In this episode of The Acquirers Podcast, Tobias chats with Steve Bishop and Patrick Fisher of Elite Wine & Whisky. During the interview William provided some great insights into:
- The Science Behind A Great Whisky
- Whiskey Investment Is Such A Great Opportunity Right Now
- How To Build A Profitable Vintage Wine Portfolio
- How To Build A Rare Whiskey Portfolio
- High Fashion and Whiskey
- Investing In Californian Wines
- Valuing Vintage Wines
- When You Should Sell Whiskey Casks
- Invest In Whiskey That You Can See In Every Supermarket & Duty Free Worldwide
- Wine Critics Have Little Influence On Established Wine Brands
- Investment In Infrastructure Driving Huge Returns In Whiskey
You can find out more about Tobias’ podcast here – The Acquirers Podcast. You can also listen to the podcast on your favorite podcast platforms here:
Breaker
Overcast
RadioPublic
Stitcher
Full Transcript
Tobias: Hi, I’m Tobias Carlisle. This is The Acquirers Podcast. My special guest– guests today are Steve Bishop and Patrick Fisher of Elite Wine & Whisky. We’re going to be talking about storing and investing in wine and whiskey right after this.
[The Acquirers Podcast theme]Steve, can you tell me a little bit about Elite Wine & Whisky? What is it?
Steve: Hi, thanks for having us today. Basically, Elite Wine & Whisky is a small company based in London. We pretty much help customers, collectors to purchase fine wine and whiskey casks. A lot of our customers are predominantly collectors that have a passion for alcohol, which is something that it’s an interest to them, it’s something that they’ve an understanding and enjoy the market. More so recently, it’s been a lot of whiskey collecting, which has been something that’s become a huge part of our company. Especially over the last 18 months, there’s been a lot of talk about whiskey casks. So, it has been on the news. People have understood how well it’s actually done, and I think because of the pandemic with COVID, people have been looking outside moving[?] the area as well. We’ve had a lot of inquiries and a lot of new customers have come on board with us over the last couple of years.
Tobias: You’re the investment-grade wine specialists between you and Patrick, who focuses more on the whiskey. Can you just tell me a little bit about what’s the process for investing in wine with you? How does that work?
Steve: On the wine side, we deal with what we will call as fine wine, which takes up 0.2% of the actual annual growth of production of wine. There’s something law called appellation controlee, which allows chateaus, especially, more so in Bordeaux, where we predominantly focus our attention. Appellation controlee only allows these chateaus in France to produce a certain amount of wine each year. Depending on the weather, depending on the grape and the harvest that year, then, of course, wines get graded from different critiques. If they have scores of anywhere really over 90 and above, that’s where we pay our attentions.
There’s a growthing system in Bordeaux as well. So, you have your first growth, which is made up of five wines, big wines like Latour, Lafite Rothschild, Mouton Rothschild, and then the tiering system goes down. Really, we would say that your Bordeaux’s, your premier because your big wines are your safe bets, where a lot of people would focus their attentions. But it doesn’t mean that every year is going to be a good year. Of course, some years, if the weather isn’t great, and they haven’t been able to produce the best of stock, then of course, it’s a year that we won’t focus our attention on. We might pay our attentions elsewhere to maybe Italy, Rome, California, and just basically try and keep our finger on the pulse to make sure that we’re giving our customers the best chance to make good capital growth on their money, basically.
—
Investing In Californian Wines
Tobias: What’s the California wines that you watch?
Steve: California has been interesting over the last couple years. Really, really interesting. It’s actually been quite hard to call because I love California wine. I think basically, Bordeaux wine is very heavy. It’s number one. Bordeaux in France is known for having the most amazing ones. But California, I think have done really well with their marketing over the last couple years as well. Because it’s a slightly lighter wine, mostly made up of cab sauv. I think with the way they’ve marketed themselves, they’ve tried to tap into the young audience, which I think they’ve done extremely well. A lot of their wine bottles and their labels are quite quirky, something that’s slightly different.
