From the "If you want to start a fund, you have to have a Gimmick" Department comes this item from Dealbreaker.com:
Arch Financial Products, a U.K.-based private equity firm will launch a US$425 million absolute-return fund this summer invested exclusively in vintages from the top chateaux in Bordeaux. Stephen Decani, head of group business development noted that Arch has plans to bet on some “extremely rare parcels, including 1945 Mouton Rothschild, 1961 Haut-Brion and 2003 Lafite Rothschild.” The strategy is rather straightforward, with the firm betting that as the supply of vintages decreases and demand increases, long-term prices will grow. If things don’t work out, the drinks are on them.
Instead of going long on a bunch of vintages that already sell at a premium, and crossing their fingers in the hope that future scarcity will drive the appreciation of their asset, I have a better idea.
Much like Private Equity searches for companies that have room for improvement, the fund should seek vintages that are selling cheaply and then bribe notable wine critics to sing their praises, attracting a target market of over-moneyed bandwagon hoppers (I'm sure anyone working in PE or a hedge fund knows at least a dozen such people personally), driving the price per bottle through the roof.
I can't help but wonder what the nice folks at Vinography think about this whole scheme.
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Arch Financial Products, a U.K.-based private equity firm will launch a US$425 million absolute-return fund this summer invested exclusively in vintages from the top chateaux in Bordeaux. Stephen Decani, head of group business development noted that Arch has plans to bet on some “extremely rare parcels, including 1945 Mouton Rothschild, 1961 Haut-Brion and 2003 Lafite Rothschild.” The strategy is rather straightforward, with the firm betting that as the supply of vintages decreases and demand increases, long-term prices will grow. If things don’t work out, the drinks are on them.
Instead of going long on a bunch of vintages that already sell at a premium, and crossing their fingers in the hope that future scarcity will drive the appreciation of their asset, I have a better idea.
Much like Private Equity searches for companies that have room for improvement, the fund should seek vintages that are selling cheaply and then bribe notable wine critics to sing their praises, attracting a target market of over-moneyed bandwagon hoppers (I'm sure anyone working in PE or a hedge fund knows at least a dozen such people personally), driving the price per bottle through the roof.
I can't help but wonder what the nice folks at Vinography think about this whole scheme.
3 comments:
Their advertising tagline -
Wine - it's not just for DRINKING anymore.
Well. Since you asked...
Investing in old Bordeaux is nothing new. There are several wine funds that exist out there in the marketplace, and the top vintages of Bordeaux have shown a very good return over time. It's a pretty fixed resource that does get more scarce over time, and tends to hold value pretty well.
I know many people who make a lot of wine buying even recent vintages and selling them a few years to a decade later for a good profit.
As far as your idea to get prices up, it suffers from one tiny flaw -- wines are nearly always tasted and rated before they are released to the world, so post-facto rating will immediately raise suspicions.
Alder. The Folk (singular) at Vinography.
Alder, thank you very much for offering a better-informed opinion on the topic than I could provide on my own!
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