Beware of guaranteed returns

There are a number of wine investment companies currently offering guaranteed returns. Investments that come under the aegis of the UK FSA (Financial Services Authority) are not allowed to promise future returns and must warn that past performance is no guarantee of future performance. Exceptions to this will usually include bank and building society savings accounts but certainly will not include wine funds, which come under the FSA as they are collective investments..

This week there was press release (see here) from Cult Wines Ltd promising a guaranted 8% return in a year on a wine investment fund:

8.5% Guaranteed return on wine investment fund from Cult Wines – London 
'22/01/2010  Cult Wines of London, are offering investment portfolios with a guaranteed return of 8% over 12 months using assets of the Rothschild products such as Lafite and Mouton. The Risk is taken away from the client and provides a safety net of 8%, while the expected returns are much higher up into the double digits.  This doubles any available savings rates offered by mainstream banks.'
See rest of the release here.

On the face of it this would appear to be a fund that ought to require FSA authorisation and shouldn't be claiming an guaranteed return. It is, however, not a fund as Oliver Gearing, CEO of Cult Wines Ltd explains:

'It technically is not a fund as each investor is allocated cases of their own wine. The investors also retain the right to continue to hold their wine past the 12 months. In essence we give each investor the option after 12 months to sell their wine back to us at 108% of its purchase value, they can either take this if the wine hasn't increased by 8% or if it has gone up more than 8% they can ignore the option and continue holding their wine for longer. We are giving the investors a safety net but from our end backed on our own finances and assets.

Finances and assets cover the base total of chosen products from 0-108%. Our company investment/investors and of course the risk attached to the company have been carefully devised and set up with expert help.  We have a master of wine, who is a contact of our family, who has been involved in the proceedings. With this combined expertise we feel quite confident in the chosen products and risk elements, being Lafite 08/Mouton 08, and we feel that we have fully covered our clients.

As it happens, we have finished running the 8% project as we have filled our small test quota up to the maximum cash budget.'

Therefore, as it is not a fund, it is not regulated by the FSA and it would appear that you can  happily make claims of guaranteed returns. Another company – The Premier Bordeaux Wine Company offers a cheque for £100 and 'your certificate of entitlement to an investment that yields 14.9% per annum guaranteed'. 

Also in the press release from Cult Wines Ltd is a highly selective example of a big return from one wine from a very particular vintage.

'Bordeaux Fine Wine has been the investment of the ‘Noughties’ proving to be a top-performing asset ahead of equities, houses, oil and fine art. A case of 1982 Lafite Rothschild has increased in price by 857% over the last decade, from £2,613 (Dec’ 99) to £25,000 (Nov’ 09).'

Bordeaux Fine Wine may or may not be 'the investment of the "Noughties" but you cannot prove it to have been a better performing asset than equities, houses, oil and fine art just by reference to Lafite 1982. 

I'd be very wary of being offered a guaranteed return by a wine investment company.

Australian wines for investment?

I have recently received an enquiry from someone who has been offered some Australian wines as an investment. I will shortly be posting a reply to this equiry but here are some general comments on investing in Australian wine.

If you have never invested in wine before, do not start with Australian wine. With few exceptions, most notably Penfolds Grange and Henscke's Hill of Grace, Australian wines do not have a long track record of resale.  Australian wine tends to be speculative and high risk. This is particularly true of cult wines, often small production, This has nothing to do with the quality or drinkability of Australian wine but merely whether it is a good investment. It is not a beginner's investment.

Australian wines hardly feature in wine auctions in Europe. I asked David Elswood, head of Christie's wine department, about the proportion of Australian wine at their auctions.  'Pretty negligible really - less than 1% I would say and mostly Grange,' was his response. It is a similar story at Sotheby's as Stephen Mould, senior director and head of department, Europe wine, confirmed: 'Approximately less than 0.4% of our sales are of Australian wines.  This is based on data we looked at from sales dating from 1999 to 2006 where Australian wine made up 0.37% of our sales.  I pretty sure since then this figure has not improved and may in fact be as little as 0.2 to 0.3%'. 

If you are looking to start a wine investment portfolio, then you should start with top Bordeaux, which has a long track record and makes up the majority of the business handled by fine wine merchants and wine auction houses like Christie's and Sotheby's. As always buy from an established and reputable merchant not from an opportunistic cold call.

Langton's is the largest wine auction house in Australia and is the specialist for fine Australian wine sales. Their website provides regular reports on the wine market and there is a price guide listing wines that have appeared in Langton's auctions and their prices.  

Templar Vintners Ltd: warning by Guernsey authorities

This afternoon the Guernsey Financial Services Commission has issued the following warning about Templar Vintners Ltd:

'Warning – Templar Vintners Ltd

22 January 2010
It has been brought to the Commission’s attention that the above-named entity is operating a web site with an address of www.templarvintners.com. The web site includes downloads of articles purporting to have appeared in well known publications. One such article includes an advertisement for The Templar Vintners Fine Wine Fund in which it claims to be authorised by the Commission as a Class B Collective Investment Scheme under the Protection of Investors (Bailiwick of Guernsey) Law, 1987.

