The facts speak for themselves!

The release price of a case of Chateau Lafite 1982 was £300...now trading in excess of £27,500!

Historical Performance of Fine Wines

FACT: From 1950-1985 the Vintage Claret Index average annual compound return of 15.2% *
FACT: From 1983-2002 the Fine Wine Index average annual compound growth of 12.3% **
FACT: From 2003-07 the Liv-ex 100 Index annual average compound growth rate was 15.3% ***

Source:
* "The Successful Investor". 1988 (Robin Duthy)
** "Wine Investment for Portfolio Diversification". 2005 (Manesh Kumar)
*** Liv-ex.com

The Liv-ex Fine Wine 100 Index

The Liv-ex Fine Wine 100 Index

Declared the "fine wine industry's leading benchmark" by Reuters, the Liv-ex Fine Wine 100 Index represents the price movement of 100 of the most sought-after fine wines for which there is a strong secondary market. The index is calculated monthly.

Security of capital on fixed returns is in fact a misnomer, since over the medium to long term the value of your capital will diminish in  real terms.

You do not want to take unnecessary risks. So an alternative would have had to show a past history of security, and a consistent return on one’s savings. Over the period between 1975 and 2008 a survey carried out by Robin Duthy ,the author of ‘‘The Successful Investor’’ showedsome startling results on returns for various types of investment as shown in the charts

The world's drinking habits do not change markedly from day to day. There are trends, mainly depending upon the world economy, and as the world grows richer the demand for the very best wines has become greater.

Historically the very top wines have consistently appreciated in value.In the early years of a wine ( say eight years) it's value rises asan investment.

However once the wine has reached it's prime drinking time the amount available of that vintage will diminish and the price will rise because of the rarity value. Records on the prices achieved by the finest wines go back at least 240 years, and in some cases many hundreds of years more.

Those prices have shown a regular steady growth, and as you will see from the tables on this folder £10,000 invested in Vintage clarets has risen to £386,940 over the past 33 years.  The fluctuations do happen, but not with the same regularity as, say, equities..

In 1855 the famous classifications of the Medoc Chateaux were introduced.

These classifications were based on the prices fetched over the previous 100 years. These classifications still stand today and the wine from the premier Chateaux in the Bordeaux region are the most sought after in the world.

In fact, in any decade only two or three crops are considered outstanding enough to be considered a great vintage year. For example only the wines of 1982, 1986 and 1988 are considered to be great vintage years in the 1980's and there has not been a great vintage year since 1990.

The demand for the clarets is constant and rising but, because of all these limitations on the supply of vintage Bordeaux clarets, the supply is limited thus the wine should command an excellent price and buyers are usually plentiful.

VINTAGE CLARETS as you will see from the aforementioned list have outperformed all the other investments. You might feel that investing in wine is risky. Records which go back many hundreds of years show that this is not so.

Investment in top class BORDEAUX VINTAGE CLARETS have shown greater returns and less volatility than equities. The very best of these wines have performed even better.

You must know the names of the Premieres Crus such as Chateau Lafite-Rothschild, Chateau Mouton - Rothschild, Chateau Haut-Brion Chateau Margaux, and Chateau Latour.Not only have these wines given hours of joyous drinking pleasure but also substantial returns for those lucky enough to own them.Not only that but there is NO UPPER LIMIT to what you can invest.

ONE MUST REMEMBER THAT THE VALUEOF WINES CAN GO DOWN AS WELL AS UP

HOW DO I KNOW WHICH WINES TO BUY ?

All investments demand knowledge and expertise. We, at Drummond & Co, pride ourselves on our knowledge. However this is not enough and so we have retained ,on behalf of the investors, the services of MAGNUM FINE WINES PLC to prepare discretionary portfolios and manage the investments.

Established in 1985, by professionals with a long history in the wine trade, they also have the expertise of an independent consultant, one of the world’s experts, David Peppercorn, a Master of Wine since 1962. His opinions carry considerable weight and assist MAGNUM to offer wines of the highest quality at most competitive prices.

Only the top 25 of the registered 4000 chateaux in the Bordeaux region meet the criteria demanded by MAGNUM. At regular intervals investors receive a newsletter keeping them abreast of current market conditions and the current holdings in their portfolio.

