Fine wine as an effective wealth store? I’m not buying it

Will the fine wine investment market ever get over its image problem? The answer to that largely depends on whether or not you think it has an image problem in the first place.

The question is provocative but important. Stories of wine investment scams and fraudulent brokers make headlines on what seems like a weekly basis, while at the same time our inboxes are flooded with research reports, news articles and marketing literature that tout the benefits of wine investment for the everyday investor. Never mind that the Financial Conduct Authority has clamped down on the promotion of alternative investments to retail investors — fine wine as an investment is not regulated by the FCA anyway.

A recent fine wine investment report published by Intelligent Partnership and sponsored by Cult Wines has made for some interesting reading, although the bulk of its contents are not particularly groundbreaking. Nevertheless, the report makes several claims about the investment potential of fine wine that I believe need to be challenged.

The first entry that gave me cause for concern was a rather bizarre pull-quote that made the report read more like an article out of a tabloid newspaper than a serious research outfit. Is this the image that they really want to portray?

“The funny thing is, wine is turning out to be a great investment. I couldn’t believe what happened with the value of my wine futures. I pinched myself and asked, ‘Did I just make more money on wine barrel futures than I did on the stock market?”

Suze Orman,
Financial adviser and CNBC presenter

Market corrections

Aside from the odd quote from Suze Orman, my biggest concern is how the report continues to promote wine as an ideal asset class that helps to add diversification to an investment portfolio, has low correlations to other investments and generates unmatched returns. Of fine wine’s correlation to global financial markets, the report states:

The crash in 2008 gave many investors an unpleasant shock in that investments which had been considered as good diversifiers were actually highly correlated and sharp negative price movements were mirrored across developed and emerging equities, bonds and property. This meant that the search was on for assets that are not correlated with the mainstream public markets in any conditions; wine, with its inverse supply and demand curve and only a 15% correlation with the mainstream financial markets, is a good candidate and its performance during 2008/2009 proved it does not follow the mainstream markets volatility
or acute downward movements.

Accompanying this statement in the report is a chart that plots the performance of global equities and government bonds against the Coutts Objects of Desire Index, which includes not only fine wine but also classic cars, stamps, coins, rugs, rare musical instruments and so on. The problem with this is that the Coutts index, as shown in the chart below, does not reflect the pure performance of wine because it contains so many other assets. Therefore, its behaviour in 2008 seems almost benign in 2008 when compared against other major asset classes (the precise make-up of which is not divulged in the report).

CouttsSource: Intelligent Partnership

A glance at the historic performance of any of the major Liv-ex indices (Liv-ex Fine Wine 50, Liv-ex Fine Wine 100, Liv-ex Fine Wine Investables) will show that fine wine prices actually went through a correction in late 2008 just like many other global stock markets (see chart below).

For example, the Lix-ex Fine Wine Investables Index saw a correction in the region of 20% in the second half of 2008 as it fell to a reading of 198 on 21 December 2008 from a peak of 248 on 30 June 2008. That is a fairly standard market correction. Moreover, the index started a multi-year bull run beginning in early 2009 just like many other global stock markets. This bull run lasted until 2011 when the market entered a major structural downturn that saw prices for Bordeaux wines fall across the board for several years. The below chart from the Intelligent Partnership report shows not only the 2008 correction that fine wine exhibited (thick red line), but also the slump that began in 2011.

indicesSource: Intelligent Partnership

The reasons for the 2011 downturn are various and widely documented. Unfortunately, the report only makes a brief mention of some of the causes for this and for the most part excluded a proper analysis of why the market for investment-grade wine began to slump in 2011. There is no mention of recession, volatile stock markets, the eurozone sovereign debt crisis, correlations with market and economic events (more of which later), a revolt against ever-higher en primeur prices, and so on. This is valuable information for any potential investor.

Lower correlations?

Wine might appear to be an attractive investment right now as a result of the prolonged downturn in the Liv-Ex 100 over the past five years, but that does not necessarily make it a perfect buying opportunity either. Yet this always seems to be the primary message coming from newspaper articles and research reports into the fine wine investment market.