The purpose of this notice is to warn potential investors that the company is not licensed, authorised or in any way regulated by the Commission for the conduct of any financial services business in or from within the Bailiwick of Guernsey.

Investors are urged to always check the regulatory status of a company before entering into any contract.

If you require further guidance please contact the Commission’s Intelligence Team on (+44 1481 712706).'

••

Having brought Templar Vintners Ltd's 'doctoring' activities to GFSC's attention only yesterday, I am delighted by the Commission's prompt action. The warning can be viewed on the GFSC site here.

In the light of the Guernsey warning it is interesting to turn to the UK 2006 Fraud Act, in particular the section on false representation:

2 Fraud by false representation

(1) A person is in breach of this section if he—
(a) dishonestly makes a false representation, and
(b) intends, by making the representation—
(i) to make a gain for himself or another, or
(ii) to cause loss to another or to expose another to a risk of loss.

(2) A representation is false if —
(a) it is untrue or misleading, and
(b) the person making it knows that it is, or might be, untrue or misleading.

(3) “Representation” means any representation as to fact or law, including a representation as to the state of mind of—

(a) the person making the representation, or
(b) any other person.

(4) A representation may be express or implied.

(5) For the purposes of this section a representation may be regarded as made if it (or anything implying it) is submitted in any form to any system or device designed to receive, convey or respond to communications (with or without human intervention).

See earlier posting about Templar Vintners Ltd here, including comment from Andrew Griffiths, a director of Templar Vintners Ltd.

Templar Vintners Ltd

I had an enquiry yesterday about Templar Vintners Ltd from AB.

The enquiry
I wonder if you have any information about Templar Vintners?

They contacted me in November about buying Bordeaux Wines. I have a portfolio of wine that is held under an umbrella by the Bordeaux Wine Company. I am at a stage where I wish to offload some of my wine and was looking for a competitive price. Templar contacted me around that time - not sure how, in retrospect. Web site up and running, other references online but no figures at Companies House - I haven’t visited their premises yet.

I have already bought a case of Ausone 2008 for £7,700 - and have a Certificate from them but realise this is no guarantee that the wine exists.

My response
The registered office of Templar Vintners Ltd is at Hamilton House, 1 Temple Avenue, London EC4Y 0HA.

Their website (http://www.templarvintners.com/) claims that:
'Templar Vintners is one of the leading fine and rare wine merchants. We hold some of the greatest and rarest vintage wines; many of the wines we hold are increasingly unavailable elsewhere. We also frequently offer more recent vintages, at very competitive prices, which gives customers excellent opportunities for capital growth. Our clients benefit directly from our immense buying power, amassed through years of experience, and strong allegiances with a wide-variety of industry experts. Over 70 per cent of Templar Vintners’ customers are high net-worth individuals and seasoned investors. The remaining 30 per cent are a collection of British and international merchants , wine brokers and institutional investors.'

If this claim 'to be one the leading fine and rare wine merchants' is correct then this is a truly remarkable and probably unprecedented achievement. The company was incorporated on 8th August 2008 when it was called 888 Finance Ltd. On 30th June 2009 the registered office was changed from www.buy-this-company-name.com, Suite B, 29 Harley Street, London W1G 9QR to the current address at Hamilton House. On the same day Andrew Griffiths was appointed as director and James Allie as company secretary and on 3rd July 2009 the company name was changed from 888 Finance Ltd to Templar Vintners Ltd. The company's first accounts are due to be filed on 8th May 2010. Thus Templar Vintners Ltd did not start trading until early July last year.

Because of the nature of en primeur (see here) it is impossible at this stage to verify whether Templar Vintners has indeed placed on order for and paid for your case of 2008 Ausone. To be certain you would need to see their order and payment records and ideally details of the transactions all the way down the chain to the négociants in Bordeaux. I suspect that most companies would decline to release these records on the grounds of commercial confidentiality. You will not be sure whether the case of 2008 Ausone for which you have paid exists and is yours until it arrives in this country either at the end of this year or in the early part of 2011.

This is why it is always crucial to carry out as much due diligence on a company before buying en primeur from them and to buy only from established companies who have a solid track record.

The company's website is registered with Philip Lane Ltd, 2nd Floor 145-157 St John St, London EC1V 4PY.

It is interesting to download the selection of articles on wine investment from the Templar site and do a compare and contrast.

First up is an article from the Independent on Sunday (22nd June 2008) by Kate Hughes and Julian Knight. Here is the second paragraph (page 2) from the Templar's version:

For a private investor, there are three main avenues into the wine world. A specialist fund pools investors' money to buy wine to trade, but that doesn't mean you will get to drink your returns, just as investing a stake in a racehorse won't get you into the saddle. Wine Asset Managers (Templar Vintners), for example, offers the Fine Wine Fund, requiring a minimum 15 per cent of the fund's annual performance growth.

