Welcome to part 4 of my “How we began and where we are now” series of short articles. I hope these articles are giving you a good insight into how we work for the last 15 years.
We have spent many years building and developing an excellent wine investment strategy, analyzing charts, ratings from the best critics, supply and demand by assessing the quantities produced and of course consistent price analysis. This evolved into our wine investment process that it is today. It’s a strategy that simply works, buy low and sell high. Watch for dips in the market and buy in, then of course sell when the market peaks. We don’t profess to get it right 100% of the time, but more often than not its a strategy that works.
Following a bullish nine years in the fine wine market, even after the 2008 financial crisis, fine wines continued to grow in price and rallied on for another three years through to 2011, but at this point the stock market was starting its recovery and entered a bull market. The wine market then hit a peak as investors were ploughing money into the stock market and selling out of the wine market. The Chinese began to bail out in droves and this created a downtrend in fine wine prices for three/four years, wine prices then flat lined for 18 months.
There were several points between 2011 and 2015 where the wine market was showing signs of a recovery and we re-entered the market on several occasions. Some entry points were too early but some were just right. I recall noting that these re-entry points were not for the faint-hearted, because confidence was at an all time low. Anyone who had entered in 2011 was looking at a loss. Those investors who came in earlier were still showing excellent gains. Even with big drops on some of the first growth prices, many of the vintages from previous years were still up more than 300%. Timing played a big part during those few years.
When the wine market went down for four years we spent this downtime, re-organising our business. In the hope that we can create an even better investment experience for anyone wanting to get involved with wine investing.
As a company, this took a toll on our financial position and since we always had a policy to invest into what we recommend, it reduced the number of recommendations that we gave out, which in turn stagnated our cash flow. At one point, we had to sell part of our own investment portfolio to maintain cash flow. It was a tough four years. Selling Mouton Rothschild 2008 at a loss of 40% was painful but a necessity to remain in business.
These four years of quiet in the wine market gave us time to reflect and rebuild our systems. We also streamlined the business by implementing automated systems and technologies which enabled us to reduce our overheads over the long term. In the end, we pulled through stronger than we were before we started. We rebuilt all our internal procedures setting up every procedure with a manual, both video and written, so that every person within each department now knows how to do any task or procedure enabling consistent workflows while minimizing the number of people required. Suddenly, we are now more dynamic and flexible!
We have also integrated a systematic approach to auditing wines both physically and on paper. The auditing of wines has been molded into a water tight procedure to ensure we never lose a single bottle of wine. We also simplified our storage fee billing and created an online education platform for anyone keen to learn about fine wine investing. An educated investor is always the best client because there is a mutual understanding and goals become aligned and achievable. So we created an online fine wine investing video course for anyone with little or even a lot of knowledge on fine wine investing.
If you are interested in the fine wine investing video course, here are some details about the course: