5.8: Reaching the End Consumer within a Free Market - Retail, Wine Investment Companies

Question 1

How do specialist wine retailers get their hands on investment-grade wines?

Answer 1

A number of specialist wine retailers are allowed a small allocation of some of these wines each year, which they either buy directly from the producer or via a merchant.

Question 2

Name some examples of specialist wine retailers that get allocated investment-grade wines.

Answer 2

• Farr Vintners
• Fine & Rare
• Berry Bros & Rudd

Question 3

Name 2 companies that only deal with investment-grade wine.

Answer 3

• Amphora Portfolio Management

- Cult Wines

Question 4

What has driven wine investment historically?

Answer 4

The growth in Bordeaux en primeur sales

Question 5

What is ‘fine wine’?

Answer 5

• no agreed definition

Guidelines:

• from prestigious regions
• made in small quantities
• made by leading producers
• command super-premium prices

Question 6

How do investors buy fine wines?

Answer 6

• en primeur, either directly from the producer or through a retailer
• buy them on release
• wine clubs

Question 7

What types of businesses engage in the wine investment trade?

Answer 7

• retailers acting as brokers

- trading exchanges

Question 8

Name a retailer that specializes in investment grade wine.

Answer 8

Berry Bros & Rudd

Question 9

What are auction houses?

Answer 9

• Specialise in selling investment-grade wines at headline-grabbing prices
• Can also sell a broad variety of wines (e.g. unused stock from retailers who have been forced to close)

Question 10

What are two of the most infamous cases of wine fraud?

Answer 10

• Hardy Rodenstock, who sold bottles of wine that he claimed had been part of the collection of Thomas Jefferson (even managing to get them authenticated by an expert)
• Rudy Kurniawan, who was eventually caught when trying to sell vintages of Clos St. Denis from Domaine Ponsot that had never been produced

Question 11

What is being done to protect against wine fraud?

Answer 11

• Producers of wines at all price points are using increasingly sophisticated anti-counterfeiting techniques to protect their wines, with the producers of investment-grade wine leading the way
• Auction houses and fine wine retailers also seek to validate the provenance of the wines they offer