But it’s been hard to call it because of course we’ve had a lot of bad weather in California over the last couple of years as well. We’ve had horrific scenes with the fires. Of course, there’s been a lot of droughts over there. So, it’s been difficult and it’s actually, sometimes, improved great quality on the fact that the grapes are actually drying out but also at the same time, it’s limited the amount of production they could do as well. There’s been certain wines where we put our customers big stock like Screaming Eagles, Hyland Estates, Opus One, Dominus, real big hit in California wines, but not all of them have performed as well as we will have liked which is quite strange.
But we’re members of something called Liv-ex, which is a main trading platform for fine wine. There’s a recent article basically saying that, California Wine has now taken up nearly 17% of trade. So, it’s taken up more of people’s interest and I think it’s something that I think if people looked at it as a longer hold, a 5- or 10 year hold in Californian, they’ll do extremely well.
—
Tobias: How did you get started as a wine guy?
Steve: Without sounding like an alcoholic, I enjoy my alcohol. I like wine, I like whiskey. Since meeting Pat, I’ve been fortunate enough to try some fantastic whiskies, and we’ve traveled to Scotland a couple of times, and had some amazing experiences. I think as an individual I have an interest in property, I have an interest in cars. I like tangible assets, things that you can collect, things that you actually touch and feel, and I’ve always found with wine is that there’s a lot behind it. There’s a lot with whiskey that goes on behind the scenes. There’s a lot of heritage. It has a story too. It is exciting as there’s a lot there.
So, I used to be involved in property, and I had some friends that introduced me to wine. It’s something I’ve been involved in last 15 years. I just really enjoy it. It’s something that you can share with friends, and there’s a lot of conversation all the time. Me and Pat have many, many, many conversations over wine, over whiskey, and it’s something that you can celebrate with friends, and it will always be at your tables, at your celebrations. It’s is something that I enjoy talking about.
Tobias: And Pat, in whiskey, how did you first get started in it? Is that a birthright because you’re Scottish?
Patrick: [laughs] Yeah, basically you’re just taught it at school. It’s just part of your pathway into growing up through teenage years. Here’s your choice. Be a fireman, a postman, or enjoy whiskey. No, it’s just one of those things that I sort of got pulled to. When I first graduated university, I went to work for the world’s largest brewer, InBev, who own Budweiser, Stella, Becks, Hoegaarde, and then progressed into distilling.
Then obviously, with the natural pull to Scotland and understanding distilling and putting together products and some of the pains that distilleries have to go through, it’s hand craftsmanship making whiskey. Then just fell– not fell into but found my pathway into whiskey and being able to have a nice life where I get to spend a couple of weeks each month up in Scotland, and seeing my family, and also have my life down in England with my own family and enjoy having– fit in both camps if you like. That’s how I got started.
Tobias: Can you give us an overview of what the investment-grade whiskey world looks like?
Patrick: An incredibly diverse place, where there is an entry and access point for anybody that would look to invest in whiskey to generate revenue back to them and profit, or to do it as a passion with a love and a desire that they wanted to have their own cask of whiskey and bottle it for themselves. It’s such a dynamic, fast-moving market right now, whiskey investment. A lot of distilleries are pulling back their main name brands from the marketplace, because they want to try and control the release of the product themselves. So, they don’t want it to end up in the hands of any Tom, Dick, and Harry, or independent bottlers who will release a different age expression or a different cask expression to what they would want to have out in the market.
—
Investment In Infrastructure Driving Huge Returns In Whiskey
Patrick: You have the other continuous moving parts, which is you have got older brands that have been undervalued and finding the new fan base as they are hard rebrands, and then the value just suddenly shoots up overnight. You have got this industry of whiskey, which you know is hundreds of years old and distilleries that have stood there for generations and generations, which have now moved from being shrouded in secrecy to having the curtain pulled open, and are now owned by huge multinational companies from the Diageos in the world, to the Edrington Groups of the world, to the Nikka Whiskies of the world, to the Pernod Ricards of the world, and it has become an incredibly professional business, where every distillery is open in some way or another to the public, where these global giants of companies are spreading the good word of whiskey all over the world near and far, and they are global monsters now. That is part of why whiskey investment has become such a huge success for people.
Forgive me, if I’m talking too much here. But as the good news stories that you’ve seen on the BBC, Forbes, The Telegraph, The Times, The Mail, big mainstream publications, writing about people generating huge returns on their investments through whiskey, and that has been driven by the professionalism that’s been brought into the industry, where these global companies have thrown billions of pounds at distilleries with 10-, 15-, 20-, 50-year projects in mind to generate the return on profit for all billions. If companies like that are investing so heavily into the whiskey industry, then they’re not doing it to not generate profits for their shareholders.
