“Supply of high-quality wine is limited when demand is growing daily. A massive hail storm could kill a vineyard and a bad winter can affect the supply,” Graham said. “The growth of wine is rooted in the emerging middle class in Asia and Eastern Europe. They understand buying a commodity with intrinsic value and that’s what wine represents.”
Oracle’s wine fund aims for medium- to long-term capital growth by spreading risk across classic wine and vintages. The fund recently acquired bottles of Cognac Clos de Griffier 1789 from the cellars of the famous La Tour d'Argent restaurant in Paris.
“Wine is less correlated with movements in the stock and bond markets than many other investments,” said Nathan-Maister. “Our goal is to generate above-inflation returns through highly informed purchases, access to first-buyer pricing from the very top chateaux and active trading of the rare spirits portion of the fund in particular.”
What sets wine apart from investments like property is that it is a more liquid asset because it’s easier to sell and buy a case of wine than it is to buy and sell a house.
“By offering stock of exceptionally rare cognac and whisky owned by the fund for sale to collectors, we aim to generate trading profits even in an overall environment where the wine market may be flat or trending downward,” said Nathan-Maister.
The fund’s investors so far are all European, from Russia and other states of the former Soviet Union. Individual who wish to invest in the fund must be "sophisticated investors," as defined in the U.K.'s Financial Services and Markets Act 2000. The minimum required investment is $100,000 for individual investors. The fund charges a 2-percent management fee.
Its wines are stored in bonded warehouse cellars and bottles are sold through public auctions and to wealthy individuals. “London City Bond's Vinoteque is the finest and most secure facility of its type in Europe. Storage and insurance costs are nominal relative to the value of the wine,” said Nathan-Maister.