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France. Liquid investments

In France not only real estate, but wine can be an attractive investment.
11.01.2012
Author: Irina Duport, the company Immoconcept
62
The French economy is proud of its wine, as the Russian oil. During the 1973 oil crisis in France was a popular slogan "we do not have oil, but have an idea!". So, about ideas. Recently, one German innovation company, specializing in high-tech software, has teamed up with an old French house merchants from Bordeaux and has come up with an original way of investing.
But you, Bordeaux, are like a friend,
Who, for better or for worse,
Comrade, always, everywhere,
Ready to do us a favor
Or quiet to share leisure time.
Long live Bordeaux, our friend!
A.S. PUSHKIN "EUGENE ONEGIN"

Buying your own winery in France is one of the popular trends in the real estate market. It is believed that investing money in a vineyard is prestigious and reliable. However, we must not forget that a vineyard is primarily an agricultural enterprise with all its natural risks, low profitability and great hassle. At the same time, the cost of a vineyard is determined by the quality of the wine it produces. Investing directly in wine from a financial point of view has no risks, since at the time of harvest, when the agricultural cycle has already passed, it is already possible to predict the quality, and therefore the cost of wine, with great accuracy.

Wine has all the prerequisites to become a strong and popular financial product and displace gold from financial markets. Of course, we are not talking about any wine. French wines from the Bordeaux region are best suited for investment, as they can be stored for many years, and their quality only improves over the years, and therefore the price increases. In addition, the field of winemaking in the Bordeaux region is small, and the production of the best brands is extremely limited, so every bottle drunk raises the cost of the remaining ones.

Two essences of wine

The wine combines high consumer qualities with a huge, untapped investment potential, which makes investing in wine safe and entertaining. At the same time, if bottled wine can be bought by anyone anywhere in the world, then the wine market as a financial product is very closed. There are only a few dozen wine merchants and courtiers on the market, and they are all in close long-term relationships with each other and with winemakers, and these connections flow (like wine!) from generation to generation.

Wine auctions are very popular. The wine is listed on the London, Hong Kong and Bordeaux stock exchanges, so after buying wine, you can have information about its value every day. But you can also buy wine before bottling, at the example stage, saving significant money on this. Drawing an exchange analogy, we can say that such a contract is the equivalent of futures, but unlike them, it is not associated with natural (agricultural) risks, which of course should warm the investor's heart.

An example is the purchase of wine before bottling, at the stage of vinification. At the same time, both sides win: the buyer receives a favorable price, and the winemaker receives off–bank financing of his production.

The most advanced in financial matters are the Anglo-Saxons. They were the first to speculate on wine. There are even special publications that publish quotes, and are considered a kind of bible for both vinophiles and wine speculators.

By investing money in wine, you can create your own wine portfolio like a portfolio of stocks. To ease the agony of choosing, experienced wine merchants provide the novice investor with the necessary advice regarding wine, depending on the goals and duration of the investment. When the composition of the portfolio is determined, the buyer transfers money to the wine merchant and in return receives the original wine certificate signed by a notary, which certifies the ownership of this wine and its specification.

With the advent of speculation on wine, small farms were endangered, whose products can be fully redeemed at the stage example , after which the price is controlled by the investor, not the owner. Therefore, it is now common practice among winemakers not to sell more than 10% of their products "in one hand".

Double guarantee

The most important thing is that you can't lose money with wine!

The evolution of the wine course depends on the success of the year. The global trend is that in an average year, you can earn in the first five years, and in a good year, the main earnings occur after five years of storage.

A good wine merchant has known his sponsored wine farms for many years, and it is not difficult for him to foresee the evolution of the wine course. At the same time, the cost of wine is influenced by various factors, among which the positioning of the brand in the market plays an important role. For example, the Chateau d'Yquem brand, owned by the LVMH group (which, for example, includes the Louis Vuitton brand), is considered heavy artillery in the premium segment, this is a win-win bet for an investor.

It is equally important to ensure the authenticity of the wine to the investor. After all, there are many fakes in this market, and when a bottle costs more than a thousand euros, it is easier to fake a bottle than a bill. Moreover, to determine authenticity, you need to taste the wine. And often years pass between the moment of purchase and the opening of the bottle. Therefore, with the help of special AVIII® technology, a chip is placed on a wine box specially closed in the winemaker's castle, which registers the conditions of storage and movement of wine, and the number on the chip corresponds to the number on the certificate. Thus, the investor has a full guarantee of his investment and the wine does not even need to be moved. It can be stored directly in Bordeaux, in special wine jars that guarantee optimal storage conditions and safety.

