Other recent
entries in this blog:
16 April 2010
Shall We Take A Glass Together?
I see that we are going through a period of bullish sentiment towards wine
investment. These come and go, like platform shoes or costume jewellery, but
I am not convinced, or rather, perhaps, I should admit that I am one of those
who is constitutionally incapable of making the distinction between admiring
my investment and drinking it.
Trying to be dispassionate for a moment, there is a recent report from the
American Association of Wine Economists which notes the increasing professionalism
and transparency of the wine market. They point out that wine values can be
counter-cyclical, which is useful; but even they have to admit that only the
1982 vintage (French, presumably) outperformed the Dow Jones Industrial Average
during the study period (1996 to 2009). Now, how would you have known that in
advance?
The London-based Liv-ex 100 Fine Wine Index, which tracks the price of 100
top wines, has gained 12% in Q1, 2010. But in 2009, the index gained 16.2, while
the S&P 500 gained 26%. Liv-ex director James Miles says that Asian demand
for top Bordeaux wines, particularly from Hong Kong and China, has caused prices
to soar over the past 12 months. Drowning their sorrows? As China recovers,
demand will drop off, then?
If you do want to invest in wine, perhaps a better bet might be an indirect
one, in the shares of the Wine Investment Company, which is about to be floated
in London on AIM or the Full List next month by fund management group Ampero
Capital, to raise up to GBP10 million. The company says it has made consistent
returns based on the long-term attractions of top-quality Bordeaux wines.
Now I'm going to have my say. As a regular red wine drinker, I just don't get
it, this stuff about Bordeaux. Of course, if you invite me to dinner and offer
me a choice between Mouton Rothschild 1982 (you are rich, aren't you?) and Tuscan
Red, I am going to have the Mouton; but my stays in Australia, New Zealand,
Chile, California and Cyprus (OK, mostly in Waitrose) convince me that there
is a pack of hungry wolves breathing down the necks of the uppity Bordeaux,
and the only thing that is sustaining them is their snob value. An up-and-coming
businessman in a booming Asian economy is obviously going to impress his clients
(and mistresses) with the Volnay and the Dom Perignon. But he will learn. This
is no basis for long-term value investment, imo. And what will climate change
do to champagne?
On the subject of champagne, I have had a long love affair with Lindauer (20%
of the price of Moet) and once conducted a blind tasting among half a dozen
of my oenophile friends of Lindauer against Moet, some methode champenoise whose
name I can't remember, and Perrier-Jouet. The Lindauer won hands down.
Now, it's confession time. When I was 35 (don't ask) I decided to go on the
waggon, and stuck it out for five years. I was travelling quite a lot then,
and I built up a formidable cellar (I did have a real, empty wine cellar) of
good clarets and burgundies. In those days there was still duty-free in Europe,
which helped. And at the same time I bought wine in bond through a good London
merchant. I used to love looking at my bottles, row upon row of them, holding
so much promise of future joy. But I can't say I was ever thrilled by the quite
costly quarterly storage reports that came from the merchant.
Then after five years I had a bad period financially, and starting with just
the nose of my precious clarets when I served them to my friends, I graduated
to one glass, then . . . well, you can guess. They gave me a lot of pleasure,
unlike the stored wine, which I sold at a loss after seven years.
Perhaps my experience is not typical. You have to make your own judgement.
But this sommelier is clear: drink it, don't keep it!
14 February 2010
A Walk In The Forest
The mobile rang at six am as promised, so struggling past the thickets
of red roses and tasteless, glittering pink hearts cluttering up my hallway
(not!) I made it out of the door and through a light blizzard to join my friend
Julie in her Bentley. As we purred our way down the M4 to Heathrow, Julie explained
how she had come by the Scottish forest we were going to visit. A long story
involving pre-nups, gifts inter vivos, divorces and so on. Upshot, a tax-efficient
forest, which had been hers since the previous Wednesday, and she couldn't wait
to see it.