One positive thing to extra from this report is that it does appreciate that the market has exposure to China, although it continues to trot out the argument that fine wine has a ‘very low correlation’ with financial markets and economies:

Although fine wine investing shows a very low correlation to mainstream financial markets, it is heavily exposed to emerging markets and China, “which many will regard as being a risk as well as an opportunity”. The key is to ensure that a portfolio is correctly balanced in terms of the markets invested in.

True, this can create an opportunity. Lower prices make a great entry point for investors. But for those who want to be fully aware of the risks, let’s look at some worrying levels of correlation that suggest that wine has anything but a ‘very low correlation’ to global markets.

As a luxury product, wine is geared into global growth and rising wealth levels. That explains why it boomed when Japan was booming, it boomed when the US was booming and it boomed again when China was booming. It also explains why there was a slump following the global financial crisis in 2008 and again in 2011 when China’s government began cracking down on corruption.

Oh, and then there was the time it was almost perfectly correlated with the Shanghai Stock Exchange. And yet the report makes this rather brave claim:

The right fine wine investment can be a very defensive holding as it has the capacity to remain stable under difficult economic conditions. Additionally, it has the advantage of not necessarily following the general trend of lagging behind the rest of the market during economic expansion because demand is consistently strong.

Consistently strong? During economic expansion, yes. But investors want to know about what happens when the opposite is true. What happens during an economic recession? What happens when the economy isn’t doing so well and conditions deteriorate? In the case of China, the buyers stop buying.

And then there is the market correlation everyone seems to have forgotten. Crude oil. Two economists at the International Monetary Fund were studying the factors that drive commodity prices upward and found that fine wine has a strong correlation with the price of oil.

Our results suggest that although fine wine can be considered as an investable asset, its behaviour is not significantly different than other commodities and therefore may fail to enhance portfolio diversification.

Fine wine prices are sensitive to macroeconomic shocks, just like crude oil and other commodity prices.

Serhan Cevik and Tahsin Saadi Sedik
International Monetary Fund


Not all is bad about this report, despite my critical statements. It does highlight the risks associated with investing in wine and it makes mention of the costs and expertise required to make informed decisions and ensure correct storage. I applaud the authors for discussing the downside to wine investment. My concern, however, is that it has not paid enough attention to the risks associated with fine wine and has downplayed the effect that global market and economic events can have on consumption and pricing. In the past, the small and relatively closed world of wine investment was sheltered somewhat from global events. This is no longer the case as more investors enter the market and globalisation takes hold.

Tasted: The Outsiders of Languedoc

wpid-dsc_0689.jpgWhen I first heard of the group of wine producers known as The Outsiders, I had visions that they were a band of outcasts akin to those conjured up by SE Hinton or even Camus.

I was clearly over-romanticising. The Outsiders in this case are anything but a band of misfits and societal outcasts. Instead, they’re a group of winemakers. All of them upstanding citizens. At least as far as I could surmise.

This is a group of winemakers operating in Languedoc-Roussillon who come from all over the world and from a variety of walks of life but, crucially, are not native to the region. What they have in common is their active decision to settle in Languedoc-Roussillon to make wine.

There are times when calling oneself an outsider is something to embrace. When it comes to the bureaucratic labyrinth that is the regulatory framework of the French appellation system, being an outsider is often seen as a disadvantage. The stubbornness of the appellation system is no place for an iconoclast, where decades of tradition are preferred over ‘frivolous’ notions of commercial viability, free enterprise and experimentation. Despite this, it seems that these Outsiders have been able to overcome, or embrace, the bureaucratic machine and carve out a niche for themselves.

As part of their effort to market their wares to UK merchants, this group of international winemakers (they come from all over the world, from America and Australia to the United Kingdom, Switzerland and yes, within France itself) hosted a small tasting in London back in early May.