—
When You Should Sell Whiskey Casks
Patrick: Of course, if you then get along and you buy a piece of that investment through a cask and not a share in the company, then you can pick up all that hard work that they’re doing and rebrands branding, selling to further afield, generating more new expressions, bringing in new drinkers to the market, and you sit on that cask for 5, 10, 15 years, you’ll see the benefit of not just with the whiskey, which is different to wine where you can see on the internet or in a supermarket the difference between a 10-year-old bottle of, let’s say,
Macallan versus a 25-year-old bottle, and you can judge the price gap, and you can see that over time on all the various outlets where you can buy whiskey. You can judge at which point you would want to sell it because you can see that price difference. Then you can track it across the years you own honor cask with the year-on-year inflation has put on with the year and year price increase.
So, most years, a distillery will release a 10-year-old expression, for example, for whiskey. But it won’t stay at the same price. The distillery will put an extra few pounds on the price of a bottle, and of course, that then is putting up the price of each and every different release, 18-year-old, 15-year-old, 20-year-old as it kicks on further down the chain, which in turn means you can see, “Okay, if I buy this 10-year-old cask now, and I sit on it for 10 years, and released the 20-year-old whiskey, I can see what that price increase would look like.” But if you’re sitting on it for 10 years, you have to then factor in, there will be inflationary increases, you will then get the increased year-on-year from the distillery increase in the price of their bottle which is obviously part of them investing into their business they want to generate bigger profits.
—
Whiskey Investment Is Such A Great Opportunity Right Now
Patrick: Of course, you might get lucky and get behind a brand. But one of the massive global companies takes and makes into something bigger than whiskey and makes a brand itself like Macallan has done with the Macallan which is now viewed as similar terms as Rolex, Ferrari, Apple, and you can pick something up that’s undervalued and really cheap just now but then, as we’ve seen with the most recent being Royal Brackla which is owned by Bacardi. Beautiful whiskey, great whiskey, nobody really knew too much about it, didn’t have great traction, Bacardi had done an incredible rebrand that they worked on for three years, released different expressions, different age statements, different cask expression, and the value of the same whiskey a year ago is almost 50% more in terms of just the bottle price from the new releases that they’ve done with Royal Brackla.
Now, everybody wants Royal Blackla, and the value of casks has doubled nearly overnight, because as soon as the rebrand came out, everyone’s like, “God, that’s amazing.” This new sherry 18-year-old expression, “How have I never known about Royal Brackla. Now, I know all about Royal Brackla.” Then, of course, when they do these releases, they have plans to distributor, further afield in the far East or America or, big campaigns, and duty free as and when travel returns to normal with COVID. That’s certainly been seen with Royal Brackla.
So, that’s a very broad brushstroke approach and sorry, if I have bored you there with some of the dynamics I guess of the whiskey market right now, but I hope that does give us a good overall picture of what’s happening in the whiskey investment market, and you know why it has become such an exciting and dynamic place to be right now.
—
Valuing Vintage Wines
Tobias: Steve, there have been some attempts over the last few decades to quantitatively predict what the value of a bottle will be over time, because I understand that when you first drink, when the wine is first casked, it’s very raw, and it’s hard to determine even the very good ones, which would be the better ones. So, they’ve tried to come up with these other mechanisms for valuing these bottles, and it’s looking at the amount of rain that falls. Is that penetrated the industry at all? Do you look at those things, so you rely on them?
Steve: I think there’s a lot of critiques and there’s a handful that really have a big influence on the wine market. All wines are tasted from barrel to start with and given a rough score of maybe– say it was out of 100, then of course, they might taste the wine from barrel anywhere between 90 to 93 points or 94 to 97 points, and you can get a rough gauge. There’s been some exceptional years recently, some not so exceptional years, and you do some– I don’t even like to use the word ‘punt’ because of course, we do have people that buy wine because they enjoyed- They don’t just look at as a moneymaker.
They will look at as something they’re collecting. We’ve got a lot of our customers that will take three or four cases or something knowing that. They’ll sit on two cases for 10 years to sell, and that the profit they’ve made will pretty much then pay for the first two, and the second two cases will be just all profit. So, it depends. A lot of our customers, some of them just as a bit of fun if they want it to be. It’s a passion. It’s something they really enjoy. They enjoy drinking wine. It’s been ups and downs.
We follow a lot of things on Liv-ex as well. Liv-ex is the main trading platform for fine wine. So, there’s about 450 merchants that are members of Liv-ex globally. There’s a lot of buying and selling that goes on Liv-ex. We can track the indices, we can see what wines are selling more often than others, we can see what’s popular, we can see if there’s any bids, live bids on certain wines. So, we can see daily, what vintages, what years are getting a lot more attention than others. But we don’t always get it right. We try to always get it right.
We’ve had certain wines and certain vintages that we’ve put customers behind and said, “Look, this looks like it’s going to do extremely well,” and it’s been a little bit of a slow burner. Some of them have taken a couple of years before it’s been any more growth, they might have seen a percent or two growth on an annual basis, and it hasn’t been as good as we wanted. But there’s been others where they’ve received higher scores, and then they’ve been upgraded, and then we’ve seen 10%, 15%, 20% uplift annually. So, we just have to keep our finger on the pulse as much as possible, really.
—
Tobias: Is there a great deal of variability from vintage to vintage? Are the better winemakers able to control it, or it really is dictated by the weather or whatever it is that prevails at the time, and then you don’t really know what you’ve got for 10 or 15 years, or however long you’re expected to sell it?
Steve: I think if you stick with the big branded, Bordeaux, Burgundy’s have been absolutely phenomenal over the last 10, 15 years. Burgundy’s have done really, really, really well. If you wish to purchase a case of, say, DRC, Romanée Conti, and use sit on it for the next 10, 15 years, you’re not really going to go too far wrong. It’s just inevitable. You don’t really get bad names with a DRC. If you were lucky enough to get Petrus where there’s only a few thousand cases made every single year, there’s people in the waiting list to visit Petrus. If you get your hands on Petrus, you know over time it’s just going to do well.
Of course, you can’t keep these things for some of these wines for too long. We’ve had stories like Lafite Rothschild 1982. It was at one point trading for £200, £300 a case when it was first bought out in 1982. Robert Parker, the most famous wine critic of all, gave the Lafite to 100 points out of 100. Everyone said he was crazy. It’s not a 100-point wine, and in 2010, the Lafite Rothschild 1982 was actually traded for £50,000…
a retraction on that and the score did come down to 98 points out of 100. Wine now has started come down slowly in value. So, that £50,000 on a case has starting coming down. I think it’s around that £30,000 to £33,000. So, there is a right time to sell. You can overhold on wine as well, which is something that you don’t do with whiskey. With whiskey, you can just keep holding. Of course, there was a time when with the whiskey, we would recommend to actually bottle it. Before the ABV and alcohol concept comes down too low, but with wine, I’d say a 10-year hold is a very, very good hold in wine. If you hold something for 10 years, you should be in good stead.
—
The Science Behind A Great Bottle Of Wine
Tobias: Does whiskey suffer from that same problem with the variability between the vintages because the process is so controlled that they’re able to get much more consistency from year to year?
Patrick: You’ve hit the nail on the head right there. It’s a much more controlled process these days. 30, 40 years ago, there was more variation because it was so dependent upon the casks and where they were stored or what the bonded warehouse looked like and which part of the bonded warehouse, they were in. The climate of Scotland suddenly had a hot summer, evaporation rates would go up and various factors, they all came into play, before the big monster companies came and took over and broadened this degree and level of professionalism now, which gives the whole whiskey market the stability that it’s always craved.
You can pick up a bottle of 25-, 30-year-old, 35-year-old whiskey from any of the main distilleries, and it will always within a varying degree tastes the same. That is what has drawn more and more people to whiskey investment, because with the big global companies owning most of the major distilleries now on Scotland, it’s not only secured all the distilleries futures, because they have been standing for hundreds of years, and the Diageos of the world, the Bacardis, they are just treating them as custodians and passing them on.