"In Invernesshire, in February?" I protested. Julie explained how
the gulf stream makes northern Scotland warmer than Devonshire, but I don't
think she believed it any more than I did. It took us all day to get to the hotel in Inverness,
so we had plenty of time to bone up on forestry with Julie's Blackberry. Lots
of countries have tax breaks for forests, it turns out: the UK, the US, Australia,
New Zealand, for instance.
It's the ultimate green tax shelter, you'd think? You buy land that has just
been planted with trees (or you can buy shares in a company that does so) and
thirty years later you or your descendants can sell it without paying capital
gains tax; and in some countries including the UK there are government grants
to pay for planting and upkeep.
The agent joined us for breakfast the next morning. Luckily for Julie, who
is Persian by origin and has problems with the accent of London cab-drivers,
never mind Robbie Burns sound-alikes, Hamish spoke perfect Oxford English. That's
true of much of northern Scotland, I found out later. Clambering into Hamish's
towering 4 x 4, and equipped by the hotel with vacuum flasks and sandwiches,
we set off through light snow towards the forest. The road was along a narrow
valley, in company with a railway track and a stream, the three of them constantly
intersecting, with road and railway now on one bank of the stream, now the other.
It was very picturesque, with the forested hills towering above us on either
side of the valley, more white than green. Occasionally the sun came out and
you could see the tops of the mountains, but most of the time they were lost
in swirling, snowy mists. I wished I was back in London, but Julie was on a
high.
"It's so beautiful," she kept saying.
After an hour or so, just at a railway station with an improbable name like Lochrothiepethray,
we turned off the highway and began the ascent to Julie's forest.
"If the snow was much worse we wouldn't be able to get there," said
Hamish helpfully. Eventually he stopped the car (tank) on a knoll and pointed
ahead to a vista of serried pines stretching in all directions, covering a series
of undulating hills. "You can see about half of it from here," he
said. "There is about 400 acres altogether."
The trees were in rows, the way the Forestry Commission usually does it, all
the same height, about fifteen feet, with occasional rides which break up the
monotonous effect to some extent. I could see from Julie's face that this blank
landscape didn't at all chime with her romantic imaginings of 'forest', some
amalgam of Hansel and Gretel, beech-woods in Surrey and horror movies set in
New England.
"Can we walk in it, a bit?" she asked rather uncertainly. So we did.
We walked up and down one of the rides in a couple of inches of snow, while
Hamish explained that the forest was about half-grown, and would be ready for
felling in fifteen years' time. "The trees will be thirty feet by then,"
he said encouragingly. 'Still all the same,' I could hear Julie thinking to
herself.
Blessedly soon, we were back in the tank, gliding down towards the station,
sucking for dear life on the coffee flasks, which the hotel had thoughtfully
fortified with local single malt.
"There's a problem," said Hamish suddenly, drawing to a halt in a lay-by at
the side of the road. "It's overheating. We're not going to make it back
to town. I'll have to call for help." There was no signal on the mobiles,
so in a tense silence we free-wheeled down the remaining couple of miles to
the station, just making it up a short incline to the station car park.
There was a signal again, now, so Hamish got to work on his phone.
"Maybe there's a train," ventured Julie. Hamish merely grunted, but
Julie and I went onto the platform and found a timetable. It was in very small
type, and hard to decipher, but we thought there should be a train in an hour's
time. At the bottom of the sheet, though, in large letters, was the emphatic announcement:
'UNLESS DIFFERENT'. That was the only time we laughed all day.
Hamish's friend, Malcolm, turned up before any train, in another cross-country
monster, and we were back at the hotel in time for lunch. Hamish and Malcolm
excused themselves: "We have to fix the jeep," they said.
The very next day, as it would happen, I saw a report in a tax newsletter
that an Australian academic had criticized forestry schemes for reducing the
land and water available to food growing, although this hardly seemed to apply to Julie's forest: 'Government assistance to forestry
and logging is equivalent to 42% of the industry’s unassisted value added;
tax-based subsidies through plantation managed investment schemes are estimated
to make up 77% of the assistance.'
So that's forests for you. Remote, boring, cold and not even green. Tax-efficient, of course. After that,
when Julie talked about her forest among friends, I could tell that she was
imagining her dream forest, not the daunting reality on that Scottish
mountainside.
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