Looking back on my rather shabby notes, I can see clear evidence that this was a decent tasting despite having experienced the onset of a head cold that same morning. First, I managed to write notes against every wine on the list, a clear sign that I neither grew bored with the wines, nor daunted by their numbers. Second, the greasy fingerprints left behind on the paper suggest that the spread of charcuterie and cheese on offer was more than adequate. Of course, as the photo below shows, reading the chicken scrawl that is my actual notes does present a bit of a challenge:



As a tasting that included a broad range of wines from across the Languedoc region, it is hard to make generalisations or make sweeping statements about the producers. Quality levels were high, but there were obvious differences among the producers in terms of what they are trying to achieve. Some are aiming for affordable, accessible wines, while others are aiming for something a little more profound. In other words, you won’t be having any flashbacks to that time you bought vin en vrac from what looked like a petrol pump behind a dusty shed.

If I’d had the foresight to, say, scribble down scores for each of the wines I tasted, I’d have a much easier time selecting my favourites from this group. But where is the fun in that?

Anyway, enough of my digressions. Here are my highlights from a good bunch of wines. Some of these winemakers are still seeking distribution here in the UK, while some are available to buy from various merchants and supermarkets, although I’ll be darned if I can remember which ones.

Chateau Rives-Blanques Occitania Mauzac Limoux 2013

A still white wine made from the mauzac grape, this is a rich wine that is matured in oak and offers up stone fruit flavours. This is a delicious wine that has a lot of heft and fruit behind it while still being dry

Domaine Sainte Rose Le Pinacle 2012

There is quite a lot to like about all of the wines of Domaine Sainte Rose, but if I had to narrow down my choice to just one, it would be Le Pinacle 2012. Consisting of 95% syrah and a 5% dash of viognier, this has the style of Cote Rotie with a lush palate and medium body. It has an attractive earthy character backed up by red fruits and the potential for a long life.

Chateau d’Angles Grand Vin Red 2010

La Clape is one of the great wine regions of southern France and this producer has brought some Bordelais swagger — complete with red trousers — to the area. The grand vin is a real pleaser, with a high level of mourvedre in the blend to make a deeper, bigger wine that has an attractive balance of fruit and earthy flavours.

Chateau Beauregard Mirouze Fiare 2010

I might be at risk of selecting too many ‘top’ wines from this tasting, but this was among the standouts from Chateau Beauregard Mirouze. With 18 months of barrel age, this displayed dark fruits (prunes and raisins) and had a deep, broody, earthy, chocolatey character to it. In many ways it was sunshine in a glass.

Domaine Saint Hilaire The Silk Chardonnay IGP Pays d’Oc2012

In the past I was never a big fan of chardonnay from the south of France. At times it seemed flabby, overripe and lacking any real character or complexity. But this is something different. It could very well be a competitor to decent Burgundy, having a healthy but not excessive oak treatment, not to mention a real elegance and finesse about it. Close your eyes and you think you’re drinking something from the Cote de Beaune or even the Cote d’Or.

Domaine La Madura Grand Vin Blanc 2014

This was a delight, a barrel-fermented, sauvignon blanc-dominant wine.Fermented and matured in older barrels, this older oak treatment is immediately noticeable on the nose, while on the palate it is rich with citrus and stone fruits, and has a long finish.

Domaine Turner Pageot La Rupture 2013

Another white wine that grabbed my attention. This was a lot like a white Bordeaux to me, made of sauvignon blanc but in a restrained style that is free from the more modern take on SB that has proliferated the market. Fresh, mineral and a good match for food. Not a whiff of cat pee to be sniffed.

Domaine Modat Le Plus Joli 2011

This is warm, spicy and very much a syrah from the south of France. With 80% syrah and the balance consisting of grenache and carignan,  this Rousillon displays licorice and nutmeg, with fine tannins and a long finish.

Chateau Saint Jacques d’Albas Le Chateau d’Albas Minervois 2012

A blend of syrah and grenache, this is aged 12 months in barrel and offers up all that is good about Minervois. It is warm, with fine tannins and a backbone of ample red fruits .

Domaine de Cebene Les Brancels Faugeres 2012

All of the wines from this producer were excellent, but Les Brancels seemed to stand out to me. This was what was described as the ‘house blend’ of syrah, grenache, mourvedre and carignan. I love the wines of Faugeres and this displayed all the characteristics that keep bring me back: warmth, earthy aromas a flavours, a good backbone of fruit and a fine complexity that pulls it all together.