This is original version of the article as it appeared in The Independent on Sunday:

'For a private investor, there are three main avenues into the wine world. A specialist fund pools investors' money to buy wine to trade, but that doesn't mean you will get to drink your returns, just as investing a stake in a racehorse won't get you into the saddle. Wine Asset Managers (wamllp.com), for example, offers the Fine Wine Fund, requiring a minimum investment of £50,000. The annual management fee is 2 per cent, plus a further 15 per cent of the fund's annual performance growth.'

Wine Asset Managers (WAM) was founded in December 2005 by William Beck and Miles Davis. It is authorised by the Financial Services Authority (FSA) – 448941 - Wine Asset Managers LLP, authorised 25.5.2006 They run two wine funds The Fine Wine Fund and The Fine Wine Investment Fund. Wine expert Steven Spurrier is the advisor to the fund.

Templar Vintners Ltd are not authorised by the FSA. Any company in the UK running a wine fund as opposed to offering cases of wine for investment is very likely to be judged to be running a collective investment scheme as will need to be authorised by a financial services authority. In most cases in the UK this will be the FSA.

When I contacted Miles Davis about Templar Vintners he was very surprised. "I have never heard of Templar Vintners," he said. His business partner, Will Beck, was equally surprised. 'We have never heard of Templar Vintners and it certainly appears that something underhand is going on. In the first article they have clearly tried to associate themselves with us, but it looks very amateurish. They appear to have a makeshift website.'

'The second article is the one we wrote in the FT (with my name next to it) for the wine investment supplement in June 2008, and the ad at the bottom was placed by Vinum Fine Wine Fund (we have a hard copy here in our office). They have clearly replaced Vinum’s name with their own.'

As William Beck points out, this is exactly what Templar Vintners Ltd appear to have done as shown here:

The original ad in the FT (20th May 2008)

The amended/or doctored ad from Templar Vintners Ltd

The full page from Templar Vintners showing the ad in the bottom, left hand corner

Templar Vintners Ltd appear to just have changed the name and the logo leaving in the details about the authorisation by the GFSC (Guernsey Financial Services Commission: 'Class B Collective Investment Scheme under the Protection of Investors (Baillwick of Guernsey) Law 1987, authorised by the GFSC'.

The Vinum Wine Fund is authorised by the GFSC as their records show: 'Vinum Wine Fund 1033646 Vinum Fine Wine Fund PCC Limited, The Class B'. There is no mention of Templar Vintners Ltd in the GFSC records. The claim by Templar Vintners of GFSC authoristion is thus entirely false – I imagine the Guernsey authorities will not be amused. I have forwarded details to the GFSC.

AB agreed with Templar Vintners to swop his 2003s for 2008s and asked Templar to contact the Bordeaux Wine Company. They declined, so AB talked to the Bordeaux Wine Company direct. They told him that they thought they were a re-incarnation of the Bordeaux Wine Trading Company/International Wine Commodities. I have no evidence to support this claim, although BWC may be in a position to know as some of the people involved in running Bordeaux Wine Trading Company/International Wine Commodities previously worked for BWC. Any connection with these two companies has been denied by Andrew Griffiths: 'We have no knowledge of Bordeaux Wine Trading Company/International Wine Commodities, nor have we had or do we have any association or dealings with them.'

My advice
I would not do business with Templar Vintners Ltd under any circumstances.

I have invited Andrew Griffiths, director of Templar Vintners Ltd, to respond to this post. 25.1.2010: Andrew Griffiths has responded – see his comments below.

How to spot an investment scam

Here is a link to the transcript and podcast of an interview with Jonathan Phelan, Head of the FSA's Enforcement Division, on the Motley Fool site.

Much of the interview concerns share scams but Phelan's comments on cold calling are well worth noting and as well as ponzi schemes that promise you guaranteed profits.

Cold calls

'David:

So when somebody is contacted by a scamster, what are the things that they should be looking out for? -- what are the things they should be aware of?

Jonathan:

I think the first thing to be aware of is, why has this guy contacted me? People don't do that out of an abundance of benevolence, they contact you because they're trying to sell something, and sometimes you've got a legitimate salesman; in the investment world that we're concerned with at the Financial Services Authority, people shouldn't cold call, so you should have invited that call, so the first red flag for you is, where you get a call out of the blue from someone you didn't expect to call you, a legitimate broker or a legitimate advisor shouldn't be calling you out of the blue -- that's a red flag to start off with.'

Ponzi schemes
'David:
So, let's have a look at some of the typical scams, I mean one that will be, I think, at the forefront of a lot of people's minds is pyramid selling, particularly in the case of Bernard Madoff. Now, how do these pyramid schemes work? A lot of people have heard about them, but they say, "What exactly is a pyramid or a Ponzi scheme?"

Jonathan:
Well, they can work in different ways, I'll illustrate it with one fairly typical example, which might be that I know someone who says, "You're only getting one and a half percent saving interest in your bank, that's a bit rubbish, isn't it? Why don't you give it to me and give me £1,000, and at the end of the year I'll give you £1,500" It sounds fantastic, so you give him the money, and then he goes to someone else, or I tell my friends, and they give him £1,000.'

(Go to the transcript for the rest.)

Buying en primeur: take care!

The barrel chai@Château Margaux – taken 2006 with 2005 in barrel

We are only a few months away from the 2009 en primeur season. For five days from 29th March through to 2nd April 2010 a throng of wine brokers, merchants and journalists will descend on Bordeaux to taste the already acclaimed 2009 vintage. However, good the vintage is the hype will be even greater. Buyers from Asia-Pacific are expected to play a big part in buying 2009 en primeur.

So what is buying en primeur?
It means that you buy the wine while it is still in barrel with the idea that this way you get the best price. It may also be the only way to obtain a small production wine – more true of Burgundy than Bordeaux. As in the investment sector, the top properties of Bordeaux dominate the en primeur market.

Following the tastings in late March/early April, the Bordeaux châteaux start to release their prices – likely to be a long drawn out process for the 2009 vintage. However, the top Bordeaux properties do not sell direct to the world's wine merchants and brokers, their wines are sold through the Bordeaux négociants who then sell it on to merchants around the world.

If you decide to buy 2009 en primeur your wine will not arrive until the end of 2011 or early 2012 depending upon when the merchant you buy from decides to ship it. However you will pay for your wine when you order it – in effect you will be giving the wine trade an 18 month interest free loan. It is crucial that your loan does not turn out to be a gift as has happened too many times in the past. I will be amazed and relieved if there are not people who pay for 2009s en primeur which they never receive.

It is always best to buy from an established, reputable merchant but it is particularly important when buying en primeur. This will be particularly important for 2009 en primeur if there is huge demand for it. Only established merchants will have the contacts to obtain the most sought after wines. The current popularity of wine as an investment will only ratchet this up further, especially as far as the Bordeaux First Growths are concerned. Any recently formed company offering 2009 en primeur will have a very tough job getting the wines they want.

The 18 month to two year gap between paying for your wine and receiving it is a golden opportunity for the fraudster. There have been instances where companies took clients' money with no intention to place orders. Equally there have been companies that have run into financial problems and failed to pay for orders they made.

If it all goes wrong it can be a nightmare getting either the wine you ordered or any money back. Certificates of ownership, however fancy, may well count for nothing. While the wine is in barrel it is impossible to identify what small fraction is yours. If your merchant has paid for the wine, the Bordeaux négociant is very likely to have sold the allocation elsewhere.

Buy en primeur only from established, reputable merchants and even then, in these recessionary days, check out their financial health through Companies House. Ideally pay by credit card, which will provide you with protection if things go wrong.

European Fine Wines Ltd: Pavie 2003

An enquiry received earlier this week:

I’ve just purchased some fine wines from this organisation. I put a 10% deposit down for 2 x cases of Pavie 2003 = £3556. Can you advise on where best I can assess fine wines prices to make sure that I’ve not overpaid?

‘This is the response over my concerns that I’ve received from one of the directors at EFW:-

"I appreciate your need to satisfy questions of due diligence, and trust that these answers will provide sufficient reassurance.

1. The Independent. The thrust of the Independent article is to say that the purchaser should ensure that they have full and clear title to their wine, and we wholeheartedly support this. As with all large value items, be they cars, houses or, in this instance, fine wine, there is the potential for the unwary investor to be caught out.

I would point you towards our web site - www.efwines.com <http://www.efwines.com> - and ask you to look at our 'Some Golden Rules for Fine Wine Investment' pamphlet. The body of the document describes the basic approach to the market, but the end section is a checklist of all the elements that an investor should take in to account.

2. We are an independent and active seller of fine wines, and our client profile is more inclined to the general public than perhaps some of the merchants that have served many generations of the same family. Over the last five years we have become recognised as a progressive and reputable company, and are frequently requested to be contributors to wine market features and articles, e.g. The Financial Times. The investment guide was in fact produced as part of our contribution to a debate on alternative investments that was aired on a number of radio programmes nationally and regionally, including the BBC, featuring my colleague David Evans who is our investment expert.

3. The wine we have proposed, Pavie 2003, is a very high scoring wine as is shown on the attached tasting notes, having been awarded 98+ by Robert Parker, and is undoubtedly an excellent investment grade wine that would form a good basis for a wine portfolio. It is possible to find this wine quoted at anything from £1,300 to more than £2,000 per case. At the low end I would be cautious on either provenance or genuine availability, and suggest that we are midway on price but offer a guaranteed quality together with a condition report - in other words I have no hesitation in saying that our product meets all investment criteria."

My response
European Fine Wines Ltd was incorporated on 15.8.2005 and its registered and trading office is at 68 Lombard Street, London EC3V 9LJ – a business centre run by Regus.

Their website (www.efwines.co.uk) is registered in the name of Scott Assemakis.

Looking at Wine-Searcher prices for a case of 2003 Château Pavie from UK merchants range from £1270 (en primeur ltd) to Friarwood Fine Wine at £3249. Taking account of the advice from EFW's director 'At the low end I would be cautious on either provenance or genuine availability', Wilkinson Vintners, one of the UK's leading wine brokers, has 2003 Pavie listed at £1280 a case. (These prices exclude duty and vat.) Two cases bought from Wilkinson would cost the investor £2560 against £3556 from European Fine Wines – a saving of £996.

My advice
I can see no good reason for the client to pay nearly £1000 more for the two cases from European Fine Wines. Unless EFW buys from France it is quite likely that they buy from large broking companies like Bordeaux Index, Farr Vintners and Wilkinson Vintners. Inevitably EFW's prices must be higher than Wilkinson's to cover their costs and to make a profit, so it would be wise for the investor to cut out an additional link in the supply chain and buy at the lower price.

As Wilkinson Vintners do not manage customer reserves, buying from them would involve the investors setting up their own account with the bonded warehouse, so may a little more complicated than buying from EFW. However, my advice is that it is best to have your own account, especially if you intend to store a considerable amount of wine, as this gives you full control over your wines. If they are stored in your name but under a merchant's umbrella account, the merchant's agreement is required if you want to move or sell your wine. This can be particularly problematic if for any reason it becomes difficult or impossible to contact the merchant or if they go bust.

Importantly having your own account also stops unprincipled wine merchants 'borrowing' your stock they receive tempting orders that they need to fulfil quickly. Of course this shouldn't happen but this may be more common practice than is generally realised.

2003 Château Pavie is a controversial wine and is famous for provoking a spat between Robert Parker and Jancis Robinson MW. See here. It is a brave and possibly not the best choice as an initial wine investment purchase. In June 2008 Wilkinson Vintners were selling 2003 Pavie for £1400 a case (data from wine-searcher). Not only has the wine dropped in value but an investor would have also been paying storage charges.

Looking at the wine's performance over the last few years I wouldn't share the EFW's view that Pavie is 'undoubtedly an excellent investment'. Wine-searcher shows that Farr Vinters, probably the UK's largest fine wine broker, were offering Pavie 2003 for £1050 (14.6.2006). The following year it had risen £1250 (offered by Nicholls & Perks 15.6.2007) and by June 2008 had reached £1400 a case (Wilkinson). Then it started to slip – L'Assemblage were offering it for £1300 (13.6.2009). A case of Pavie bought in June 2006 would be showing a gross profit of 21% over the nearly four year – 5.25% per annum. However, against this has to be set storage and insurance. If stored at Vinothèque, part of London City Bond, storage on a case costs £12.24 plus vat – £14.38 a year and £57.53 over four years. The gross gain on the case of Pavie is reduced from £230 to £172.47 – a rise of 16.43% over four years or 4.1% a year. Although this is better than most cash ISA's, the calculation doesn't take account of the commission due on the selling the wine, which will further reduced the profit.

At present looks like the market is more in sympathy with Jancis Robinson's negative view than that of Robert Parker.

Bought at the right price long term 2003 Pavie may show a profit but I'm not sure I would bet on it and I certainly wouldn't want to pay nearly £500 over the realistic market price. If I was the investor I would be asking for my 10% deposit back under the Distance Selling Regulations.

I have emailed Gregory Assemakis, director of European Fine Wines, to respond.

Finbow Wines Ltd

An enquiry received today

‘I've been approached (cold call) regarding short term investment opportunities with a company called Finbow Wines Limited and wondered if you know anything about them and whether they are a legitimate company offering legitimate opportunities.

They were talking about low value, high volume Italian wines to be supplied to China / Hong Kong. Usually not open to private investors but demand is high and contracts to supply in place. Minimum investment is half a container which equates to £14k, and promising returns between 14-23%. In essence any profit made is split 50/50 with transport, insurance and admin coming out of their cut. To make it even more 'appealing' they even offer a buy back guarantee after 12 months.’

My response:

Finbow Wines Ltd was incorporated on 10.6.1999. The latest accounts are made up to 30.6.2008 as a dormant company. Finbow would appear to have been dormant since its incorporation in 1999. Companies House currently list Finbow Wines Ltd as a non-trading company. Vivian Paul Rees is the sole director (appointed 11.11.2009).

Finbow Wines Ltd's registered office is at St. Clements House, 27-28 Clements Lane, London EC4N 7AE. These are serviced offices.

Finbow Wines Ltd's website (www.fin-bow.com) is registered in the name of Simon Dempsey of London SE12. Dempsey was a director of Finbow from 5.4.09 to 11.11.09. The website was registered on 20.5.09. It deals in generalities and does not name any director.

From the Finbow site:
'We are a team of internationally experienced wine buyers, sellers and consultants who have worked in the industry for over 20 years. We have created FINBOW to share our passion for the finer things in life.

