Investment Presentation170212

16/02/2012 1

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Web: www.antique-wine.com Email: [email protected] UK Office: 53 Queen Anne Street London W1G 9JR

THE CASE FOR WINE INVESTMENT?

Motives for Investment in Wine?

• Diversification of Portfolio

• Passion or interest in wine

• Tax efficient

• Supply/Demand Environment

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Liv-Ex 100 (Top 100 Investment wines) Vs FTSE 100

Why AWC WineCap

• Dedicated Investment Division within AWC Group

• 45,000 Global Client database

• Readily accessible to market

• Market making capabilities

• Huge sourcing capabilities

• Ability to help build large Client positions discreetly

• Efficient and cost effective on liquidation

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The Fine Wine Market

• UK wholesale and merchants - €475 million

• Global Auctions - €300 million

• Asia auctions - €120 million

(40% of global total)

• Le Place de Bordeaux (Bordeaux negociants) - €500 million to €1 billion, depending on the vintage

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Total global market for fine wine is just €2.95 billion annually:

Why does wine rise in value?

• Increasing demand for fine wine – Emerging markets are only starting to drink wine

– Global wealth is increasing

• Limited production – Fine Wine Appellation areas are not extendible

– 150 years old classification remains unchanged

• Decreasing stocks – The older the wine, the less stock remains

because people drink it

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Growing Markets

HONG KONG

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•Abolition of taxes on Alcohol in 2008 (from 80% to 0%) •Gateway to China •Increasing consumption per habitant (3ltr/year to 4.5Ltr/year in 2012)

•Between 2010 and 2013 wine consumption will grow by 25% in Asia •Top 20 chateaux exports are rising fast •Drinking habits (young wine, brand driven market)

•600 million people aged between 20-35 •Only 2% drink wine. By 2012 market research predicts 10% of Indians will be drinking wine (25 million people consume only 1.1 million cases annually > 125 million people in 2012 will consume 55 million cases)

•Strong internal investment has fuelled economic growth •The number of wine consumers is expected to increase year on year with 25 to 30 year olds enjoying more imported wine.

CHINA (Mainland)

INDIA

BRAZIL

Offers opportunity to indirectly invest in emerging markets

Traditional Markets

• Wine consumption is being maintained in all traditional markets

7 Source www.oiv.int

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2002 2003 2004 2005 2006 2007 2008 2009 2010

Mil

lio

n H

ec

toli

tre

s

Wine Consumption

France

Italy

Spain

UK

USA

Past 10 year trend – TOP 100

• Price movement of 100 of the most sought-after fine wines for which there is a strong secondary market.

• The majority of the index consists of Bordeaux wines – a reflection of the overall market – although wines from Burgundy, the Rhone, Champagne and Italy are also included.

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Crisis Times

• 2008-2009 Financial Crisis – Price correction by an average of 10-20% (dependant upon

vintage)

– Clients focus on strong brands from best vintages

– March 2010 we are already back at the pre-crisis prices (top 100) and +5% more than highest record on top 10.

• 1997 Crisis – Weak vintage following two great ones

– Opening prices not correctly aligned to quality of the vintage

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Brand

Vintage

Rating

Region

Critical Factors

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Secondary Market Value

Which wines are for investment?

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BORDEAUX

BURGUNDY

RHÔNE VALLEY

- DRC, Leroy, Ponsot

- Chapoutier, Guigal, Jaboulet

- First Growths - Super Seconds - Top Pomerol and Saint-Émilion

Italy

- Masseto, Solaia, Sassicia, Ornellaia,

Portfolio Bordeaux -90%

Burgundy -8.5%

RhoneValley -0.75%

Italy -0.75%

Which Vintages?

Top vintages

• 1961

• 1966

• 1982

• 1986

• 1990

• 1996

• 1998

• 2000

• 2003

• 2005

• 2008

• 2009

• 2010

Brand vintages

• 1991

• 1992

• 1993

• 1994

• 1997

• 2001

• 2002

• 2004

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Journalists’ Influence

100 Points-scale 96-100 - An Extraordinary wine (typical investment wines)

90-95 - An Outstanding wine

80-89 - A barely above average to very good wine

70-79 - An Average wine

60-69 - A below average wine

50-59 - A wine deemed to be unacceptable

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Harvest [September ]

Wine tasting during Primeur

period [March ]

Release of the first ratings –> price increase – Buy [End of May ]

Release of the re-visited ratings

[end of May following year]

Release of physical wines on

the market

Robert PARKER rating system

ROBERT PARKER (Bordeaux, Rhone Valley)

WINE SPECTATOR (All Regions)

ALLEN MEADOWS (Burgundy)

Jancis Robinson (All Regions)

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Current Performance

Liv-ex 100 - Up 65% over the last 5 years, however it is down 16.1% in the last year Traditional markets still retaining a demand for fine wine at the right price levels Emerging Markets broadening tastes through producers and regions

Out Performing the Index

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• Careful Stock picking • Intuitive reaction to market conditions •Availability to wide range of stock sources •Carefully planned exit strategy

Out Performing the Index

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View of 2012

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• Market broadening • Demand in brand and value driven investment

grade wines • DRC has sparked interest in other Burgundy

Producers. Speculation Driven ? • Blue Chip Bordeaux heading back into “buy zone”

– GBP250-300/Btl • Excitement of Bordeaux 2009’s “the best modern

vintage ever” • 2011 En Primeur campaign – a drinking driven

vintage

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• Choice

• Buy Early

• Cases Only

• Keep Records

• Insurance

• Reputation

Key Investment Points

Investing in a Fund

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Advantages Disadvantages

No in depth knowledge or passion for wine necessary to benefit

High subscription and Management fees

Fully managed so no decision, control or input from investors

A Fund is not tax free, therefore liable to capital gains tax

Lack of flexibility in regards to investment amount, time period

and Liquidation of Portfolio

Investors have no title of the wine simply a share of the Fund itself

You do not have the option of taking redemption in wine

AWC WineCap Principle Terms

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• Wine Investment advice provided through Portfolio Management

• All stock owned by the investor

• Minimum GBP50,000 investment

• Minimum investment term 1 year

• 2% Annual Management Fee

• 10% Performance fee - high watermark

• Generally 30 days process from Email order to cash payment

• Fee: Market price minus 15% fee charged by The Antique Wine Company.

• Immediate transfer of the wines from Bonded account to Bonded accounts in the same warehouse

• Uncertainties, but can realise exceptional values for rare items

Liquidating to cash

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TRADE SALE

AUCTION

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How to begin

•Budget, Terms, Preferences

•Personal Account Opened • Acquisition of wine

• Six Monthly Valuation

• Active Portfolio Management

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