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Sniffing the moolah

Drink, be merry and, while you are at it, make some money. It's early days yet, but wines are spicing up the investment space.

They are rich, earthy, full-bodied and now sought after. Fine wines are becoming the new flavour of the season.

Gary R. Bennett, 52, was all of 19 when he had his first close encounter with the buoyant world of wines. When his family shifted to Adelaide in South Australia, next to the wine-growing regions of Barossa Valley and McLaren Vale, Bennett got his first lessons in wine tasting and its value as an asset that could appreciate. What started off as an experiment 25 years ago, turned into a serious investment opportunity 10 years ago. "Wine was an interest first and since I had an early education, it turned into an investment prospect," says Bennett, the Gurgaon-based MD and CEO of Max New York Life Insurance.

 Bennett is your classic high networth individual who has an equity portfolio, a property portfolio along with an art portfolio spread across Vietnam, China, Hong Kong, India, Sri Lanka, Thailand, and Australia.

He can already sense an opportunity for Indians in the wine investments. Drawing an analogy with ULIPs (unit-linked insurance plans), the insurance industry veteran says: "Who had heard of unit-linked insurance plans six years ago? Similarly and surely, wine is emerging as an investment for Indians."

Gary R. Bennett
My liquid asset: Bennett owns a full vertical of Penfolds Grange Shiraz
One of the early birds in the Asian wine investment market, BNP Paribas-which started wine investment services last year-vouches for the growing Indian interest in the wine investments. Says Anthony Debarry, Head (Communications), BNP Paribas Private Bank Asia: "BNP Paribas and its partners can help construct an actual cellar of the finest French wines available. Managed from the heart of the Bordeaux region and focusing exclusively on French wines, this service has attracted interest and clients from throughout Asia, including India."

For Subhash Arora, President, Indian Wine Academy, and founder, Delhi Wine Club, the first investment in wine was for "fun and experimentation and was a part of the learning process". For investors like Arora and others, the wine investment market may just become even more action-packed. "The power is shifting in the wine collectors' world from the us and Europe to Asia; some of the world's biggest collectors now come from Asia," says Troy Saddler, MD, Platinum Wines, a Hong Kong-based wine merchant.

Though it is early days yet, Saddler bets on the buoyant Indian market. "We see India as an exciting and viable market moving forward," he says. Saddler plans to come to India later this year to gauge investor interest in fine wines.

Lawyer and wine buff Ajay Bahl and his wife Radhika represent the segment where Saddler sees big potential. From occasional individual buys, the Bahls have now experimented with futures. "Making use of the liberalisation of exchange controls in India, we have made a small investment through the London-based Berry Bros and Rudd in wine futures," says the lady.

The hot picks for the new buyers are the universal favourites. Arora's wine portfolio includes "a few Gajas, a Margaux here and a Latour there". Says an upbeat Arora: "Last year, I invested in a couple of cases of Château Gruaud Larose 2005, a second growth from St Julien, as an experiment. Vintage 2005, considered one of the best vintages over the last few decades, will be released in 2008 and will be drinkable between 2015 and 2020."

While Bennett is sold on Australian wine, he particularly raises a toast to his rich vintage vertical. "I have acquired a full 'vertical' of Penfolds Grange Shiraz-one bottle from every vintage since it was first made in 1951 to its most recent release in 2005," he says. The full vertical is valued at $150,000-200,000 (Rs 61.5-82 lakh) at present.

The sudden interest in fine wines is driven by high returns seen last year. Figures from the London International Vintners Exchange (Liv-ex) show that in 2006 its benchmark index, the Liv-ex 100, rose 49 per cent, making it the best year in a decade for wine investors.

As with all high-risk investments, a word of caution will be in order. Sommelier Magandeep Singh warns that wine is a tricky market. "Before you think of investing, you need to do know about the harvest, rain, region and the property," he advises.

The other stumbling blocks in India: high import duties if you want to bring your stocks home, storage problems and practically no infrastructure to sell the stocks.

Adds Matthew Ringrose, Director, Wine IQ, Australia: "There are social and religious reasons as well for wine's low impact in India, and no doubt, these are reinforced by government policies aimed at protecting local producers and discouraging importers."

The way out: arm yourself with caution and good advice, and raise a toast to investment in wines, he says. With wine, if all else fails, you can drink your investment.



Published on: Sep 03, 2007, 5:18 AM IST
Posted by: AtMigration, Sep 03, 2007, 5:18 AM IST