How it works?
When you open a Cellar Builder account with us, you deposit a sum of money with us. You can also indicate an intention to put money into this account regularly. When there is a buying opportunity and sufficient funds in your account, your relationship manager will purchase wine for you. All the assets in your Cellar Builder Plan portfolio (whether wine or cash) are yours.
We will issue regular statements for the assets held under the Plan. You can request to withdraw wine or cash with sufficient notice to us. If you indicate a preference for reinvestment, money from sale of wine will be credited back to your account and used to buy more wine. Otherwise
How do I contact Hermitage Wines to open an account?
You can contact our Relationship Management Team via e-mail at:
email@example.com or by calling +65 6272 2013
How much input do I have for my Cellar Builder Plan?
There are three ways to manage your Plan: Self Directed; Purchasing under partial discretion by Hermitage; Purchasing under full discretion by Hermitage. You have full control over your cellar for the first two options. We will only purchase wines when you have approved our recommendations.
You can also choose to give us authority to purchase for your Cellar, based on your stated preferences. We will keep you informed of the purchasing decisions made on your behalf. If you give Hermitage full discretion to manage your cellar, the wine will be sold when its value reaches your indicated profit margin. If you sell the wine yourself, we will not charge a brokerage fee if you take the wine out and deliver it yourself. Brokerage fees will apply. Otherwise we will charge a small service fee for transferring the wine on your behalf to the next owner.
Will I have access to wine tasting?
Yes. We organize many events each year exclusively for holders of our Cellar Builder Plan. Our aim is to give Plan holders the opportunity to taste multiple interesting wines and also get to meet wine producers. These events are specially organized for Plan holders.
What is the role of my Relationship Manager?
Hermitage will designate a personal relationship manager for all Cellar Builder Plan holders. They will discuss your preferences and understand what you want to achieve from your Cellar Builder Plan. They will advise you on wine selection and help you make selections for your Cellar.
Do I need to know a lot about wine?
You do not need to have an extensive knowledge about wines to have a Cellar Builder with us, as our Relationship Managers will be able to share with you their knowledge and experience. Hermitage works with established merchants and our relationship managers will make recommendations based on our experience within the marketplace.
Why does fine wine go up in value?
Unlike table wines, fine wine improves with age. A limited amount is produced, so when bottles are consumed, the supply of the wine becomes rarer and the price increases. Demand and interest in fine wine is growing around the world, but the supply of top vintages from established châteaux cannot be increased.
All wine in the world is branded by a system known as Appellation Controlee. This protects the branding of wines. The Institut D’Appellations d’Origine in France strictly limits the labels each vineyard can produce to only 177 cases per acre. Wine left over after all the ‘labelled’ bottles are full will be sold under a secondary label or blended with another wine.
What is Ageing Potential?
The ageing of wine is its ability to improve in quality over time. Chemical processes between the tannins (organic compounds found in the seeds and skins of grapes), fruit, acid and alcohol in a wine result in wine ageing. The tannin may soften and precipitate as sediment, while the fruit flavors and body in the wine may diminish over time.
Wine tasters look for ageing potential by examining the balance and concentration between the tastes (alcohol, fruit, tannin and acid) present in the wine. A strongly fruity wine with a high tannin content can age longer than one with little tannin and fruitiness.
Not all wine has ageing potential. White wines often don’t need ageing as they lack the tannins found in red wines. Jancis Robinson, in her book Jancis Robinson’s Wine Course notes that less than 10% of all red wines get better with age after two years and less than 1% of all wines will improve after a decade.
What sort of wines should I invest in?
William Sokolin coined the phrase ‘investment grade wine’ in his book The Complete Wine Investor. An aspiring investor has to be discerning in selecting his wines. Like stocks and bonds, fine wine has its own index of prices. The London International Vintners Exchange (Liv-ex) is an electronic exchange of about 150 merchants and professional traders in the global fine-wine market. Liv-ex produces the Liv-ex100 Index (Bloomberg ticker symbol LIVX100). Most wines listed on the Liv-ex100 are French red wines.
