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SIMON BROWN: I’m chatting with Roland Peens, director of Wine Cellar. Roland, appreciate the time again. You are my go-to wine chap. We’ve talked around wine from many different angles, broadly as an asset class. You sent me a note last week. LinkedIn does have some use, as it turns out. You and a colleague are going to be consulting on an actively managed certificate that will list in Switzerland, but perhaps the lead there is it’s going to have wine in it. Essentially it’s going to be an easy way to access wine as an alternative investment.
ROLAND PEENS: Thanks, Simon. Yes, we are really excited because we’ve been looking for the right kind of structure to house a wine investment, and this is it. It’s the AMC, it’s securitised, which means the investor has confidence that what they’re buying actually has the underlying within it. And there’s an ISIN [International Securities Identification Number], so that’s no more bulletproof that a wine investment can be. We love this asset class because, if you look over the last 20 years, you’ll see that it’s long-term gains and it’s uncorrelated and less volatile than a lot of the other asset classes. And now you’re able to move in and out of this AMC, much like you would with any other instrument.
SIMON BROWN: Absolutely. We’ve chatted around wine as an investment before, and it’s not going to be like equities where you’re trading up a storm. There might be some trading happening, but I would imagine a fair bit of this is wine. We have chatted before. You pick it up early, hold it some years, and then exit on the other end.
ROLAND PEENS: That’s exactly right. There are some star performers that we would put down for a long time, and then there’d be some more active trading. But I was just looking yesterday how the top four wines in the world are all owned by LVMH, Moët & Chandon, Dom Perignon and the like. Those wines have been going up 12% annualised for the last 20 years and I don’t think they’re going to be stopping. So it’s a really great place to have an alternative investment.
SIMON BROWN: In the article I was reading it’s going to be the four main regions – Burgundy, Bordeaux, Champagne and Tuscany. No South African wines. It’s not that we don’t do good wines; maybe we just don’t do quite good enough wines.
ROLAND PEENS: Well, we are getting there, Simon. We will be putting a small percentage into South African wines. It has traditionally been very difficult because of the way that our industry has been structured. We haven’t made large quantities of fine wines, and the reason it would pick the main regions of Europe is because they’re the most liquid and the most traded, and of course you want this certificate to be liquid, and South African wines have been less so. But with this enterprise we actually will be investing in South African wines. That’s great news for the industry as well.
SIMON BROWN: I was preparing for this interview and digging around, and there’s a couple of places where you can get a sense around prices and trends and the like. Wine is becoming more liquid – no pun intended – but the tradability, certainly from what I would imagine 20 years ago, probably certainly 40 years ago, it was just somebody’s cellar.
ROLAND PEENS: Absolutely. Now it’s changed completely of course with technology, the internet, Liv-X, which is now the factor-pricing mechanism in the market. They’ve been around for 20 years. They’ve got millions of points of data and [just as] you can trade any other asset class, you can now trade these little stocks, these wine stocks, and there’s liquidity across multiple platforms. So really there’s a lot more certainty than ever before.
SIMON BROWN: Do you have an expected listing date for the AMC?
ROLAND PEENS: It’s imminent. We are speaking to funders at the moment, people looking to invest, and now’s the time. Shire Capital is offering it in South Africa and would be the ones to contact. Wine Cellar is backed behind it as well, giving the comfort of 20 years of fine-wine trading and experience. We’ve been doing the same sorts of practice for the last 20 years and now it’s time just to formalise it a lot more.
SIMON BROWN: Yes, it’s that liquidity, it’s the ease of transaction within an AMC. As you say, it’s all the sort of i’s being dotted and t’s being crossed.
Changing topics slightly, when you messaged me last week you said you’d been in contact with Minister Steenhuisen around changes to current outdated and expensive export legislation. What is the issue with our export legislation in terms of wine?
ROLAND PEENS: Well, we’ve got a very good wine certification and export protocol, but it’s almost too good. So if you want to export some ‘fine old wine’, you have to give three samples away for them to test it. It doesn’t matter if it’s R10 or R1 000 a bottle. And then of course we don’t have long-term Bond stores in this country, so fine wine gets stored without Vat and duty, so that you don’t get any leakage and we don’t have these long-term Bond stores. So we are looking to have other practices where we’re able to store wines in Bond and then move them across the world and trade them on multiple platforms.
And it’s really important that South African fine wine gets traded around the world, because that’s visibility. And then a hotel in any part of the world could buy it off these platforms and have it on their list. And South African fine wine hasn’t had that exposure in the past. We generally drink it when it’s young. And you know what? South African wines are fantastic. They’re world-class and they need a bit of age on them.
SIMON BROWN: I have a friend who lives in Manhattan. He was at a restaurant and there were some old South African wines on the menu. I don’t think I’ve ever seen him so excited on WhatsApp. He comes here often and he says our wine needs to be out there more.
A last question which I always ask you when I conclude an interview with you, Roland. I can’t let you go without asking what’s your Tuesday night quaffing wine for those on a budget these days?
ROLAND PEENS: Pshew, I just have to think about the Raats that I’ve got in my fridge at the moment. It’s chenin blanc under R200 – and, you know, South African chenin blanc is becoming world famous, like white burgundy is. People around the world are looking for South African chenin, and Raats is one of the best of them. And yes, I’ve got one in the fridge.
SIMON BROWN: Roland Peens, director of Wine Cellar. As you said, Shire Capital is sort of doing the book, I suppose, in a sense for that AMC.
Roland, always appreciate the time.