But they have invested heavily into cask programs, so that the wood that’s in the cask is the same throughout whether it’s bourbon barrels, cork barrel, sherry barrels, refill bourbon, virgin oak, which gives you the consistency. All of the bonded warehouses now are all temperature controlled, so it doesn’t matter which part of the bonded warehouse the casks are sitting in anymore. It doesn’t matter if the weather is suddenly really freezing cold for months on end, which is very typical in Scotland, or if there’s suddenly swelteringly hot, you know that cask is going to age at a certain rate, and what the flavors will be.
The education programs have gone to the master blenders and the master distillers and the warehouse keepers who are continuously going around sampling these casks to find out when they are at their prime, that education ensures that you get that consistency in all from the products. The testing panels and the science that goes into whiskey casks, it’s not just 10 people now sitting around the table sampling, “I agree, and oh, yeah, that tastes very similar to what it tasted like last year.
So, we’ll release that.” I’ve sat there around these tables and the scientific reports that are done on a cask of whiskey before it’s bought are tested for everything or any off flavors, testing for, is it matching the same scientific criteria that it matched last year, and if it does, then great. It makes the cut. If it doesn’t, then we’ll send it off for it to be part of a blended whiskey rather than be this amazing single malt, because they’re so protective of what is released now, and ensuring that they maintain the quality, and consistency, and a well-balanced product.
I think that is part of what is continuing the rise and the growth of whiskey consumption around the world, attracting new people to the market. Because we have these great cask programs that they’ve brought into play, they’re able to ensure that when they do a cork barrel or when they do the sherry barrel, or when the master blenders and distillers come together and actually blend all three barrels together to release something really special or blend two together, that product is so accessible to everyone across the market, that it just keeps drawing in new and new drinkers. Of course, there’s education of drinkers also and the growth of social media has allowed people to be able to do the virtual tastings to find out what a product should or shouldn’t taste like before they’ve even reached off the shelf.
So, that quality control has become so important, and as I spoke about earlier, there’s sort of the drawing of the curtains, open up the distilleries to people to make it feel like, they’re part of that journey, and part of that distillery and continues to bring more and more people sitting around the table, enjoying the end product. That is where it’s so different to wine with whiskey, because it is more controlled. You can’t open a bottle of wines and see how it’s testing. But with a cask, they can continuously draw samples of year on year on year, and make sure that it is aging appropriately, make sure that it is in its absolute prime condition. With bottles of wine, that’s a much harder thing to do, and obviously, wine has its own experts and its own education behind it. But with whiskey, it’s so professional and has a much more protected way of checking year on year for that product is maintaining the highest of conditions for the highest end quality product. That deals with the question?
—
High Fashion and Whiskey
Tobias: Perfectly. This is a question for both of you, but I’ll start with you, Pat. To what extent is the value of a cask or a bottle driven by fashion, or marketing, or taste at the time versus, say, the quality of the contents of the bottle? The reason I ask is that it seems to me that the wine there can be these very good vintages that will be exceptionally sought after and highly valued, whereas I gather from what you’re saying about the whiskey that they make a concerted effort to revive a brand and bring it to everybody’s attention. That seems to be what drives some of the changes in valuation.
Patrick: That’s incredibly correct. As we’ve touched upon already, there are brands– All single malt whiskey that comes from a main distillery, a distillery that’s sat there for hundreds of years, it’s all a great product, and the reason it stood there for hundreds of years is because they have produced a wonderful, great product. Nowadays, they’ve removed any ambiguity of, maybe having a bad 10%. Yes, fashion, brand managers, designers, chief executives play such a key role and bringing back a brand, a distillery that’s there and it’s producing whiskey, if you take an example like a [unintelligible [00:28:09] or Royal Brackla or a Ben Nevis.
So, Ben Nevis, great prime example. Ben Nevis is owned by Nikka and 70% give or take the whiskey, the Ben Nevis makes actually shipped across to Japan and goes into Nikka Whiskey. Now, Nikka whiskey is so well regarded as a really expensive product to buy whereas Ben Nevis, it’s in the most beautiful location and the beautiful setting. It’s got such an iconic name that’s known worldwide but yeah, it doesn’t sell worldwide because it is a has-been and a terrible bottle, is a distillery that before Nikka has invested all this money which they’ve been doing over the last two years, they’ve been investing heavily in the infrastructure, the distillery.
