X is leading the way to

develop a good code of practice across the

industry and our operating systems and

independent audit of client wines are

geared to protect investor interests.

How do I know that I have

ownership title to the wine you

have sold me?

This is very important to us. Upon

purchasing the wine you will receive a

Certicate of Ownership stating where

the wine is stored and a corresponding

reference. Our storage partners, London

City Bond, recognise the wine stored on

behalf of Vin-X clients is owned by the

individual investors. Vin-X has been the

rst wine investment specialist to enlist

an independent rm of accountants to

provide an annual audit of client wines,

to verify their location and ownership

reference. In the case of buying en

primeur clients will receive a

Certicate of Allocation whichwil l be

replaced by the Certicate of Ownership

once the wine is bott led and shipped.

We recommend thatyou consider your wine

investment as a mediumto long term investment

of at least 3-5 years.

15www.vin-x.co.uk


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19/20

Our retail wines division Tipple was

introduced in 2012 as a result of our growing

relationship with producers of ne wines who

also had superb wines which didnt have the

investment value of their rst wines but wereextremely special wines available to drink

now. We were, at that time, also receiving

requests from our Vin-X clients for wines to

drink rather than have stored In Bond.

As a con sequence Tipple was born a nd now

offers a collection of w ines that are relatively

hard to find on the U K high street. We have

broadened our l ist from our orig inal focus on

French wines to encompass New and Old

World wines and we w ill carefu lly grow this

collection over time. Tipple is currently an

online service only, however clients of Vin-X

that do not have internet access can get

information on Tipple wines f rom their

Vin-X consultant and we can arrange the

delivery of wine direct to your home.

For more information plea se visit

www.tipplewines.co.uk


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Forum House, 41-51 Brighton Road,Redhill, Surrey, RH1 6YS

Tel: 0203 384 2262

www.vin-x.co.uk

Documents

Fine Wine Invest