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Tuesday 30 September 2014

New merchant eyes fine wine resurgence

15th January, 2014 by Gabriel Savage

A new wine merchant, backed by a group of high profile investors, has started trading as its founder suggests that the fine wine marketplace is about to pick up.

Latimer VintnersWest London-based Latimer Vintners has been set up by the team from existing merchant HS Liquid Assets with the help of investment from seven new shareholders. These include former Marks & Spencer chairman Sir Stuart Rose, aviation lawyer Sean Gates, Lord Davies of Abersoch and former Matalan chief executive Angus Monro.

The move will see HS Liquid Assets, which was founded by managing director Michael Stobbs in 2003, continue to trade, but in the capacity of consultant for a wine cellar fund based in Bermuda.

With Stobbs at its helm, Latimer Vintners now aims to expand his original company’s balance of private client and trade sales, supported by a growing agency business, which focuses on the traditional fine wine regions of Burgundy and Rhône in particular.

“There are a lot of small merchants and brokers, which HS Liquid Assets was one of, so there was kind of a race to the bottom on margin,” Stobbs told the drinks business. “That’s not a long term great vision for a business and we felt under-capitalised to take advantage of the current market.”

Boosted by the injection of financial backing from these new shareholders, Stobbs remarked: “The market is currently down for Bordeaux and we believe the opportunity is there by raising capital.”

Although 2013 ended with the news that Bordeaux’s Left Bank had pushed the Liv-ex Fine Wine 100 into its third consecutive slump, Stobbs predicted: “I can’t think we’re that far off the bottom.”

Predicting that the UK fine wine market would be “more positive this year,” he continued: “There’s been a long period of misery for everyone but the basic fundamentals of the wine market are the same – there’s a limited supply – so in the long term it’s a sensible place to be.”

This view is reflected in the buying strategy of Latimer Vintners, with Stobbs observing: “Instead of just buying blue chip wines there’s a opportunity to buy wines lower down that scale. The place you have made money in the last two years is in wines that have been consumed rather than blue chip.”

In support of this argument, he noted of Bordeaux: “Vintages like 2001 and 2004 are harder to buy now than they were two years ago but it’s pretty easy to pick up some 2005 Haut Brion.”

Meanwhile Christopher Herbert will develop his HS Liquid Assets role into balancing private client sales with sourcing new agencies from Burgundy in particular. The company already buys directly from high profile producers including Hudelot Noellat and Roulot

While admitting: “great producers in the Rhône and Burgundy are harder and harder to get hold of,” Herbert stressed the importance of regular visits to these regions. “It’s about finding out who are the up-and-coming growers,” he remarked.

Looking more broadly at the fine wine investment market, Stobbs acknowledged the recent growing popularity of Champagne among buyers. While Taittinger Comtes de Champagne 2005 was warmly received by merchants in October, Cristal has also shone as the best performing fine wine on the Liv-ex 100 in December.

“Vintage Champagne offers a very steady return over a reasonable period of time,” said Stobbs. “It’s a handy part of a portfolio because it offers that underlying growth that Bordeaux did 8-10 years ago and there’s a belief that the brands who own those houses are going to consistently put up prices.”

Returning to his earlier point about the current opportunities within the fine wine investment market, Stobbs added: “Also, the thing about Champagne is that it’s consumed.”

As for the Asian fine wine market, where Latimer Vintners is aiming to expand its client base with the help of new head of trading, James Pymont, formerly of Justerini & Brooks, Stobbs identified significant room for growth. “I don’t think we’ve even touched the sides of that yet,” he said.

Brushing aside concerns about the impact of a recent government crackdown on lavish spending among officials which has been blamed by a number of major international drinks groups for a slowdown in growth, Stobbs added: “The big clients in Asia are so significantly wealthy that it matters little.”

Against a backdrop of concerning stories from the world of fine wine investment during the last year, including Nobles Crus and Bordeaux Fine Wines, Stobbs highlighted a difference in the business model of both HS Liquid Assets and Latimer Vintners.

“We don’t store wine on behalf of our clients,” he stressed. “We recommend that they use Nexus [Wine Collections] who are independent of us and specialists in that area.”

As a result, explained Stobbs, in contrast to those merchants who offer storage as part of the investment package, customers can see immediately if a wine doesn’t physically appear in their account.

Nevertheless, he acknowledged that the recent upsets in this sector had made some people hesitate, noting: “We maybe get fewer enquiries from people who have little experience in wine investment.”

Having started trading earlier this week in time for the Burgundy en primeur season, Latimer Vintners’ website is currently under construction but is due to go live during the next month.

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