Investing in wine

Updated: Aug 24 2014, 07:50am hrs
Entrepreneur and connoisseur of the best things in life, Rocky Mohan, recently posted a photo of two bottles of Chateau Mouton Rothchild, one of the worlds greatest red wines, on his Facebook page. And why wouldnt he The claret from Bordeaux is considered the showpiece of any wine collection. In 1997, a jeroboam of Chateau Mouton Rothschild 1945 was sold to an anonymous bidder at Christies, London, for $114,614, which works out to almost $23,000 for a regular-sized wine bottle. In fact, thats the reason why a growing number of people are investing in wines, just like in company shares. Some fine wine and special vintages can appreciate by considerable amounts. Now, a Mumbai-based company is offering Indians a chance to invest in the global wine market. The company, All Things Nice (ATN), is advising Indians on wine stocks and why it makes sense to park their extra money on the wine exchange rather than the stock exchange. ATN, according to Luxpresso.com, a site devoted to high-end lifestyles, has partnered with Amphora Portfolio Management to provide wine portfolio management services in India. In fact, one of the main reasons for wine prices having risen again after a drop post the 2008 financial turmoil is the strong demand from Asianotably China and increasingly India.

In India, a number of factors have led to an appreciation of fine wines. One is accessibility. Thanks to relaxing of earlier laws, you can now buy excellent wines from your neighbourhood market, and those stores with licences to sell beer and wines have to be air-conditioned to ensure the wines dont go bad. Many private homes now have wine coolers, also freely available, where wines can be kept at the optimum temperatures. According to a Vinexpo survey, wine consumption in India is expected to increase 73% between 2013 and 2017. Many factors are behind it, as there is a rise in salaries in the country, people are travelling to the West, local production is increasing and people are becoming sophisticated. For similar reasons, wine consumption in China has increased. It triggers demand in any country, said Vinexpo chairman Xavier De Eizaguirre. From wine drinking and appreciation to wine investing is not that big a leap. Prices of the most widely-collected and traded winesmainly Bordeauxhave risen sharply, attracting buyers who were more interested in the profits they could generate. The price of fine winesas measured by Liv-ex, a benchmark index based on sales prices of the most sought-after 100 winesis up by more than 150% over 10 years. Liv-ex, which is based in Britain, but draws its data from global sales, points out that while its primary Bordeaux index fell between 2011 and 2013, prices of other wines remained stable or grew throughout the period.

That is possibly why Nikhil Agarwal, managing director of ATN, has got into the wine investment business in India. He has also roped in two investment managers from abroad to talk to potential investors. As he says: India as a country has evolved a lot when it comes to knowledge about wines. Appreciating this knowledge and also seeing the increasing number of people collecting wines, we considered introducing wine investment services in wine. He and his overseas partners see a growing demand in India for fine wine, as well as in collecting rare wines. They predict that the wine boom in China will be next seen in India. They give the example of a recent client who after looking through their catalogue handed over a cheque for R5 lakh. Heres how it works: wine collectors, or those with a knowledge of wines, are advised by ATN on building a portfolio. Amphora Portfolio Management has access to a London warehouse, which stores wines that once matured can sell at a good price. Current sale values and other details are available at Liv-Ex.comthe wine exchange, much like checking out the Sensex.