You drive past the distillery now and it is beautiful, sitting at the foot of Ben Nevis whereas beforehand, the paint was peeling off, it was a bit tacky. It had an old management team in place from decades, decades beforehand. Nikka have taken this baby, they grabbed it, and they have made the distillery incredible. They’ve set up a big viewing platform at the back of the distillery for people who take Instagram pictures of the experience, for example, and tag everyone in it.
They’ve built a beautiful tasting room that is– It’s built in granite. It’s granite, and it’s red leather, and it’s every Ben Nevis thing, and there is a rebrand on the way with Ben Nevis. I’ve been lucky enough to sit in the offices of Ben Nevis, see this new rebrand. It looks fantastic. But people have clocked on that Ben Nevis is going through changes, Nikka are investing into it. There must be something going on in the background. The price has started to climb. Now, soon the rebrand will be out. There will be different age expressions, different year expressions, and the fashion behind that will change. Instead of 70% of liquid going to Nikka, they’ll be pulling back some because they’ll need it for themselves to release these different years, these different age expressions.
It’s the same with what’s happened with Royal Brackla. As I said to you on one of the previous questions, the price of that for a cask nearly doubled overnight, and the price of a bottle for the new expressions they were releasing for age expressions they hadn’t released before and cask finishes they hadn’t released before, that was almost 50% higher than some of the comparable older ones but the older ones didn’t have the fancy new label, didn’t have all the PR drive behind it. That doesn’t damage the value of preexisting popular brands. It just means that now, there’s a huge amount of marketing money suddenly behind this product, bringing it more into the public’s consciousness, bringing it more into the public eye, bigger Instagram drives behind that, more traffic online, and that inherently does push up the value of something that was undervalued.
There are still plenty of other brands out there, whiskey brands, that are currently undervalued that are owned by the Pernod Ricards of the world, Bacardis, Diageos where there is a lot of work going on in the background, because there’s a hole to fill in the whiskey market, there’s more people drinking it than ever, it’s growing year on year. There’s a demand worldwide, but you can only get single malt whiskey, scotch, from Scotland. There’s only a finite amount of distilleries. So, how do they increase their market share, or how to reach new territories, or make the most of whiskey they’re producing already that may previously to be used for blend?
Well, years of investment into a rebrand, getting different expressions, different wood finishes ready, and then go out there and introduce this new all-singing, all-dancing rebrand to the world and the price just climbs up. It’s a simple process, but it probably would never have happened if it wasn’t for the bigger worldwide organizations taken over the distilleries and bringing that professionalism.
Because beforehand, all prices were almost driven and dictated by the independent bottlers because the distilleries, when they were all independently owned, were selling their bottles to all the independent bottlers, your Gordon & Macphails of the world, your Hunter Laings, your Douglas Laings. And they were so reliant upon that cash flow and those revenue streams because it was those independent bottlers that had done the time developing the routes to market globally with their blended whiskies or their single release expressions and they determined if they released a 13-year-old Mortlach under Hunter Laing, and that was so popular, was getting rave reviews, then that’s what makes Mortlach even more popular and more expensive, and the independent bottler has done a lot of the promotional work for the distilleries.
But the minute that you started to get that external investment from the bigger companies with their own marketing teams and their 10-year plans, then that’s when it pulled back for the independent bottlers, and you got the smarter approach to the industry because they had the deeper pockets to invest into long-term projects and weren’t almost living as hand to mouth as they had previously done.
Yeah, that in a nutshell. Yes, fashion does drive, creativity of the marketing team rebrands, bring in more people’s attention to previously lesser thought of distillery does increase the price drastically of that whiskey but it does not diminish the inherent growth going on with an already popular brand that you can see in the supermarket or see worldwide. I hope that deals with that in a good way?
—
Wine Critics Have Little Influence On Established Wine Brands
Tobias: It was great, but Steve, same question to you, because I remember 20 years ago, maybe there was a documentary called Mondovino, which was about Robert Parker’s influence, and perhaps promoting Mondavi as a comparable wine to some of the European wines as an investment-grade wine. The suggestion in that documentary was that it was unfair for him to have promoted it to that point. I guess that’s an example of fashion, but I don’t know, maybe it was just an undiscovered wine. Do you have any views?
