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banermunn & balfourd


Wine is a sensory pleasure that “imbibes delight through every pore”. It has the potential to elevate spirits, bring people together, and provide a strong financial return. As a leading wine broker, we’re here to share our passion, impart our knowledge, and to show you how, with our help, you can build a portfolio of the world’s most collectable, celebrated and desirable wines.

‘Wine is a sensory pleasure that “imbibes delight through every pore”’ Henry David Thoreau

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Wine’s ageless appeal Wine has a rich history dating back thousands of years. Vitis vinifera (the common wine grape) was cultivated in the Middle East by 4000 BC, possibly earlier. Egyptian records show the use of grapes for wine making from 2500 BC. All around the world since antiquity, people have valued wine. The Ancient Greeks planted grapes and traded wine from the Black Sea to Spain. The Romans carried grape growing into the valleys of the Rhine and Moselle and areas that now define some of the great French wine-making regions.

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While both civilisations shared a love for wine, the production methods differed. The Greeks stored wine in earthenware amphorae, and the Romans prolonged the wine’s life with improved oaken cooperage. Wines were generally drunk within a year and spoilage disguised with honey, herbs, cheese – even salt water! Fortunately, the science behind wine making has improved, but for those wishing to enjoy wine at its best, an understanding of the wine’s provenance is essential. We’re here to help you buy with diligence, and enjoy your wine collection.


A growing international market The fast-growing economies of Asia, Latin America, Russia, and China have created an influx of superrich buyers investing in fine wine. With fine wine supplies limited due to production restrictions and the demand for top wines growing globally, prices have been driven upwards. The shortage of supply is further prompted by wine being the only investible asset that is consumed daily. As the new markets develop, creating a culture of wine drinking and wine drinkers with increasingly sophisticated tastes, the demand for higher quality wines will further increase, resulting in higher returns for the fine wine investor.

A toast to fine wine Fine wine has been actively traded for the last 400 years. As trade has increased, it has become more and more important to establish the integrity of higher value wines. Knowing a wine’s provenance is central to good investment. That said, even since Ancient Egyptian times, people have recognised the importance of a good label. In the annex of Tutankhamun’s tomb, 36 wine jars were found. Each jar bore a label giving the wine’s date, place and vintage. Today, The Fine Wine Index – Appellation Controlee is used to define French wine. Introduced by Napoleon III and controlled by the Institut D’Appellations d’Origine (Appellation Controlee), it helps preserve quality standards. The Institut also places restrictions on the amount that can be produced – only 177 cases of wine per acre. A limitation that further drives prices upwards.

“With wine being the only investible asset consumed daily, imagine the effect on the prices of Monet’s paintings if one painting was burnt every year”

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Investing for pleasure and profit Ask any wine investor, and they’ll tell you there’s a unique pleasure to be had from building a wine portfolio. Beyond helping you accumulate and diversify your wealth, your collection becomes a personal pleasure that reflects your appreciation for the finer things in life: beauty, taste, heritage and quality. A pleasure to own and consume (should you wish), your fine wine collection can also appreciate in value and quality over time. Over the last two years, many collectors have enjoyed healthy returns with prices for some wines soaring to record levels. This has been largely driven by unrelenting demand from buyers in countries such as China and Asia, leading to a contraction in supply due to limited stock. “Fine wines outstripped gold, crude and the FTSE 100 as an investment last year as prices surged for top vintages” Fiona Walsh, The Guardian, 2011

What about Taxation? While you keep the wine in bonded storage, you are generally exempt from paying VAT or duty. This pleasure falls to the owner who takes the wine out of bond for consumption. It is also exempt from Capital Gains Tax, as it is considered a “wasting asset” unlikely to exceed 50 years. For the most up-to-date information on HM Revenue and Customs, call us and we’ll advise.

“Fine wines outstripped gold, crude and the FTSE 100 as an investment last year as prices surged for top vintages” Fiona Walsh, The Guardian, 2011

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What are the world’s finest wines?

From Chile to California, Argentina to New Zealand, fabulous wine is produced. But it is the wines from the established Bordeaux region that interest us. The limited production of wine in this region - there can be only one harvest a year – and relentless focus on quality has created an insatiable demand for Bordeaux’s wine, particularly from investors in countries such as China.

Premier Cru Premier Cru is a French phrase meaning “first growth”. It is the highest subcategory within the “Grand Cru Classe”, a method of classification established in 1855 by Napoleon III, and a status awarded to the very finest wines.

Bordeaux reds Premier Grand Cru wines: Château Lafite-Rothschild Château Latour Château Margaux Château Haut Brion Château Mouton Rothschild

“In May 2011, a single bottle of 1961 Château Latour sold to a Chinese buyer for £135,000 at Christie’s in Hong Kong, more than three times the expected price” This system of classifying France’s best Bordeaux wines is the benchmark used by the wine industry to measure a chateau’s reputation, quality and trading price. It is worth noting at this point that only 1% of the world’s wine is considered worth investing in, with 90% of these fine wines originating from Bordeaux.

Building your collection There are two ways to build your collection: en primeur and with bottled vintages.

En Primeur Premier Cru: Château La Tour Blanche Château Lafaurie-Peyraguey Château Clos Haut-Peyraguey Chateau de Rayne-Vigneau Château Suduiraut Château Coutet Château Climens Château Guiraud Château Rieussec Château Rabaud-Promis Château Sigalas-Rabaud

Many investors buy en primeur, a method of buying the previous year’s harvest before it has left the barrel. It is usually delivered in the Spring/Summer of the third year after harvesting and can be a sound way of securing wine produced in limited quantities. The wine may also be cheaper to buy during the en primeur period.

Bottled vintages A distinguished vintage can be enjoyed or cellared for many decades to come. As the supply decreases over time, its value can increase.

“A 1982 vintage of Château Latour, was sold at £250 a case en primeur in 1983 and valued in 2007 at £9,000”

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Golden rules for a good investment

Diversification

The “Big Eight”

Getting started

The key to any good investment is diversification. A balanced portfolio with a range of vintages in both chateaux and years of production is essential to long-term growth. We also recommend you buy wines you like, in case you decide to consume them. A fine wine is always welcome at an anniversary, birthday or other special occasion.

The “Big Eight” is an investor’s dream selection. It comprises Premier Grand Cru wines and three others: Le Pin, Ausone and Petrus. This octad of wines has strong investment potential and can form the backbone of a good portfolio, when combined with a diverse range of premium second growths and grand crus.

You can start your portfolio with a quality case of wine for as little as £500. Or invest a healthier £10,000 to create a diverse portfolio. If the latter sounds too high, build your portfolio up over time, adding a good case when you can afford it.

“One of the most prudent rules of investment strategy has to be not to put all your eggs in one basket”

Château Lafite-Rothschild Château Latour Château Margaux Château Haut Brion Château Mouton Rothschild Château Le Pin Château Ausone Château Petrus

“First growths symbolise a “money no object” approach to showing off and quenching thirst, and since the world is filling up with wealthy individuals I believe we have seen nothing yet of the heights to which these wines may rise in price” Peter Lunzer, FT ‘Buying and Investing in Wine’ 2011

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Beyond knowing what wine labels and capsules should look like (counterfeits do exist), it’s essential to know a wine’s provenance. Where the wine came from, who the producer is, how many hands it has been in and even how it has been stored and transported are key factors to choosing your wine. You don’t want to buy a bottle of wine expecting it to taste a certain way to find it has maderised.

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“Confirming the wine is in an Original Wooden Case, checking for transit stickers, and looking at whether the labels, evaporation rate and caps are in good condition with regards to the wine’s age are just some of the checks we carry out.”

You’re in safe hands We understand the world of fine wine can be daunting to the new collector, so we invite you to take full advantage of our expertise. We will guide you in selecting the finest vintages, source and select the best available, and ensure your wine is suitably stored either for selling on or enjoying at a later date – perhaps at a special occasion. To get the best returns, we recommend a holding term of 10 years or more.

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Your premier service Whether you buy for pleasure or profit, our premier service will help you get maximum enjoyment from your portfolio. As such, you’ll benefit from: Reliable sourcing Our expertise and contacts enable us to source the very best wine.

bond and duty paid storage. You won’t have to pay duty or VAT when your collection is in bond.

monitor your portfolio and advise you on its market value.

Fuss-free purchase

Safe and secure facilities

Leave the paperwork to us. We’ll source and acquire your wine in perfect condition and at the best prices on your behalf.

Our approved warehouses conform to all HM Revenue and Customs controls including perpetual inventory checking and regular stock reconciliation.

You may decide to capitalise on any increase in value by selling some of your collection. Your personal advisor will be on-hand to help you get the best price.

Optimum storage conditions To maintain the provenance of your wine and to protect its value, we only use bonded storage facilities with climate control and that are free from vibration.

Approved storage Our warehouses are HM Revenue and Customs approved for under-

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A personal account Once a storage account has been opened, your wine will transfer to your name. You will then be able to monitor and manage your stockholding online.

Accurate valuation Your personal advisor will regularly

Trade On

“We hope we have shown you just how exciting, rewarding and profitable building a wine portfolio can be. Let’s work together to create a wine collection you can be proud of for many years to come”.


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Address: Banermunn & Balfourd Office 706 19-21 CRAWFORD STREET, LONDON, W1H 1PJ Tel: + 44 203 355 4936 Email: info@bbfw.co.uk www.bbfw.co.uk


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