Friday, 5 June 2009

New Wine Club - The 1855 Club - A Unique Opportunity

Nick has founded a new wine club: The 1855 Club and here is his post about it:

Many of you are familiar with my love and appreciation of fine wine and I wanted readers of my blog to be the first to know – and the first to have the opportunity – about a brand new wine club that I am setting up: The 1855 Club. I have been dealing in the world of wine for many years and have written extensively on the topic for both serious wine collectors and investors as well as those of you who are passionate about your palates. (You can find my articles in The IOD Handbook of Personal Wealth Management for The Institute of Directors and The Waterfront Magazine – the latest will be coming to your computers soon at www.investornetworkonline.com).

Whilst engaged in writing I started to think about investments in general. I don’t know about you but I find the whole investment cycle cold, faceless and disappointing. Disappointing due to my inability to influence what other people are doing with my money and the lack of communication once I have written the cheque. I think I am not alone in my thoughts, especially during these recessive times. Since the credit crunch bringing with it low interest rates people’s attitudes towards investment have changed. Investors now require more from their advisors and Financial Institutions through more influence on their own investments, different and understandable products, acceptable pricing structures and a better service.

The more I considered the subject it seemed to me that the answer to my concerns was staring me in the face. The problem was that investing in wine seemed a closed shop to many people. Wine funds suffer from high annual performance fee charges on unrealised gains on their wine stocks and I have always been a little cynical of them. Those people who want to go it alone either need extensive and insider knowledge (I have written an A – Z on wine investment for those of you who are interested in doing it for themselves at www.interestinwine.co.uk) or have to go via wine merchants who will build up your own personal cellar. However this will be based on their retail prices with mark ups ranging from 10 -35% depending on the wine and the vintage. Some may charge additional fees on top and there will be a commission of 10% off the selling price when you sell.

I have good contacts in Bordeaux, I know my subject, I can buy at wholesale prices and the wines I have bought and sold have given favourable returns. Allowing for the changes in investors attitudes and taking the wise words of Peter Drucker "the greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic” into consideration I have developed the idea of The 1855 Club - a small but exclusive business offering wine lovers across the globe the opportunity to have a shareholding(s) in a wine company which trades exclusively in Bordeaux Grand Cru Classés. The ethos of The 1855 Club is not only to obtain returns but also to deliver knowledge and enjoyment to those who wish to gain a wider education of the wines of Bordeaux and great cuisine through experiences gained by visiting and staying in the best Châteaux in Bordeaux, attending exquisite dinners, tastings with wine makers, quarterly insider newsletters, limited edition books and even grape picking if that’s what you would like to do!

Although biased towards the UK tax payer it will also suit wine lovers around the world offering a marvellous opportunity to indulge in a favourite hobby, gain more knowledge, have experiences that you can regale to your grand children and be involved in an investment that is quite unique as you can influence the returns you can achieve.

In addition The 1855 Club has received advanced approval from HMRC (Inland Revenue) under the EIS (Enterprise Initiative Scheme) rules. EIS relief enables certain UK tax payers to benefit from an income tax saving of 20p for every £1 they invest through their annual Tax Return as well as Capital Gains Tax and Inheritance Tax benefits.

We are keeping it small to retain exclusivity and can only offer this opportunity to around 200 potential investors. It will not suit everyone’s pocket as the minimum entry level will be £25,000 with an upper limit of £500,000 per individual. Should this offering be oversubscribed shares will be offered on a first come first served basis or on a pro rata basis.

Whilst the lawyers (Martineau) and accountants (BDO Stoy Hayward) are crawling over the details and putting an information pack together (which you can apply for at the end of this blog) I would like to give the followers of my blog the first opportunity to read about it before it goes on general release in mid June.
This is a lifestyle opportunity with emphasis not only on good returns but also on enjoyment, knowledge, some unforgettable experiences and fun! I believe life is too short and if you have the money and opportunity to indulge in an interest or hobby which you enjoy and it’s not going to cost you your life savings then why not enjoy the rewards of your hard work - life is not a dress rehearsal!

More and more people are realising that wine has been an alternative investment for some time. It is uncorrelated to global stock markets, its less volatile, can offer lucrative returns but above all can be fun! Timing as with most successful opportunities is paramount. Due to the credit crunch many Bordeaux wines are at very advantageous prices and good vintages can be found at bargain prices plus the pound is beginning to strengthen against the euro, interests rates are low and people are wanting something different.

Fine wine is a finite product with demand outstripping supply, a liquid asset (excuse the pun!) easily transported and environmentally friendly. A château can only produce a finite quantity each year which then diminishes over time as the wine is consumed. This in turn leads to limitations on availability and prices can subsequently rise. Interest in the fine wine market is growing and it’s worth c£500 million a year in the UK with a sizeable proportion going straight into the cellar.

Historically the best performers for wine investments are the top châteaux in Bordeaux (which is why The 1855 Club will deal exclusively in Bordeaux Grand Cru Classés). In part this is due to their classification system which dates back to 1855 (hence the name of the company) and Bordeaux is still recognised for producing some of the best wine in the world. Their experience in wine making goes back many centuries with their traditional methods of wine making being handed down from generation to generation. Their wines can be more complex than most and we have been enjoying it since Henry II married Eleanor of Aquitaine, bringing claret (or Clairet as it was known then and still remains in production) with her as her dowry.

I will be responsible for the buying and the management of the wines. My advisers have appointed two very experienced NEDs (Non Executive Directors) who bring with them many years of commercial experience gained in a verity of industries – their main role is to look after shareholders interests and both our aims are to keep the running costs to a minimum. This is a 5 year investment with further opportunities to invest in years 2 and 3 with no management bonus until an exit strategy or trade sale has been achieved. Wines will be valued by a third independent party Liv-ex and the company will have its own website as a selling platform.

With any commercial venture there are inherent risks but in my opinion as this is an asset based opportunity the risks involved are quite low with the worst likely scenario being that each shareholder would be a beneficiary of a very good Bordeaux cellar but you must seek your own financial advice.

If you are looking to put some money into something different, you like life and enjoy wine along with good food and camaraderie then think about it. Should you be interested in receiving further information in the form of an IM (Information Memoranda) when it is completed please contact me nick.stephens@interestinwine.co.uk or alternatively ask your advisor or agent to make contact.

1 comment:

Ashley Lauren said...

I love the notion of the 1855 Club. Perhaps one day my budget will enable to indulge in some of these amazing wines. Until then, I'll return to your blog to satisfy my curiosity.
Ash