Not mentioned…

Two other producers that were at the tasting but without a mention here were Le Clos du Gravillas and Domaine Le Clos du Serres. This was for no other reason except that my notes for these producers were a bit too sparse (likely because I was chatting rather than writing) for me to be able to write a recommendation.





Fine wine and pensions: A dangerous cocktail

wpid-dsc_0638.jpgThese are interesting times to be discussing investment advice. For those who invest in wine (without even discussing the rigours of the en primeur market), there has been nothing short of a deluge of stories about fly-by-night wine investment firms using high-pressure sales tactics on stock that never existed. For those who are simply investing for retirement, a new regulatory landscape that was introduced on 6 April has opened up incredible opportunities — and a great deal of uncertainty as well.

Right now you are probably wondering how these two topics are related. With interest rates and bond yields at low levels, investors have been clamouring for yield wherever they can find it, particularly those nearing retirement. Given how alternative investments — such as fine wine — have received a great deal of press over recent years for the returns they have achieved, it stands to reason that they have attracted many an amateur investor.

But as someone who used to be a financial journalist and today works somewhere in asset management, these are areas of investing that are best left for the experts and those who can afford them. So when I noticed that the Q&A column in the May 2015 issue of Decanter magazine featured advice on how best to supplement a pension income by using an inheritance to invest in wine, my curiosity was immediately piqued.

In this advice column, a reader asked this specific question:

I’m looking to invest in wine using an inheritance to supplement a pension — so looking at mid- to long-term returns. Should I buy Bordeaux or Burgundy, or both?

Ultimately, what someone does with their inheritance is their business. If they want to splash out on a case of Le Pin 1982 or even a whale tanker of rough-and-ready Vin de Pays, that’s their decision. But where I start to grow concerned is when that flight of fancy transforms into something more serious, such as an appeal for genuine financial advice.

Perhaps only a financial wonk such as me would pick up on the distinction between wine investment advice and pensions advice, but there we go. For safety’s sake, the mere mention of the words ‘pension’ and ‘wine investment’ must be approached with caution. In fact, anyone asked to advise on a scheme where the two could be combined is faced with a minefield. Better to retreat to safety than to risk a fatal misstep.

Sadly, this issue wasn’t addressed in Decanter’s response, in which the first two paragraphs were probably the most crucial:

Historically, fine wine has proved a lucrative investment over the long term, although it is subject to corrections like any other asset class. We’ve seen this with first-growth Bordeaux — the traditional investment staple — losing about 40% since mid-2011 while over the same period, top Burgundies gained about 10%.

My advice is to hedge your bets by diversifying, in two key ways. First, you are right to treat wine as a supplement rather than a primary investment. Wine is a useful addition to a wider portfolio thanks to its lack of correlation to more traditional asset classes, such as the stocks and bonds making up most pension funds.

The central issue I am highlighting here is that, in the highly regulated world of financial advice, fine wine is an unregulated asset class so symbolic of the wild frontier of the investment world that it has attracted disapproval from the Financial Conduct Authority. Ask your financial planner to include wine investment in your retirement funding arrangements and the answer will be simple: No. If professional advisers won’t touch it, then it’s probably a good idea that the amateur financial advisers not do it either.

This doesn’t mean wine investment is a bad thing. Nearly every wine enthusiast I know has bought at least a case or two for investment purposes over the years. But there is wine investment and then there is pensions investment. And my bone here is related specifically to the fact Decanter ignored the pensions aspect of this reader’s query and trundled straight on to the wine investment advice aspect. For my purposes, the most crucial part of Lister’s reply came in the first two paragraphs:

To her credit, Lister made clear that wine should be seen as a supplement to a portfolio rather than a primary investment. She also made sure to point out that fine wine, like any asset class, can fall in value as well as go up. But my gripe with the advice given is as follows:

  1. There was no statement at the outset that, above all, the reader should seek professional financial advice before making any major investment decision relating to inheritance and a pension (we don’t know how much money this person wants to invest, but there is some suggestion it is more than a few thousand pounds).
  2. Fine wine is touted as providing lucrative returns over the long term without any specific reference to actual performance figures.
  3. While the suggestion that fine wine has a “lack of correlation” to other asset classes is not necessarily incorrect and, indeed, there are no clear indicators for fine wine prices. There is, however, evidence to suggest wine is correlated with major global economic events, such as the 2008 global financial crisis or growth in the emerging markets. While it might not move in lock step with stocks and bonds, wine as a luxury product will be affected by the vagaries of the economy in one way or another, particularly during a recession or a decline in spending.