Steve: I think where wine varies, is different whiskey side, of course, as Pat touched on, rebrands and people looking at changing the path in the direction of different whiskey brands. I think with wine and the fact that we touched base on earlier, appellation controlee, and the amount of wine they can produce each year, and the fact that you’ve also got the growthing system in place, that growthing system hasn’t changed.
Well, I say it hasn’t changed, it changed once 100 years ago, and it’s pretty much sat where it is now. I think it’s almost like these chateaus have their stance already. You know the likes of the Lafite Rothschild, you know the likes of Mouton Rothschild and you know that they’re at the pinnacle. They know how good they are. There is no difference in wine labels from one year to the other. It literally just has the vintage on the bottle. There is no change. It’s just a matter of them having to focus and be on point as possible as actually producing the superb wines that I do every single year. So, I wouldn’t say that there’s any real influence of fashion at all. More so maybe on the champagne side of things where you have different fads with champagnes or the celebrities drinking certain champagnes, and that might put him in the spotlight, a public high.
But I think with the big hitting wines, they are really, really high and the kudos is there. They know where they are. There’s only a certain amount of people that could afford to drink– your Latour, say for example, might be £500 with [unintelligible 00:36:43] £1000 a bottle. There’s only a small amount of the higher net worth people that bear to drink these wines in your bars and restaurants. So, I don’t think there’s much will influence. I just think these chateaus, these vineyards have set their stamp from day one.
You will get other chateaus that are up and coming through the ropes. Like you said, you had this an influencer, Robert Parker. Robert Parker can make or break a chateau. So, of course, if there’s been mentions of certain wines, and maybe there was a little backhand or a brown envelope with a certain amount of money [laughs] that was given out to promote this new wine. But I’ve said, I think a lot of them have their stance already and that there isn’t any real influence from elsewhere.
—
How To Build A Profitable Vintage Wine Portfolio
Tobias: If I was to approach you and say, “I’m interested in investing in investment-grade wine or in fine wine. I like the idea of being able to drink some of it for free by selling the rest of it at some point,” what would you tell me to do? Should I put together a portfolio? What should I be thinking about?
Steve: I think because of the foundations of Bordeaux and how well it’s done over time, we predominantly say to a client, a collector, let’s focus 50% of the funds over into Bordeaux, not necessarily happen to be first-growth wines. There’s some fantastic wines from second-growth wines. Even down to your fifth growth, there’s still some fantastic wines. Pontet-Canet is a the fifth-growth wine. But in 2009, Pontet-Canet was given 100 points out of 100 by Bob Parker. Once again, in 2010, they’ve shown good growth. But they have now slowed down. But that is some of wines where you might pick up a case for, say, of £1700, £1800 a case and it gives us a bit of diversification.
We would say to a customer, maybe focus 10% of funds off that on Burgundy’s, 10% on Rome. There’s some absolutely fantastic wines. Sassicaia from Italy, you’ve got some Super Tuscans. Sassicaia, Ornellaia, they’ve done really, really well over the last few years, made fantastic percentage growth. But we just try to be as diverse as possible. We know that Bordeaux is the basis, is the foundation. We probably focus 50% Bordeaux, 10% champagne, 10% Rome, 10% California.
Like I said, some great California wines, very quirky, different, that haven’t shown us the growth that we would like to see as of yet but we would recommend anyone look at even wine or whiskey as 5-year hold, 10-year hold, it’s not something where– we don’t see any fluctuation. It’s not we have the global pandemic and there’s billions of pounds wiped off the stock market suddenly. We just don’t see any affiliation with global pandemics, if there’s changing presidents. Things will be volatile and I think that’s what people like with investing or collecting in wine and whiskey. It just literally stays steady. The longer you hold, the better you’re going to do.
We might show people 5% growth one year, but 15%, 20% growth on another year. It is very, very rarely– we pride ourselves in between myself, Pat, and the guys at Elite Wine & Whisky where we don’t rush into investing people’s money. So, if someone comes to us and says, “Look, this is how much I want to put into the market.” We work with the customer. So, they have an interest in the products.
They might give us an influence of where they want to put their money as well. It might be more whiskey based if they have some influence, or some family heritage, or some background where they want to invest more in whiskey. But we would take our time, and we always take our time, making sure that the stock that we put any of our customers to, we know it’s going to perform well over a certain amount of time, a certain amount of years. But we recommend a 5-year hold at least anywhere up to 10 really, if possible.
