Philip Staveley
The views expressed in db Reader do not represent the views of the drinks business.

The promise of India

Regular readers will know that for over two years now Amphora has been sending executives out to India every three months or so with a view to spreading the fine wine investment message. Last week we were lucky enough to be able to spend a day at the delightful Sula Vineyard, a hair-raising three hour drive north east of Mumbai. What has that got to do with wine investment, you may ask? Or was it simply an arduous perk?

sula1Sula’s first vintage was, propitiously enough, the Millennium year, and they now produce an excellent selection of wines of differing hue, as well as a lovely “method traditionale” champagne. They also sell imported wine, and have a relationship with Hardy’s in Australia, for example. From relatively small beginnings it has expanded capacity and now enjoys a domestic market share of over 60%.

What we must understand, is that this is not 60% of a thus far painfully small figure. As we have been at pains to stress, while the older generation of Indians grew up drinking principally beer and whisky, this has been changing rapidly in recent years, and the affluent (and not so affluent) younger generations are being won over to wine rather as happened in the UK back in the 1980s.

We visited on a Wednesday, and couldn’t help but marvel at the number of other visitors. Imagine our surprise when this was endorsed by the statistic that over the last year they have received over 250,000 through the turnstiles. That averages out at nearly 700 per day!

Where this leads, of course, is that India is well on the way to becoming one of the world’s great wine consumers, and this will percolate from bottom to top in terms of wine quality. We have mentioned in the past how imports of fine wine face an exorbitant 160% import duty, thus currently inhibiting sales of imported fine wine domestically. Whilst we wouldn’t put money on that duty figure disappearing any time soon, it is certain to over time, and fine wine investment being a medium to long term proposition will definitely benefit at some point.

Meanwhile the market continues to enjoy itself, a further hike of 1.59% for the Liv-ex 100 in September registering the tenth straight monthly rise. So is the complexion of these rises evolving at all? We know that the broader market outperformed Bordeaux during the correction and consolidation phases from mid 2011 to date:


More recently, though, Bordeaux’s return to fashion has seen it nudge ahead, the narrower “50” outperforming the larger “1000” by 500 basis points on both a one and two year view, as you can see from the table attached to the graph.

Interestingly there are signs of that situation evolving too, over the last three months. Here is the “50” against the “100” over six months:


Lock-step until mid June, then the referendum acting as a starter’s pistol for the First Growths to power ahead. Although the chart doesn’t capture it, the last month has seen a slight change of focus in favour of the Liv-ex 100 over the Liv-ex 50.

Remember that the Liv-ex 50 comprises the last 10 physical (already bottled) vintages for the First Growths, while the Liv-ex 100 is broader in respect of constituents. It is almost a microcosm of the Liv-ex 1000 because it is not restricted to French producers, comprising wines from Burgundy and Champagne, various Super Seconds and wines from the Right Bank, as well as one or two from Italy, Spain and the USA.

In the month just past the rate of increase of the “100” has exceeded that of the “50” by a substantial margin. They have both done well, but the “100” has does especially well. It is far too early to draw any substantive conclusions from a single month’s data, but at some stage we will look back and be able to tell when the market’s focus switched from the First Growths. We will keep an eye on all of this, obviously, because it is of particular use when we are determining the optimum weightings for client portfolios.

Finally, we mentioned in last week’s note the importance of making sure you buy at the right price, and we have had quite a few people asking how best to ensure that they don’t get ripped off. The answer is at your finger-tips. Wine Searcher is the best indicator, as it is an online market place amalgamating all the advertised offers from a multitude of sources. A quick glance will illustrate that the prices on show can display a pretty wide spread, but all of the advertisers can be called to see if their offer is for real.

Remember though that these are by and large the merchants’ best offer prices. An analogy most people will understand is that these might be viewed as the best “forecourt” prices. Can you buy more cheaply? Absolutely, and it is by trying to match willing buyer and willing seller that we at Amphora are able to get inside the merchants’ bid:offer spread, a crucial element of engineering enhanced investment returns.

That said, for most investors Wine Searcher is a perfectly decent place to start looking at prices.


PhilPhilip Staveley is head of research at Amphora Portfolio Management. After a career in the City running emerging markets businesses for such investment banks as Merrill Lynch and Deutsche Bank he now heads up the fine wine investment research proposition at Amphora Portfolio Management

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