The investor actually owns the wines, not shares or units of investment. MAGNUM advise clients to keep their wine in a U.K. or a USA Customs Controlled Bonded Warehouse because:

The Wines may be sold at any time either completely or partially. Investors, with £10,000 minimum, may sell off some of their wines each year so availing themselves of a TAX FREE INCOME FACILITY.

MAGNUM knows the wine market and continuously monitors auctions in the U.K. and abroad to keep abreast of prices and demand. When the investor wishes to sell, MAGNUM will prepare all the paperwork and see to the technicalities. The auctioneers commission is usually less than 10% on the selling price and the investor should receive the proceeds in six weeks. If they prefer it, MAGNUM will offer a price for the wine
.

For keeping wine in the client’s own name and account number in a U.K. Bond, documentation, storage and insurance it is usually 0.25-0.5% p.a. depending on quantity and value of wine purchased. There is no annual management charge nor is a fee levied by MAGNUM on the sale of wines provided funds remain under management, otherwise a sale fee of 2.5% is levied.

Simply fill in the Application Form and enclose a cheque made payable to "Magnum Fine Wines Plc" and send them both to the address on the Application Form. A Managed Wine Investment Portfolio will be specially tailored to your investment needs depending on how much is available (minimum £2500/$4000) and the length of time you wish to keep the investment.

E&OE April2007

There are many people, including ignorant financial advisers, who believe that the UK Financial Services Act is there to cover all investments, and if an item is not covered by the Financial Services Act then investing is risky. This is not true.

Investments as defined in Part I of Schedule I to the Act include units in a collective investments scheme such as unit trust and derivatives and options. With regards to this precious metals, wines or property are not themselves investments for the purposes of the Act, but derivatives based on them such as units, futures or options are. The protection afforded by the act is to ensure that trustees of units of a whole investment which has been divided into units, derivitives or options actually hold those goods and have divided them properly.

As the investor in The Bordeaux Managed Wine Investment Plan  purchases and retains the actual wine ( which is held in his/her name) there is no need for the investment to be registeredunder the Financial Services Act. That retention makes their investment safer than units held under the Financial Services Act.

Fine Wines are normally considered to be a ’ wasting asset ’ which is not subject to Capital Gains Tax. However, one should consider the actual legal standing. The following points should be considered:
 

As there is no income derived from the holding of Fine Wines, this does not have to be considered by anyone other than a ‘trader’ in Fine Wines

As described before, Fine Wines are considered as a ‘wasting asset’. Therefore as long as they do not have a ‘predictable useful life’ in excess of 50 years, it is irrelevant that they are ‘appreciating assets’ (over a short period of time).

Therefore, as long as the owner has retained the proof of the purchase cost, the Wines, for the purposes of Inheritance Tax, are considered at the purchase price and not at any ‘appreciating value’.

*The contents of this folder are produced on Drummond & Co’s understanding of present tax law and understanding of the practices in the wine trade. However neither they, or Magnum Fine Wines Plc, can take any responsibility for this information.

Please include an e-mail or phone number in case there are questions about your order

For cheques & money orders copy this form and post to : Drummond & Co., otherwise submit form by email to info@informedinvestor.co.uk  Please purchase and manage for me a DISCRETIONARY WINE INVESTMENT PORTFOLIO.  I wish to invest  $*amount: / £*amounrt: (minimum$4000/£2500) (Cheques and Money Orders made payable to Magnum Fine Wines Plc.and send to : Drummond & Co, ) I realise that if I am not satisfied with the Portfolio within fourteen days of receiving it I may have my investment back in full. Length of time to be invested (approx.)..*term: years.  I *do: /*do not:  wish to participate in an income facility (minimum $16,000/£10,000 and equivelant in other currencies) *Name: *Address: *City: *State/County: Country: *Zip/Post Code:  Phone:  Home Work *e-mail: Payment Type:  Visa  MasterCard  Check/Cheque  Money Order  C.O.D. Cheque Number:  Credit Card number:   Expiration: Order Comments: Would you like to receive an email with details of new vintages etc? Yes No