Together we offer a unique blend of experience and expertise. Some of us have been around wine for all of our lives and have personal, hands-on knowledge of the wine making process. Others have developed expert judgement by helping individuals and institutions build world-class collections that can provide pleasure for years to come.'

The following quote from the wine knowledge section of the site suggests that Finbow Wines Ltd may be the only company in the world outside the Bordeaux négociants to be able to buy en primeur direct from top Bordeaux estates:

'Buying en primeur
Due to our long-standing relationships with prestige vineyards, we can give you exclusive opportunities to purchase their wines before they reach the market, when you can expect to pay significantly more.

http://www.fin-bow.com/wine-knowledge/

Previous enquiries about Finbow Wines Ltd suggest that the Italian wine may be called Frassine, which apparently the company 'can buy for £1.95 and it sells in China for around £3 a bottle. The minimum purchase is 3500 units'.

My advice
Companies House records show that Finbow Wines Ltd has only recently become an active company, so has no track record. 'Low value, high volume Italian wines'  are unlikely to have much value if it remains unsold after a year. It is not clear from the website what experience the current director of Finbow Wines Ltd has in buying and selling wines into China. This seems to me a decidedly speculative deal with considerable risk attached.

All in all this is not a deal I would want to invest in.

United Wealth Pte Ltd

Message received today:

'How about this firm seems promising, as it would! Do you have any background on this investment company or should I just ignore:

United Wealth
Admin Department
27 Old Gloucester Street,
London WC1N 3AX

020 7193 0081
info@unitedwealth.co.uk
www.unitedwealth.co.uk

Seems too glossy but still not sure if they are legitimate all started form a cold call!'

My response
I agree a cold call is not a good start.

From a look at United Wealth's website the company is called United Wealth Pte Ltd and is based in Singapore. It is either closely related or part of Assetton Pte Ltd, whose site is: www.assetton.com. Assetton is another company registered in Singapore offering a similar range of investments in wine, land and art. As far as I can see neither site tells you who runs these companies nor what experience they have in the investment areas they are suggesting.

Nor can I find any prices against the wines they have listed in their 'Current offer'.

United Wealth's website is registered in the name of Maria Avendano, Querandies 230, Libertad 1716, Argentina.

27 Old Gloucester Street, London WC1N 3AX the address of United Wealth's admin department appears to be an accommodation address.

Asseton's website is registered with Domains by proxy Inc based in Arizona. Their Singapore address – 77A Boat Quay, Singapore – may also be an accommodation address.

My advice
I would ignore United Wealth's offers until you have more information about the company which would help you to decide whether the company is legitimate or not and whether it would be wise to invest through them.

I have emailed United Wealth Ltd inviting them to respond and asking for details of directors and their experience.

Accommodation addresses/ instant offices

There is, of course, nothing wrong or illegal in having an accommodation address. However, any potential investor ought to be decidedly wary if a company only uses an accommodation address or an instant office and does not have its own permanent trading address. If an investment company is legitimate it will require its own premises, so why hide behind an accommodation address?

The following list is for guidance and is as accurate and up-to-date as I can reasonably make it. However, it is possible that some of these businesses have moved as they may not issue press releases if they relocate. investdrinks-blog is very grateful to Tony Hetherington's (Mail on Sunday) assistance in compiling the list.

Here are some accommodation addresses:

London
42 Bloomsbury Street,London, WC1B 3QJ.

BCM: this is an historic oddity: addresses are simply BCM or BM followed by a number, then a Bloomsbury postcode. The company behind this is British Monomarks, est. 1925. It is now just another maildrop, but in its heyday it was groundbreaking stuff and provided addresses for members of the royal family, and for lots of people in WW2 whose homes were bombed.