While Paul Lewis, host of BBC’s Moneybox, rightfully wrote that anyone can given financial advice, not just qualified financial advisers, there are times when it’s best left for the experts. I do not dispute the wine investment expertise that Decanter provided to this reader. I just believe that it should have been more careful given this person’s clear need for pensions advice.


Sticker shock: Worthy pinot noir for less than £20

wpid-dsc_0662.jpgFinding decent pinot noir for a decent price has become a nearly impossible quest that is akin to finding an affordable apartment in central London that isn’t simply a converted attic with a camp stove in the corner.

Pinot noir is one of those wines that can stop you in your tracks when you taste it. At its best, it is complex and profound, causing you to take more time to enjoy layer upon layer of flavour. At its worst, it can prompt your gag reflex.

Notoriously difficult to get right, pinot noir isn’t one of those wines that can be made in large volumes successfully. Thin-skinned, prone to rot and demanding care and attention throughout the growing season and in the winery, this is a wine that you don’t want to buy from Romania for £2 a bottle. And despite what some people might say, you probably don’t want anything from New Zealand’s Marlborough region for less than £10 a bottle these days either. Note that in California, the volume producers have steered clear of pinot noir for the most part. While Charles Shaw — AKA Two Buck Chuck — can pull off cheap chardonnay and cabernet sauvignon, among other varietal wines, they stopped short of jumping on the pinot noir bandwagon. That was a wise decision.

Where, then, do we find affordable, drinkable pinot noir? New Zealand’s Marlborough region is increasingly turning out impressive examples.

While Central Otago to the south and Martinborough to the north are coveted for the quality of their pinot, the price can often be a bit of a shocker. Marlborough, perhaps best known for its unique style of sauvignon blanc, has been producing pinot noir for quite some time. Even though they tend to be cheaper than those from Otago, they can be frustratingly acidic, one-dimensional and unappetising. Think Brancott, Oyster Bay and any other supermarket brand for that matter.

There are some great examples of Marlborough pinot, however. The likes of Dog Point and Cloudy Bay, and the better offerings from Seresin, all produce fine pinots but their per-bottle prices are north of £20 and are often closer to £30. Pegasus Bay, in the Canterbury region, also makes a great pinot noir, but again the price is around £25 per bottle.

The question is, can we find an enjoyable pinot noir with layers of complexity with a price somewhere between the forgettable supermarket brands and top-end juggernauts? I think we might.

For several months I have been visiting the Leadenhall Market location of Amathus Drinks and eyeing up its selection of wines from Marlborough’s Domaine Georges Michel with curiosity and suspicion. Curious, because it is a producer unknown to me. Suspicious, because little has been written about them in the UK.

Further suspicion comes from the price. The company’s mid-range pinot noir, Domaine Georges Michel La Reserve Pinot Noir 2010, is listed at £22.51 per bottle on the Amathus website, placing it firmly in the more expensive category of Kiwi pinot. But in the shop it is selling for £16.85. While not cheap for the everyday wine drinker on the street, if it’s good, it could be a steal.

On first pour, the wine is pale but not watery, with complex aromas of cherries, plums, currants, mushrooms, oak, brambly fruits and savoury, earthy notes. On the palate it has that classic smoothness of a well-made Kiwi pinot, with a dash of muscle while also having a great deal of French-influenced finesse. Plenty of cherries and fruit backed by more layers of savoury notes and smooth tannins. At five years old, this wine has benefited from some bottle age and is clearly made in a more Burgundian style but clearly has New Zealand as its origin.

For the price, this wine outclasses many that have cost twice as much (Cuvaison from California coming immediately to mind). It might be too early to suggest that it is in the same league as some of its more famous Marlborough neighbours, so let’s hope that the price stays put.


On junk science and my (former) dislike of Chilean wine

wpid-dsc_0592.jpgA quick glance at the science section of any major newspaper tells us two things. First, that there is no shortage of academics trying to find the answer to anything and everything in our observable universe. And second, that there seems to be a disproportionate number of scientists devoting countless hours, perhaps even years, to some of life’s least important issues.

Almost all of it is junk science with an agenda behind it, and this fact has been reported widely. It seems, for some reason, that the Telegraph is leading the pack when it comes to reports of junk science, perhaps because, in its endeavour to attract the most clicks and therefore higher ad revenues, it must print anything and everything.

It comes as no surprise that junk science about wine tasting appears frequently, hashing and then re-hashing the same tired topics. Case in point, this week’s round of wine tasting ‘science’ and ‘research’, as reported by the Telegraph and Harper’s Wine & Spirits. At the Telegraph, we read about how wines with lower alcohol are purported to have more flavour than those with higher alcohol. Sure, insofar as the alcohol isn’t masking the fruit and other aspects that make up the wine’s flavour profile.

Then, in Harper’s, we read that Naked Wines, the online retailer, claimed that consumers ‘prefer’ bigger, bolder wines with more alcohol. If consumers want flavour, then surely going for a wine with more alcohol is counter-intuitive? I can only conclude that something doesn’t add up here. I’m going to suggest it’s the science involved. No matter how deeply scientists study the process of wine tasting, no matter how often they might conclude that there is nothing behind it, they are clearly ignoring the fact that there is, and it’s entirely sensory and subjective.

Think of it this way: there are no scientific reviews that I know of that have debunked the science film reviews. Many of the most celebrated films ever made received bad reviews upon release — think Vertigo, Citizen Kane, Casablanca and my personal favourite, The Big Lebowski — but no one has claimed that this was because film reviewing is junk science. Nor does anyone say it when the reviews are overly positive.

On the topic of science and subjectivity, let me make a very bad segue and write about Chilean wine. It is no secret that I have an irrational intense dislike of Chilean wine. Mostly, I have found it to represent a vague middle ground in the wine world, a sort of indecisiveness, neither here nor there of flavour and complexity.

If, for example, a merlot from St Emilion represents restraint and a sense of place while a merlot from, say, California, has a reputation for being the opposite of restrained, then a Chilean merlot, by and large, will inevitably land somewhere in the middle. And the middle is not where anyone wants to be, for being in the middle really just means that you’re neither this nor that. It’s the beige minivan of wine, offering as much excitement as a night out at the library.

Except. Except there could be another way. And I might have found it, in all places, at Marks & Spencer. Look beyond the cashmere scarves and the navy blue blazers with those gaudy gold buttons and head straight for the wine aisle, where the selection is anything but stuffy. Indian sauvignon blanc? Georgian orange wine?  A crisp, white wine from Tikves in Macedonia? Check, check and check. On the Chilean front, the usual suspects make an appearance in the M&S aisles.

But what’s this hiding near the bottom of the shelf? A dry pedro ximenez from Chile’s Elqui Valley? Pedro ximenez is a white wine grape best known for growing in southern Spain, where it is turned into a sherry of the same name, often labelled PX for short. PX sherry is dark and sweet, the result of grapes that have been laid out to dry in the sun to intensify their sugar concentration.

With M&X Pedro Ximenez PX, things are rather different. The wine is dry and crisp, not sweet and unctuous. It reminded me more of a wine from the Maconnais region of France, not an oddball white wine made in Chile from an oddball grape. For somewhere in the region of £7, this wasn’t just an acceptable bottle of wine, this was one of the first Chilean wines I’d enjoyed in a long time (a recently tasted bottle of very expensive still wine made in a Champagne style notwithstanding).

Now, this isn’t a perfect wine by any means. Its price is in the lower half of the M&S product suite, so it isn’t necessarily profound or complex. It probably won’t cause any epiphanies any time soon. But it’s interesting and satisfying, something few Chilean wines have achieved for me in the past few years.

