How Invest Into Wine Began – Part 3

Here is part three from my previous two articles about ‘Who we are’ and ‘what has driven Sure Holdings for the past 15 years’.

When we initially ventured into offering wine wine to our clients, we decided to continue the same policy as real estate, by purchasing and investing ourselves in the wines we recommend, just like we did when recommending the real estate. This was one way we could guarantee investors that we would always present something to them that we were willing to buy ourselves. “If its not good enough for us, then its not good enough for our clients” formed part of our¬†decision making for new wine recommendations.

It worked tremendously well, and we continue to buy wines with tough (and hard nosed) negotiations. We often get complaints from merchants and negociants that our low ball offers are ridiculous, but the good ones understand, that price plays a big part in an investor’s decision.

Negotiation is an art in itself, there must be a certain element of respect on both sides for a negotiation to work effectively. The buyer must have done his homework on pricing, the seller must be prepared to give in a little. But the final decision is always with the buyer and a buyer must always be prepared to walk away from a deal if it does not fit. When you become desperate to buy, you become open to buying something that is either overpriced. ¬†Simply, ‘know what you are doing in the ring and make sure you spent plenty of time training¬†before you put on your gloves.’

We had an excellent run with more than eight years making outstanding returns in fine wine, many wines made more than 300% over a period of 5-8 years.  We invested in over $40 million worth of fine wine with both our private clients and our own investment portfolio.

China had awoken to the notion of buying and drinking fine wine and they were buying anything with a big name that came from Bordeaux. There seemed like an endless supply of money flowing into the fine wine market. And it became known that provided China’s wealthy consumers were drinking it as fast as they were buying it, consumption was high, which resulted in higher demand and a shortage of supply. ¬†Following this, was staggering growth.

Knowing how small the fine wine market was, it was hard to predict how high prices could escalate because wine compared to the global investment markets is still relatively small in comparison. Mordor intelligence report that the global wine market is worth only $304 Billion.

Since the fine wines we invested in were always the top first or second growth Bordeaux classified wines, the allowable¬†number of bottles produced had not changed for centuries since they formed their classifications in 1855. ¬†These laws are still upheld today by France and the European Union. ¬†Our strategy was simple, don’t take big risks with those lower priced wines which are less than 100 pounds/case and always look at the best and higher value top classed wines.

Check out part 4 – Thanks for reading!

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