Mail Boxes Etc. Belgravia, 34 Buckingham Palace Road, London SW1W ORH
75 Cannon St., EC4N 5BN
Business ConneXions (BCA), 4th floor, 2 Caxton Street, London SW1H 0QH
10 Charterhouse Square, London EC1M 6LQ
16 Connaught St., W2 2AG
Roman House, 9/10 College Terrace, London E3 5AN
Ebury News, 23 Ebury Bridge Road, London SW1W 8QX
Rivington House, 82 Great Eastern Street, London EC2A
1-7 Harley Street, London W1N 1DA
7 Harley Street, London W1G 9QD
12 Harley Street, London W1N 1AA
Harley Street Freeholders, 12 Harley Street, London W1G 9PG
Arlington Management Services Ltd, 1-11 Hay Hill, London W1J 6DH
Woodberry Development Co Ltd (BCA) T/as The Executive Centre, 8 Hanover Street, London W1S 1YE
Management Accountants Ltd, 1 Hinde Street, London W1U 2AY
Mail Boxes Etc. Oxford Circus, 4 Little Portland Street, London W1W 7EZ
The City Business Centre, 2 London Wall Building, London EC2M 5PP
Macbean Centre, Macbean Street, Woolwich, SE18 6LW
Mail Boxes Etc. Marylebone, 78 Marylebone High Street, London W1M 4AP
45 Mortimer Street, London W1N 7TD
72 New Bond Street, London W1Y 9DD
37B New Cavendish Street, London W1 8JR
1 Northumberland Ave, Trafalgar Square, London WC2N 5BW
Standbrook House, 2-5 Old Bond Street, W1
120 Old Broad St., EC2N 1AR
77 Oxford Street, London W1R 1RB
28 Old Brompton Road, SW7 3DL
35 Piccadilly, W1V 9PB
Empire House Business Centre Ltd, Empire House, 175 Piccadilly
London W1J 9TB*
Mail Boxes Etc., 61 Praed Street, London W2 1NS
Chesham Executive Centre (BCA), Chesham House, 150 Regent Street, London W1B 5SJ
International House, 223 Regents Street, London W1B 2DQ
Langham House, 302-308 Regent Street, London W1R 6HH Landmark Virtual Offices Ltd, Devlin House, 36 Saint George Street, London W1S 2FW
eOffice 2000 Ltd, Medius House, 2 Sheraton Street, London W1F 8BH
110-111 Strand, WC2R OAA
Mailboxes Etc, 456-458 Strand, London WC2R ODZ
10 Stratton St., W1X 5FD
Ross Alexander Services, 34 Upper Tachbrook Street, London SW1V 1SW
R. Abraham & Co Ltd, 262 Vauxhall Bridge Road, London SW1V 1BS
Mailboxes Etc, 95 Wilton Road, London SW1V 1BZ
Citib@se Victoria (BCA) 120 Wilton Road, London SW1V 1JZ
Connaught Services Ltd, 78 York Street, London W1H 1DP
Communications House, 26 York Street, London, W1U 6PZ
43-45 Portman Square, London W1H 6HN

Member of MAIL
Many prestigious London addresses are within the City of Westminster where the council have scheme called The Mailing, Accommodation, Internet & Locations (M.A.I.L.) Fair Trade Scheme. Accommodation addresses that have signed up to this scheme and comply with the council's code are listed on tradingstandards.gov.uk/westminster/busaap.htm

Outer London area:
Berkeley House, Elmfield Road, Bromley, Kent BR1 1LR.
1000 Great West Road, Brentford, Middx. TW8 9HH
SBS House, 244a High Street, Bromley BR1 1PQ
Collingwood House, Schooner Court., Crossways, Dartford, Kent DA2 6QQ
Hygeia Bldg, 66-68 College Road, Harrow, Middx. HA1 1FD
Maple Hse, High St., Potters Bar, Herts., EN6 5BS
Knyvett House, The Causeway, Staines, Middx., TW18 3BA
The Nova Building, Herschel St., Slough, SL1 1XS

Other parts of the UK:
Cornwall Court, 19 Cornwall Street, Birmingham B3 2DY
Somerset House, Temple Street, Birmingham B2 5DP
4200 Waterside Centre, Solihull Parkway, Birmingham Business Park, B37 7YN
2440 The Quadrant, Aztec West, Almondsbury, Bristol BS12 4QX
University Gate, Park Row, Bristol, BS1 5UB
110 Whitchurch Rd, Cardiff CF4 3LY
11 Parkway, Solent Business Park, Whiteley, Fareham, Hants, PO15 7AB
Buchanan Prospect, 69 Buchanan St., Glasgow G1 3HL
36 Finch Rd, Douglas, Isle of Man
19 Peel Rd, Douglas, Isle of Man
5 Upper Church St, Douglas, Isle of Man
Prospect Hse, 32 Sovereign Street, Leeds LS1 4BJ
Harrington Chambers, 26 North John Street, Liverpool L2 9RU
Eagle Court, Concord Business Park, Threapwood Rd, Manchester M22 ORR
World Trade Centre, 8 Exchange Quay, Salford, Manchester M5 3EJ
Cavell House, Stannard Place, St Crispins Rd, Norwich NR3 1YE
Austin House, Stannard Place, St Crispins Rd, Norwich NR3 1YE
7200 The Quorum, Oxford Business Park, Oxford OX4 2JZ
Sussex House, 6 The Forbury, Reading, Berks RG1 3EJ

Ireland
Europa House, Harcourt Centre, Harcourt Street, Dublin 2

Marshall Wineries: a forgotten investment

This afternoon I received the following email headed Marshall Wineries:

Hello!

I have just remembered that I invested in some wine with this firm years ago and had forgotten about it until I found some papers at the very back of my desk.

I paid by Barclaycard at the time for whisky, and I think some port, and for storage.

Do you know, please, if there is any possibility of my being able to claim anything from anyone - or has it just gone into the 'sinking fund'?

Any help would be appreciated, please - I was recommended to you by the SFO.

Hopefully, and with best wishes,

My response:

I suggest your only option is your credit card company. Stephen Jupe was found guilty of fraud on 23rd April 2004. You need to check the rules of how long you have to make a claim, which will depend upon I think when you knew it was a fraud.

