Mar 31 2008
Wine - A Palatable Investment by Saeed Shah
The first talk at the Smart Expo that I attended was delivered by Saeed Shah, the sales director of Australian Wine Index (AWI).
Australian Wine Index is a fine wine broker which sources and purchases fine Australian wine for investors. They will also help to find suitable storage space for your wine, and advise you on different exit strategies when the time is ripe.
The reasons given by Saeed why we should invest in wine include:
- Wine has outperformed other investments.
- Recent UK report by Wine Asset Managers (WAM)
- Return of 16% over last 7 years
- Wine is a relatively low risk investment.
- Finite commodity
- Limited supply & growing demand
- There is huge growth potential.
- US no.1 wine consumption market in the world
- China 45% growth over the next 10 years
- Global demand
- Auction houses: Christie’s & Sotheby
- “Nuevo Riche” in emerging marketings like China, Russia, Eastern Europe
Wine is an area that I haven’t invested in before as it is something not close to my heart. Even though I was told that I don’t have to be a wine drinker to be an investor, somehow I feel that I would be at a disadvantage when it comes to the product knowledge.
So how exactly do you invest in wine? These are the steps shared with us:
- Selection
- Storage
- Trading
1) Wine selection
- Ratings (Critics) - RPJ’s Wine Advocate
- Regions - South Australia & Margaret River
- Vintage, Vintage and Vintage
- Research
- Strong ties with vineyards
- Build collections with intrinsic value
2) Wine storage
- Home storage - bad idea
- Perishable product
- AWI has a tie-up with Cougar Express Logistics whereby investors can store their wines and have their own individual account
3) Trading
- Exit strategies - Friends, collectors, merchants
- Auctions offer best option
I can’t really elaborate on the points given in the presentation by Australian Wine Index as I’m pretty much a novice when it comes to wine investment.
Would not recommend AWI to anyone. They are only eager to sell you the wine. Any requests to liquidate will lead to a frustrating effort to initiate, let alone closing it! Poor support…..Really regret to invest with them…
[Reply]
Edwin Reply:
November 13th, 2008 at 11:07 pm
Hmm.. I don’t agree. I have been with AWI since 2002 and sold off half my portfolio for about 80% returns and have purchased more wines since. They provide constant market updates and I have also been to a few of their wine tasting events. Excellent service. I will recommend only AWI to anyone interested in wine investment. My friends have told me many bad comments from other companies, even UK companies.
[Reply]
Jimmy Reply:
November 13th, 2008 at 11:25 pm
Hi Edwin,
No such service for me as far as sales is concerned…except receiving calls to buy more! I was informed the annual valuation will be out in Nov. Will see what are the recommendations though do not expect much with the current crisis. Maybe my 60k portfolio is “too small” for them
[Reply]
Edwin Reply:
November 15th, 2008 at 4:57 pm
Hi
Well, seems like you just invested with them not long ago..
Yes, I do receive calls from them often. They will call me to update me on market situations and also to recommend me new wines for my portfolio.
I enjoy such service as I will learn more about what is the best wines for investment. Of course, I don’t always buy every wines that they recommend to me.
Yes, I just received my valuation report and I will say I am extremely satisfied to see profitable results when all my other investments are in negative.. This year is the best proof and assurance for me that wine seems to be the only investment to get profits returns in tough times..
Well, personally, I will recommend to you not to sell any wines in this current situation. As for me, I will definitely not sell any of my portfolio this year and wait until the next valuation report. It will be better to sell after the market recover to see better returns.
Hmm, 60k portfolio is never too small. In fact. I think I buy around 60k worth of wines in total also, and now my whole portfolio is worth more than 100k.
Hi Edwin,
Nice to hear that your portfolio is profitable. I have yet to received any updates from AWI till date….
Just to mention that I have started investing with them since 2004 and have gone through 4 different wine brokers along the way. High turnover rate?
Nevertheless, I still maintain my opinion that I will not recommend anyone to AWI. Cheers….
[Reply]
Hi
Well, do not worry. You will be all smiles when you received your valuation report very soon.
Hmm, I have gone through 4 different brokers also and I like the service of my current one. Guess those who stayed on are the really good ones.
Well, once you get your first profits from wines, you will start recommending AWI to everyone just like me. Cheers…
[Reply]