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Wine As An Asset or Alternative Strategy
1.
2. 2
Through
Provides
“Investment Grade Wine” – Cases of
physical wine from various vintages,
regions and producers
Diversification, to establish a collection,
store of value, real asset
UK market, exchanges, direct
Individuals, Wealth Managers, Collectors,
Trusts and Estates
WHAT
HOW
WHY
WHO
3. 3
Through
Provides
Provenance, Price, Profile and
Performance
Analyze the market, trade on
secondary market, write research
Wealth managers, investment advisors,
to clients and clients to wine
Technology – Advent, Wine Owners,
Liv-Ex, Auctions
ADVISE
CONNECT
RESEARCH
VALUE
6. Women and Wine – The Stats
Women do have more fungiform
papillae and taste buds
34% of all wine drinkers are
high frequency, 50% are women
Of 135 Master Sommeliers in
the US, 19 are women
Approximately 10% of the
winemakers in California are
women
There are 366 Masters of Wine,
93 are women
Men spend on average $4.00
more than women on wine 6
7. Market Trends
70% of all wine sales in the
US are made by women
As a demographic over 55%
of the wine drinkers are
women, 100 million wine
drinkers in the US
80% of the readers of Wine
Spectator, Decanter and
Wine Enthusiast are men
Target millennial women
7
8. Marketing to Women, Really?
Skinny Girl
Smarty Pants, Rebel
Red, Drama Queen
Be, Flirty, Bright,
Fresh
Relax
Chateau
Domaine
Napa Valley
Willamette Valley
Burgundy
Premier Cru
First Growth
8
12. What Wine?
% of Wines Offered by Region on Liv-ex
Argentina Portugal Bordeaux Red Bordeaux White
Burgundy Red Bugundy White USA Aus
Rhone Italy Spain Champagne
Chile NZ SFR Germany
Alsace
12
Burgundy,
Bordeaux,
Champagne,
Rhone, Italy,
California, Niche
The further from the
vine, the lesser the
wine
Most liquid and
transparent wines,
UK, France or
exchange traded
Current and back
vintages
13. The Secondary
Market for
Investment Grade
Wine
IGW market, as
measured by the London
International Vintners
Exchange, Liv-ex, is
approximately $8 billion.
Niche market with
unique supply and
demand characteristics
Secondary market
provides liquidity, price
transparency
Daily pricing allows for
“mark to market”
valuation
Secondary market
volumes of wine are at a
record high with over
400 traders representing
33 countries
Christie’s Wine
Department has
approximately 7,500
clients
13
17. Wine – Growing Demand,
Rare and Regulated
17
Global wine market is
valued at $200 billion
Lack of transparency,
barriers to entry,
specialist knowledge
Auction house revenues
for wine $400 million
US demand for wine up
34% since 2000
Source: International Organization of Vine and Wine, IWSR. Demeter Group
18. Investment Grade Wine
18Source:Liv-ex
At a cyclical low point in
traditional five year cycle
Supply diminishing, 2010 the last
great vintage in Bordeaux,
Burgundy at historical low yields
Shift in market focus from
Bordeaux to Italy, Champagne,
California
Market as measured by the Liv-
ex 100 peaked in June 2011 and
has since pulled back
New trading platforms
emerging helping transparency
80
100
120
140
160
180
200
220
240
260
280
300
320
340
360
380
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Index Value
(Dec 03 = 100)
Investables
S&P 500
Liv-ex Investables vs. S&P 500
19. “IOP” Demand
0
5
10
15
20
25
30
35
40
North
America
Asia-Pacific
ex. Japan
Japan Europe Latin America Middle East
and Africa
Global
Average
ALLOCATIONS TO INVESTMENTS OF PASSION
(%)
Other Collectibles - Wine, Coins, Antiques Alternatives Sports Investments
Alternatives Art Alternatives Luxury Collectibles
Alternatives Jewelry, Gems & Watches
19
Source: World Wealth Report 2013. HAGI.
Art Market
$58 billion
Collectible
Cars $12
billion
Investment
Grade Wine
Market $10
billion
20. 20
1 year change Q3 ‘12 to Q3 ’13, Art, -3%, Furniture -2%, Chinese 3%, Jewelry 3%, Watches 4%, Wine 3%,
Cars 28%, Stamps 5%, Coins 10%, Index 8%
21. The Wealth Market
21
Source: 2013 World Wealth Report.
Global High Net Worth
Market
$46.2 trillion
Alternatives Market
$4.6 trillion
Annualized Growth In
HNW Investable
Wealth 6.5%
Ultra high net worth,
$30 mm +, grew 10.9% 0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
US Japan Germany China UK
HIGH NET WORTH POPULATIONS
('000)
2011 2012
1.2 1.7 7.3 10.2 11.6 10.8
1.1 1.7
7.1
10.1 11.4 10.7
1.3 1.8
7.5
10.9
12.7 12
1.4 2.2
8.3
13.1
15 15.9
A F RIC A MIDDLE
E A S T
LA T IN
A ME RIC A
E UROP E NORT H
A ME RIC A
A S IA -
P A C IF IC
INVESTABLE WEALTH
(US$ TRILLION)
2010 2011 2012 2015
24. The Catalysts
Top storage – further
from the vine the lesser
the wine
Entry point, relative
price, too expensive to
drink, upside
Parker Points, PPP,
production, brand
History of aging,
consistency of vintages
Provenance
Price
Profile
Performance
24
25. The Circle of Wine
AOCIA
Clients
Current
and
Future
Consumers
Producer/
Market AOCIA
Individuals
Collectors
Auction
Houses
Foundations
Endowments
Trust
Departments
Wealth
Advisors,
Brokers
•Wine producers, collectors and investors have an obligation to steward
the understanding of fine wine and future growth in the market
•Proper vintage management can support this process
•Engagement with younger demographics can help grow demand
25
26. Market Trends
Diversification away from
Bordeaux
Bordeaux now stabilizing,
new demand
Super Tuscans finding favor
Vintage champagne trading
well
Climate and price are
creating relative value in
back vintages
26
Source: Liv-ex as of 9/12/14
Market Expands Beyond Bordeaux
28. Sell off in Bordeaux
Creates Opportunity
The 2009 and 2010 First Growths had an
average rating of 99 points, two of the top rated
vintages of all time in Bordeaux.