And there’s more. M&S also sells a reasonably priced wine made from Chile’s signature red wine grape, carmenere, and it, too, stopped me in my tracks. M&S CM Carmenere also hails from the Elqui Valley and, while slightly more expensive than the PX, represents good value. I expected it to be fruity and innocuous like a generic merlot might be, but instead it was so much more. Oak, spices, excellent fruit on the palate and a solid backbone all make for a bit of a surprise. So PX and CM. Who knew? Until recently I had avoided Chilean wine out of caution. But perhaps I was wrong all along. What I do know is that it had nothing to do with science.

Wine investment: A worrying state of affairs

IMAG0028Bear with me, the link I am about to make is tenuous. It’s often disappointing when something that you wanted to believe was true turns out to be nothing more than a sham. In the case of the Wizard of Oz, that sham was a wizard who sustained the myth of his powers using smoke and mirrors, shielding his worshippers from the reality that he was just an ordinary man from Omaha who got lost. Thanks to the power of fiction, the wizard effected a happy ending by proving to Dorothy and her friends that the answers they were seeking were always within them.

When it comes to wine investment, there has been no shortage of instances when people wanted to believe something to be true. Rudy Kurniawan is perhaps the most famous recent fraudster, but don’t forget about the case of Labouré-Roi’s fake pinot noir or even the somewhat mythical Thomas Jefferson bottles, documented in the book The Billionaire’s Vinegar.

We need not travel too far to find cases of wine fraud. A daily visit to Jim Budd’s blog keeps us up to date with just about every instance of nefarious activity in the wine investment world, some elaborate and some not.

The latest story that caught my eye was that of opportunists attempting to capitalise on clients of the now-defunct wine investment company European Fine Wines. EFW was a company that many of us wanted to believe was the real deal and free from the troubles associated with other collapsed wine investment firms, but deep down there were plenty of suspicions floating around. This all came to fruition in 2014, when EFW’s phone lines went unanswered and the staff had reportedly been ‘sacked’.

Indeed, once the company went under, it left behind a trail of unhappy former clients and dubious practices. Sadly, they did so right under our noses. On three occasions in 2012 and 2013 it held tasting events where, looking back, it seemed to wish upon itself all the scrutiny and suspicion it could muster. I wrote about the first of these tastings back in May 2012, where the wines lined up on the table consisted of Haut Brion, Cheval Blanc, Yquem and more from the 1998 Bordeaux vintage. The event was peppered with clients and journalists alike, but any scrutiny that was in the air was drowned out by a fog of first growths.

Later that year, the company held a Christmas tasting. The first growths were fewer in number, but the volume of financial journalists attending was uncanny. If they had something to hide, they were doing an unbelievable job of hiding it out in the open.

It was at this tasting that an unhappy client’s story of cold-calling and potential mis-selling (unverified), began to raise my suspicions. What he told me was all too familiar. A slick sales person from EFW  cold called him and sold him a story about the thick profits that could be made by investing in wine and how EFW would handle everything for him. The person on the phone was pushy and persuasive, of course, and managed to part the client and his money with ease. And because this person knew nothing about wine, especially not Bordeaux, EFW sold him second-tier wines from lesser vintages at prices that were very likely unfavourable.

The unhappy customer was angry but realistic. He figured he had been duped, but thankfully didn’t lose a fortune. When he received an invitation to the Christmas tasting, he attended because he wanted to see for himself if the company was legitimate. I gave him my card and told him that if he wanted further help with his situation, I could recommend a few avenues for him to follow. He never did get in touch.

A year later, another tasting invitation landed in my inbox. It was near the end of 2013 and this time there were no journalists present and the wines were all lower-tier. The atmosphere was also much frostier than usual. Something had clearly changed at EFW.  Six months later, the company would be gone. Rather than follow the path of successful and trusted brokerages, companies like EFW seem designed to make quick profits by taking advantage of naive clients by promising fast profits. The problem is that if there is money to be made in wine, it doesn’t come quickly.

In a recent interview with the Telegraph’s Victoria Moore, famed American wine critic Robert Parker said that there is no way to make a quick buck out of wine, adding:

Speculation is one of the ugly down-sides to Bordeaux. I think these speculators have finally, especially the Chinese and some other wealthy people, recognised you can’t make money on them. Now if you’re buying it to sit on it for 10 to 15 years ….but speculators are looking to turn things over.

Truer words were never spoken. We all know the adage; if it seems too good to be true…