While other good wines are available, demand is limited in the global secondary market for wines from other regions. Wine Funds tend to rely on the Liv-Ex. So always speak to your relationship manager first, as he will have current information as to which wines are performing best on the market. It is generally better to invest in wines with a proven secondary market.
What is an ‘en primeur’ wine?
En primeur means ‘opening offer’. It is a wine future; wine sold by growers and merchants before it is aged, bottled and ready for physical delivery. Typically wine merchants will be invited to taste wines while they are still in barrels. Experienced merchants will make an offer based on their judgment of quality. Prices may change based on factors like demand, supply and Parker ratings.
What is en primeur pricing?
An en primeur price excludes taxes such as GST and Singapore Liquor Duty. Shipping and insurance are also excluded. After purchasing his wine en primeur, a client still has to pay freight charges (from port to port), duty and GST (if in Singapore), handling and transportation charges.
When are en primeur wines delivered?
Many wines from Bordeaux, Burgundy and the Rhône are sold en primeur. Delivery varies by region. In Bordeaux, the largest region, the en primeur offer of the previous years’ vintage is typically made in June of the following year. Delivery of the bottled wine will then take place 18 months to two years later (i.e. about 3 years after the harvest or vintage). Delivery of fine wines normally will take 2 months by sea or 2 weeks by air.
How do I store my wines?
Many clients prefer to have their wine stored by Hermitage rather than at home. This can be done in two ways.
1) The wine is stored “under bond” which means that the wine is placed in a bonded warehouse. Liquor Duty and GST is not paid. This option is better if the client thinks he may sell the wine, although it slightly delays the retrieval of the wine.
2) The wine is stored in a non-bonded warehouse after the payment of all applicable taxes and duties. It is easier to remove wine from a non-bonded warehouse. Hermitage offers storage in Singapore under bond or in non-bonded warehouses. Storage in London and Bordeaux is only available under bond.
What are the advantages of wine over other investments?
• Limited Product, Growing Demand – You are investing in a tangible asset that has a limited production but rapidly growing global demand.
• Growing rarity – inventories of this asset will decline over the years as wine is consumed.
Tangible Asset – Unlike other investments held only with the expectation of profit, wines can be enjoyed. Even if your investment does not perform as well as expected, you can still drink your wine!
Portable – moved easily across borders, unlike real estate. Tax – Your investment is exempt from duty and GST while in a bonded warehouse. There is no capital gains tax in Singapore. In most wine markets, wine is considered a depreciating asset and not subject to any capital gains tax. We advise you to obtain independent legal advice for tax matters.
Performance: Wine has performed very favorably as an investment for hundreds of years. Even in recessionary times, wine tends to hold its value.
What are the risks?
• Investment – There is no absolutely risk-free investment in the world. Prices can go down as well as up.
• Unregulated Market – Wine investment in most countries is not regulated unlike the financial sector.
• Unprofessional storage – Wine requires multi-year storage at the correct temperature and humidity together with a lack of light and vibration.
• Fake wines – There are fake wines circulating on the global market. Wines with sound provenance command a significant premium.
• Reassessment – Wines are rated before and after bottling. Some wines may not turn out to be as good as originally predicted, leading to a negative reassessment and a corresponding fall in value. Other wines may have their rating increased, leading to a sudden increase in value.
• Investment Horizon – Wine investment is for the mid to long term.
• Legal Interference – Governments routinely change taxes or regulations which may affect the wine market.
• Wine Types – Only fine wines will tend to accrue value, and they tend to be expensive. Ensure (through sound advice) that you are buying the right wines at the correct prices.
What makes Hermitage different from wine funds?
It pays with age! At Hermitage Wines, we do not merely buy in the hope of selling higher later. We will offer our expertise to help you select and store wines for personal enjoyment as well. Under our Cellar Builder Plan, your wines are kept segregated in a bonded warehouse. These are not mixed with our proprietary stock or other investors’ portfolios.