Innocent wine delights

Wine as an investment object is interesting because the investor buys a product that also has a consumer value. This is especially interesting during the crisis, when financial markets no longer attract many people. Investors, in search of reliable investments, invest money in real estate and gold. But the cycle of buying and selling real estate is quite long, and liquidity is low, while gold is a typically speculative instrument and a sharp collapse in quotations may come after a period of rapid growth.

If you allow yourself a small pun for connoisseurs of the French language, then wine is a liquid product (liquide in French means liquid and liquidity at the same time). It is easy to sell, the course of each wine is known daily. The merchant also guarantees the redemption of the lot at any time at the rate of -15%.

In addition, the owner of a wine portfolio has different ways to get out of the position: wine can be kept in stock, you can sell it, making a profit, you can turn it from a financial product into a real one and drink it with pleasure or give it to friends or customers. By the way, customers will remember a donated bottle of lafite much longer than a discount on products for the same amount.

A small detail that cannot be ignored: unlike real estate, you do not need to report the purchase of wine to the tax service, and the transaction is not subject to mandatory registration with a notary. The rights to wine are included in the family common property, but in fact they can also be personal property, since the property is acquired without the participation of third parties or witnesses. In addition, the parties to the transaction can choose the place and method of payment themselves.

If an investor wants to sell his wine assets, it will be enough for him to hand over the original certificate. And if he plans to transfer his asset by inheritance, then it is worth noting that Bordeaux wines are aged for decades, while becoming better and more expensive, and at the same time such an inheritance is not taxed.

By the way, when buying real estate, French notaries often ask to show the origin of the money. So, the proceeds from the sale of wine (bought earlier!) it would be a good explanation in such a situation. So, contrary to the warnings of the Ministry of Health, wine can be consumed in large quantities, you just need to understand what exactly.

What to do and where to start?

Bordeaux is a thing in itself, it is a closed community where it is difficult for a novice investor to get into, especially for a foreigner. It is customary here to take each other's word for it, everything is in plain sight, business relations are linked here for several generations, and reputation is sometimes valued more than human life.

How to navigate this closed market? How to choose wine to buy, where to buy and store it, and how to sell it later? For advice, we turned to the hereditary wine merchant from Bordeaux, Frank Gericault, who will introduce us to this mysterious and fascinating world.

Merchants are more objective than winemakers. Therefore, they can best advise on the choice. Some wines with limited production become a rarity already at the time of bottling
After buying wine, you can not take it anywhere, but leave it with the winemaker or place it in a special warehouse. This scheme is especially convenient if the investor is going to sell wine, since it eliminates the costs of transport and customs.

It is better to choose the products of wineries with a small volume of products in order to guarantee a price increase. It is preferable to make purchases from the most principled and wealthy manufacturers, who will not let the price drop under any circumstances. Many other factors should also be taken into account, for example, the marketing policy of the wine house, the profile of its main customers, and the method of sale.

A good investment wine portfolio starts from 50,000 euros and grows strongly in price over time. Just like in the stock portfolio, the wine portfolio has its own "bottom" - classic Grand cru or premier cru. Chateau d'Yquem, Cheval Blanc, Mouton, Lafite are ideal for this. You can always count on famous brands that are very popular. Without a doubt, you can buy all the same Chateau d'Yquem from LVMH and Marjosse and Fourcas from Hermes. When choosing wine regions, you can stop at the proven Margaux, Medoc, Graves, Pessac Leognan, Saint Emilion, ST Julien, ST Estephe, Pomerol.

A high increase in value can be expected from the second brand of wine of the samethe house that makes the famous wine. Such a "second brand" is much cheaper and gives good quality and access to the same sales system. And the most dynamic component of the portfolio can be promising domains, which include Bauregard from Pomerol, Fouorcas from Medoc, La Dominique from Saint-Emilion. You can not be afraid to make a mistake when buying wine with a very small harvest, which immediately becomes a rarity, such as Caillou Blanc and Arums de Lagrange from white Bordeaux, Clos Fourtet and La Mondotte from Saint-Emilion.

The main problem of a wine investor is access to good products, for which you need to have your own connections. Franck Gericault shares with his clients good relationships with such wine stars as Pierre Lurton, the Hermes family and Alain Vauthier. This friendship was started by their grandfathers, and it is carefully passed down from generation to generation. Of course, this improves the ability to get the necessary quotas for each domain.

On December 1, Frank Gericault, at the invitation of the Immoconcept agency, successfully held a presentation of his wine secrets in Moscow as part of the Showcase of France exhibition, which was held at La Colline restaurant in Zhukovka by the economic mission of the French Embassy.

Photo materials courtesy of Frank Gericault

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