You could also contact Paul Smith of the Malt Whisky Buyers' helpline.

Kind regards

Jim

Reply:
Fantastic response - very many thanks, I will try.

Checking a company out

You have been cold called and for some reason decided to listen to the salesman's spiel about the wonderful wine investment deals they can offer. We'll call the company, Bordeaux Investment Scams Ltd based in the UK.

Ignoring for the moment my advice not to accept cold calls, how can you check out the company and whether the wine they are offering is a good deal?

The good news is that the internet makes it easier than ever to make a number of checks.

Companies House (updated 21.11.2015)
I tend to start here with the UK's companies web check on the Companies House site. There used to be a charge for all but a limited amount of information. However, information on the Beta site is now free, which is really excellent news.  If it is a limited company or a plc you'll find details here of when it was set up, who the directors are, annual returns and accounts. Look for the date when the company was set up. Let's use our imaginary company – Bordeaux Investment Scams Ltd – as an example.

Bordeaux Investment Scams Ltd was set up in October 2007, so how come the salesman claimed that the company had long experience in wine investment?

The company's registered office is 72 Bond Street, London W1S 1RR. This is a well-known accommodation address offering telephone answering services and message centres. Nothing wrong with this, of course, but this means that Bordeaux Investment Scams Ltd is unlikely to have offices here, so the company could be difficult to find if need arises.

The company's annual return and accounts are shown to be overdue. Under UK company law companies have to file an annual return and accounts – so two more warning signs.

Apart from details of any change of company name, this is the extent of the free information. However, you can pay to get details of the company directors and accounts etc. Each of these will cost £1. A small price to pay if you are considering spending substantial sums on buying wine for investment.

Company website
Bordeaux Investment Scams Ltd has a website. This can also be quite revealing. Ask yourself a few questions as you look through the site:

a) Does it tell you who the directors are or who runs the company?
b) Is there a contact address? Is it still 72 Bond Street? If there's another address do a Google search? Is this new address also serviced offices?
c) Is there a price list?
d) Does Bordeaux Investment Scams Ltd charge an up-front commission? The UK Government warns against this practice. It is easier to buy wine than to sell it, so it is better to pay a commission when selling rather than when buying. Furthermore if the company disappears you will have to pay a commission to another company if you then want to sell your wine.
d) Is the site long on wine's mystique but short on details?
e) Does Robert Parker, the influential wine critic, feature prominently? Without Parker's consent or knowledge a number of dubious investment companies have tended to have a section on their website about him.


Checking the website registration
All websites have to be registered and there are a number of sites that allow you to check the registration details. I tend to use http://www.who.is/ Do the registration details give the name of a person in the UK to contact or is there merely the details of an admin company usually based in the USA?

Checking the wine offer

Use wine-searcher to check the prices. See further details here. Also there is a wine-searcher facility at the top of this page.

Hopefully these checks will help you decide whether the company that has contacted you is both reputable, well-established and is offering you a fair deal. If you have any doubts, then don't buy from them.

Furthermore before you buy contact other wine merchants and seek their advice. Read about wine investment – do your research!

Are you serious about wine investment?

If you are, then I'd start with a pro subscription to Wine-Searcher that costs $29.95 a year. This amazing wine search engine gives you prices of wines available around the world. The Pro Version gives you more complete price listings and lets you compare price movements over the past three years.

If someone offers you a case of fine wine, this is the ideal way to check whether the price is reasonable. There are a lot of sorry investors who wished they had first checked the price of the expensive wine some smooth talking, snake oil salesman pestered them into buying.

(NB I have no commercial interest in wine-searcher, although I do receive a complimentary pro subscription.)

Cold calls

Many dubious wine investments start with a cold call. The company may have got your name and details from a share register. In 10 years of dealing with wine investment enquiries the vast majority of unwise wine investment buys started with a cold call.

My strong advice is to not to buy anything from a company that uses cold calls.

The best way to deal with a cold call is to put the phone down. A more fun alternative is to say that you are not the right person to speak to but you will go and find the person they need to speak to. Then just put the phone on hold – the caller will soon give up.

You may wish to get your number blocked from being added to future mailing lists through the Telephone Preference Service.

Why a blog for investdrinks?

I started http://www.investdrinks.org/ in 2000. So why an investdrinks blog as well?

For the simple reason that it is easy and quick to use a blog. The investdrinks site, however, will continue, although perhaps not very regularly updated. For the reason of possible libel/defamation, comments will be moderated. Alternatively you may prefer to contact me through budmac@btinternet.com

Another reason for starting investdrinks blog is that the 2009 en primeur campaign is likely to be a blizzard of hype. There will be many offers from legitimate companies but it is also quite likely that there will be some dubious companies leaping onto the 2009 bandwagon trying to sell wine that they have no intention of buying. Instead they will take your money and disappear long before the Bordeaux 2009s are due to be shipped in late 2011 or early 2012.