—
How To Build A Rare Whiskey Portfolio
Tobias: Yes. Same question to you. If I was to approach you and say, “I want to invest in whiskey,” what should I do? Should I build a portfolio? What should I be thinking about as I’m doing that?
Patrick: You should 100% build a portfolio. The main things to consider, you want to be investing in a whiskey that is predominantly owned by one or all of the major international companies, Diageo, Bacardi, Pernod Ricard, somebody of that nature, that if they’re putting all their money into that distillery, into that business, that’s obviously a really good thing for your investment, because they’re going to see the uplift, and the whiskey and the distillery that’s going to represent uplift, and the cask that’s going to outperform the standard year-on-year increase. You would want a diversity in terms of the year expressions. So, you might get a 5-year-old cask, a 5-year-old, a 10-year-old, a 15-year old cask, so then you can be getting different growth at different stages.
Invest In Whiskey That You Can See In Every Supermarket & Duty Free Worldwide
Of course, if you were really wanting to expand upon that portfolio, you would also be wanting to look for different cask expressions. From refill bourbon to sherry to cork, and then you basically tick every single box. You only want to be buying whiskies that you can see in every major supermarket or duty free across the world because then you know you’re really maximizing it. There are whiskies out there that are tradename spirit. So, that is a secondary whiskey that the distillery would produce. Tomatin, for example, is the main name distillery. They’ll produce Tomatin whiskey but they have a tradename for it called Strathdearn, which is what goes off to blenders.
Some people are misguided or misknowingly invest into these tradename spirits without doing the research properly and therefore are then with the cask, but there’s no overall brand behind that particular cask. That’s why it’s really important to just invest and to main name brand whiskies that you can see on the shelves. You can google and you can see on websites like The Whiskey Exchange or Masters of Malt, the big-name players, because that gives you the safety and security.
Somebody else is working hard investing their billions and millions of pounds into building that brand, which you own a cask of. So, let them do all the hard work for you while you just let it sit there and continue to mature into this wonderful, beautiful spirit. If you did ever want to draw a bottle from your cask, you can do that without affecting any part of your profit because your cask is sitting safely in a nice HMRC-bonded warehouse with your unique cask number which is the same as a license plate on a car, so it’s unique to you. You can get the warehouse keeper or some work within the warehouse to draw a bottle of the whiskey from your cask.
Obviously, if you do it when it’s too young, it will be 60% ABV. So, it might destroy your taste buds and destroy your palate forever. But as time goes on, or if you have a 15-year-old cask, for example, you could draw bottle, they’ll stick your name, your label, all the cask details on the bottle for you, and it can be sitting there, pride of the place in your home, on your drinks tray, your drinks cabinet, sharing with your friends. And then, a couple of years later, you can draw off another bottle and have a comparison as it’s mellowed out a bit and more of the flavors from the cask that came into.
Number one for me is, you want a cask of whiskey from a main name brand distillery that you can see everywhere. Then, followed by the different age expressions, and then the different cask styles, and that gives you such a great level of potential growth and protection, because we’ve a big company doing all that hard work for you. You’re just going to reap the rewards of that, from what they do.
Tobias: Gents, absolutely fascinating discussion. We’re coming up on time. If folks are interested in learning more about wine or whiskey or getting in touch with you, what’s the best way to go about doing that?
Steve: Our website is www.elitewineandwhiskey.com. Our telephone number and all our details, contact details are on there. We have a team of portfolio managers that are happy to answer any questions. If anyone ever wants to call in or speak to us, me and Pat are always at the other end of the phone as well. As you can tell from today’s conversation, we enjoy drinking and talking wine and whiskey.
Tobias: [laughs]
Steve: So, if anyone ever wants to call us and they want any advice, then by all means, yeah, we’re here.
Tobias: That’s fantastic. Thanks very much, Steve Bishop and Patrick Fischer from Elite Wine & Whisky, thank you for your time.
Steve: Thank you.
Patrick: Thank you very much.
For all the latest news and podcasts, join our free newsletter here.
Don’t forget to check out our FREE Large Cap 1000 – Stock Screener, here at The Acquirer’s Multiple:
