This document discusses investing in fine wine as an alternative investment option. It outlines some of the key motives for wine investment such as portfolio diversification, tax efficiency, and the supply and demand environment of fine wines. The growing global markets in Asia and emerging economies are increasing demand. While traditional markets are maintaining consumption, limited production areas and aging stocks are supporting wine prices. Certain regions, producers, vintages and ratings are considered best for investment returns. Active management is highlighted as a way to potentially outperform wine indices over time. Both trade sale and auction are options for liquidating wines to cash.

1. THE CASE FOR WINE INVESTMENT?
Web: www.antique-wine.com Tel: +44 (0) 20 3219 5588
Email: info@antique-wine.com Free from USA: +1 800 827 7153
UK Office: 53 Queen Anne Street From Hong Kong : +852 2850 5572
16/02/2012 London W1G 9JR Fax: +44 (0) 20 3219 5568 1

2. Motives for Investment in Wine?
• Diversification of Portfolio
• Passion or interest in wine
• Tax efficient
• Supply/Demand Environment
Liv-Ex 100 (Top 100 Investment wines) Vs FTSE 100
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3. Why AWC WineCap
• Dedicated Investment Division within AWC Group
• 45,000 Global Client database
• Readily accessible to market
• Market making capabilities
• Huge sourcing capabilities
• Ability to help build large Client positions discreetly
• Efficient and cost effective on liquidation
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4. The Fine Wine Market
Total global market for
fine wine is just €2.95
billion annually:
• UK wholesale and merchants -
€475 million
• Global Auctions - €300 million
• Asia auctions - €120 million
(40% of global total)
• Le Place de Bordeaux (Bordeaux
negociants) - €500 million to
€1 billion, depending on the
vintage
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5. Why does wine rise in value?
• Increasing demand for fine wine
– Emerging markets are only starting to drink wine
– Global wealth is increasing
• Limited production
– Fine Wine Appellation areas are not extendible
– 150 years old classification remains unchanged
• Decreasing stocks
– The older the wine, the less stock remains
because people drink it
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6. Growing Markets
•Abolition of taxes on Alcohol in 2008 (from
HONG KONG 80% to 0%)
•Gateway to China
•Increasing consumption per habitant
(3ltr/year to 4.5Ltr/year in 2012)
•Between 2010 and 2013 wine consumption
CHINA will grow by 25% in Asia
•Top 20 chateaux exports are rising fast
(Mainland) •Drinking habits (young wine, brand driven
market)
•600 million people aged between 20-35
INDIA •Only 2% drink wine. By 2012 market research
predicts 10% of Indians will be drinking wine
(25 million people consume only 1.1 million
cases annually > 125 million people in 2012
will consume 55 million cases)
•Strong internal investment has fuelled
BRAZIL economic growth
•The number of wine consumers is expected to
increase year on year with 25 to 30 year olds
enjoying more imported wine.
Offers opportunity to indirectly invest in emerging markets
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7. Traditional Markets
• Wine consumption is being maintained in all
traditional markets
Wine Consumption
40,000
35,000
30,000
Million Hectolitres
25,000 France
Italy
20,000
Spain
15,000 UK
USA
10,000
5,000
0
2002 2003 2004 2005 2006 2007 2008 2009 2010
Source www.oiv.int 7

8. Past 10 year trend – TOP 100
• Price movement of
100 of the most
sought-after fine
wines for which there
is a strong secondary
market.
• The majority of the
index consists of
Bordeaux wines – a
reflection of the
overall market –
although wines from
Burgundy, the Rhone,
Champagne and Italy
are also included.
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9. Crisis Times
• 2008-2009 Financial Crisis
– Price correction by an average of 10-20% (dependant upon
vintage)
– Clients focus on strong brands from best vintages
– March 2010 we are already back at the pre-crisis prices (top 100)
and +5% more than highest record on top 10.
• 1997 Crisis
– Weak vintage following two great ones
– Opening prices not correctly aligned to quality of the vintage
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10. Critical Factors
Brand
Vintage Secondary
Market
Rating
Value
Region
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11. Which wines are for investment?
BORDEAUX Portfolio
- First Growths Bordeaux -
- Super Seconds 90%
- Top Pomerol and Saint-Émilion
Burgundy -
BURGUNDY 8.5%
- DRC, Leroy, Ponsot Rhone
Valley -
RHÔNE VALLEY 0.75%
- Chapoutier, Guigal, Jaboulet Italy -
0.75%
Italy
- Masseto, Solaia, Sassicia, Ornellaia,
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12. Which Vintages?
Top vintages Brand vintages
• 1961 • 1991
• 1966 • 1992
• 1982 • 1993
• 1986 • 1994
• 1990 • 1997
• 1996 • 2001
• 1998 • 2002
• 2000 • 2004
• 2003
• 2005
• 2008
• 2009
• 2010
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13. Journalists’ Influence
ROBERT PARKER WINE SPECTATOR ALLEN MEADOWS Jancis Robinson
(Bordeaux, Rhone Valley) (All Regions) (Burgundy) (All Regions)
Wine tasting Release of the first Release of the Release of
Harvest during Primeur ratings –> price re-visited ratings physical wines on
[September ] period increase – Buy [end of May the market
[March ] [End of May ] following year]
Robert PARKER rating system
100 Points-scale
96-100 - An Extraordinary wine (typical investment wines)
90-95 - An Outstanding wine
80-89 - A barely above average to very good wine
70-79 - An Average wine
60-69 - A below average wine
50-59 - A wine deemed to be unacceptable
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14. Current Performance
Liv-ex 100 - Up 65% over the last 5
years, however it is down 16.1% in the
last year
Traditional markets still retaining a
demand for fine wine at the right price
levels
Emerging Markets broadening
tastes through producers and regions
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15. Out Performing the Index
• Careful Stock picking
• Intuitive reaction to market conditions
•Availability to wide range of stock sources
•Carefully planned exit strategy
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16. Out Performing the Index
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17. View of 2012
• Market broadening
• Demand in brand and value driven investment
grade wines
• DRC has sparked interest in other Burgundy
Producers. Speculation Driven ?
• Blue Chip Bordeaux heading back into “buy zone”
– GBP250-300/Btl
• Excitement of Bordeaux 2009’s “the best modern
vintage ever”
• 2011 En Primeur campaign – a drinking driven
vintage
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18. Key Investment Points
• Choice
• Buy Early
• Cases Only
• Keep Records
• Insurance
• Reputation
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19. Investing in a Fund
Advantages Disadvantages
No in depth knowledge or passion High subscription and Management
for wine necessary to benefit fees
Fully managed so no decision, A Fund is not tax free, therefore
control or input from investors liable to capital gains tax
Lack of flexibility in regards to
investment amount, time period
and Liquidation of Portfolio
Investors have no title of the wine
simply a share of the Fund itself
You do not have the option of taking
redemption in wine
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20. AWC WineCap Principle Terms
• Wine Investment advice provided through
Portfolio Management
• All stock owned by the investor
• Minimum GBP50,000 investment
• Minimum investment term 1 year
• 2% Annual Management Fee
• 10% Performance fee - high watermark
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21. Liquidating to cash
TRADE SALE
• Generally 30 days process from Email
order to cash payment
• Fee: Market price minus 15% fee charged
by The Antique Wine Company.
• Immediate transfer of the wines from
Bonded account to Bonded accounts in
the same warehouse
AUCTION
• Uncertainties, but can realise exceptional
values for rare items
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22. How to begin
•Budget, Terms, Preferences
•Personal Account Opened
• Acquisition of wine
• Six Monthly Valuation
• Active Portfolio Management
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