Since the release of the 2009 vintage en
primeur, Lafite Rothschild has contracted over
40%, Mouton Rothschild 28%, Margaux 22%,
Haut-Brion 19%, and Latour 5%.
Looking at the return profiles of the 2000 and
1990 Lafites, there appears to be substantial
upside, with returns of 533% and 1,410%,
respectively.
2009 and 2010 Haut-Brion is the second least
expensive per Parker point at $98 and $99
respectively.
En primeur pricing appears to be a major driver
of volatility and market perception.
28
Source: Liv-ex as of 9/17/13. Constant
currency of 1.55 USD/GBP
En Market
Production % Change Primeur Price RP EP$/PP MKT$/PP
Lafite Rothschild 20,000 (43) 18,600 10,540 98 190 108
Mouton Rothschild 15,000 (17) 12,013 9,920 98 123 101
Margaux 10,000 (22) 12,276 9,610 99 124 97
Haut-Brion 10,500 (16) 11,774 9,920 100 118 99
Latour 18,000 2 17,050 17,360 100 171 174
Average (19) 14,342 11,470 99 145 116
En Market
% Change Primeur ($) Price ($) RP EP$/PP MKT$/PP
Lafite Rothschild (41) 20,150 11,974 99 204 121
Mouton Rothschild (28) 12,090 8,680 99 122 88
Margaux (22) 13,175 10,230 99 133 103
Haut-Brion (19) 12,090 9,765 100 121 98
Latour (4) 17,050 16,275 100 171 163
Average (23) 14,911 11,385 99 150 114
En Market
% Change Primeur ($) Price ($) RP EP$/PP MKT$/PP
Lafite Rothschild 635 2,868 21,080 98 29 215
Mouton Rothschild 364 3,410 15,813 96 36 165
Margaux 370 2,472 11,610 100 25 116
Haut-Brion 192 2,868 8,370 99 29 85
Latour 359 2,868 13,164 98 29 134
Average 384 2,897 14,007 98 30 143
2010 First Growths Return Profile
2009 First Growths Return Profile
2000 First Growths Return Profile
42. Our Clients are Your Clients
Individuals
Financial Advisors
Wealth Managers
Financial Institutions
Collectors
Wine Educators
42
43. What Clients Want Access to wine
Easy to understand
process
Trustworthy knowledge
Transparent inventory
Valuation services
Vintage management
Actionable content
Risk controls
43
44. AOCIA What We Do
Advise
Vintage Management
Research
Educate
Connect
Consult
Import
Taste – a lot
44
45. The
Differentiator
45
Platform provides
analysis of vintages,
regions, producers,
vineyards, color etc.
Active portfolio
management to
maximize returns and
minimize risk
As a “wasting” asset
wine deserves active
management, for both
current and future
wine lovers
AOCIA’s platform is
familiar and
transparent, it looks
just like any traditional
brokerage statement
Partnered with Advent
Software recognized as
the “gold” standard in
RIA community
47. Wealth Managers and
Wine White Label
Customizable design elements
Static pages & content
Own URL/ SSL
White Label admin
Extensive security
Highly configurable
Data feeds/ Restful interfaces
48. Peer to Peer Fine Wine
Trading Exchange
The worlds first peer-to-peer
fine wine trading exchange
Assured trading process &
faster settlement
Wine Owners facilitates, does
not participate
50. Top Tips to Owning the List
Start with Geography 101
Varietal, think region, if its hot, if its cold, basics of wine expression
Don’t play the margin game, Italian wines, lots of good but not great
Just because its from France or Napa it does not need to be expensive
Vintage matters in top wine, not as much in New World
Be willing to step outside of your varietal comfort zone
Be wary of Pinot from hot climates, 14% Pinots are an 80/20
proposition
Value regions, Jura, Languedoc, Spain, Southern Italy, Finger Lakes
New York, Argentina, Austria, Ontario, Sud-Ouest, Savoie, Rhone
50
51. Wine Menu Restaurant versus Retail
Chardonnay Cabernet Sauvignon
• Hedges, 2011, Red Mountain,
Yakima Valley, Washington $58/$20
• Colgin, Herb Lamb Vineyard, 2004,
Howell Mountain, Napa Valley,
California $775/$265
• Château Margaux, Premier Cru,
1995, Margaux $1200/$450
• Pichon Longueville-Comtesse de
Lalande, Réserve de la Comtesse,
2006, Pauillac $150/$40
51
• Au Bon Climat, Sanford &
Benedict Vineyard, 2010, Santa
Ynez Valley, Santa Barbara
County, California $70/$44
• Aubert, Lauren Vineyard, 2011,
Sonoma Coast, California
$225/$120
• Chevalier-Montrachet, Jean-
Marc Pillot, Grand Cru, 2008,
Côte de Beaune, $650/$300
• Bouzeron Aligoté, Aubert de
Villaine, 2010, Côte
Chalonnaise, $54/$20