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Tuesday, 13 April 2010

Bordeaux Wine Company: Anthony Grant responds

This is a response I have received today from Anthony Grant of the Bordeaux Wine Company. As it is a lengthy response I have decided to put it in a separate linked post. 

Hi Jim,

I am writing to you to for 3 reasons, firstly, to let you know that your site is being used and manipulated by a disgruntled former employee of BWC who I will not name for various reasons.

The enquiry and posts you have received have not come from a client or potential client, all been written by the same person as a way to discredit BWC and myself due to his dismissal.

After the enquiry, you posted what you knew about BWC, our trading history and the partners, most of which was fairly accurate.

I don’t wish to go into the ins and outs of mine and my investor’s (Frederick Achom) past history, we feel that is in the past and the best we can do is try and be as open, honest and as transparent in our business dealings as possible.

Secondly, I am was not sure if you were implying that at Boington & Fredericks wines were deliberately not purchased for clients but I wanted to address that subject if that was the case.

Boington & Fredericks was never accused by the DTI or anyone else of failing to purchase wines for our clients. All wines up until the company ceased trading were purchased or ordered and placed under client accounts.

I would like to make it clear that wines were purchased for clients mid way through the following month once all funds from the  previous months trading had been received. So when the company was halted from trading in November of 2001 it was unable to fulfil clients orders for October. The company was consequently wound up by the courts in January 2002, 3 months after ceasing trading.

The main reason for the court’s decision was that clients were being misled and the wines being offered by B&F had almost no chance of making a profit for the client as suggested by the company, not that wines were not being purchased on the clients behalf.

Today a simple wine searcher search will show you that some of the wines purchased from B&F have gone on to achieve good profits for the clients; one example being the Lafite 1996, sold for £4,300 and now commanding prices in excess of £10,150, a return of approximately 136%.

Now, a very simple argument which you have posed in the past is that the client can of course purchase the wines cheaper elsewhere. Now the same thing can be said for almost any product in any industry, and in the wine industry it can be said for almost any wine purchased from any well known merchant, this i am sure you know. You only have to look at wine searcher and there will be a spread of different prices with Berry’s usually being the most expensive!

All that said, we certainly recognise that the business model of B&F was flawed, front end loaded and geared towards a profitable company, with the client waiting longer to see profits. We have steered well away from the high mark ups we used 10 years ago.

Thirdly, BWC has been in operation for 8 years now and has to date never had a client claim we did not purchase their wines or anything remotely suggesting that they have been misled.

I am aware over the years you have spoken with some of our clients and our warehouse operators and have been satisfied that where the wine is concerned all was in order  and wines existed!

Those clients that were uneasy about being under an umbrella account were assisted in opening their own accounts at a warehouse of their choice.

Our aim at BWC is always to offer the best possible service and price for the clients and we are continually striving to do so. As we grow in the industry and make further in-roads with overseas suppliers and some larger UK suppliers therefore allowing us reduce our prices in an effort to be more competitive. Our brokerage fee was reduced from 25% to 15% two years ago and our mark up is approximately 25% at the moment.

We have always stated in our promotional literature that our prices are determined by source of purchase, competitor pricing and of course demand.

Anyone investing in wine is almost always in a loss making position initially and we offer a service that is no different but the length of time it takes to see a return is of course important and slightly longer with us because we don’t have the buying power of other larger merchants who can command lower wholesale purchase prices etc.

Our clients are provided with all of this information in a deliberate effort to be more transparent. We want our clients to be happy with our business model and on entering into an agreement with us understand that our fees are designed to align the interests of both the client and the company.

Please find below a list of wines we have sold over the last 8 years and the returns that have been achieved by our clients and also attached are testimonials received from our clients over the last 12 months.
(Unfortunately I’m unable to paste in the tables supplied. I assume that they would be available from The Bordeaux Wine Company.)

The past aside, we have been as open and as honest as possible from day one, at BWC and intend to continue until we areas competitive as any other merchants.

Over the years you have not hidden your scepticism for the wine investment market so I don’t expect you to start recommending us or the industry anytime soon but if you have any questions or queries that you want answered in the future, please feel free to contact me directly or my office and we will try and help if we can.

I hope this sets the record straight for you and all those that follow your site.

Many Thanks

B A Grant

NB. BWC has been offering en primeur wines since the 2003 campaign and to date all wines have been purchased and received and if not yet received we are awaiting receipt due to back log from our suppliers, all evidence of purchases are available at our offices.

We will be offering 2009’s Bordeaux once we have an allocation and look forward to a fruitful campaign.

  
*

'Those clients that were uneasy about being under an umbrella account were assisted in opening their own accounts at a warehouse of their choice.'

I'm pleased to see that the Bordeaux Wine Company assists their clients to set up their own accounts with bonded warehouses. My advice is that all private clients holding stock with all wine merchants, including the Bordeaux Wine Company, should have their own storage account if they hold more than the odd case of wine or if the wine is particularly valuable. 



22 comments:

  1. Thats a very plausible sales pitch, probably why they have been so successful. They appear to be open with the information. Lets hope they sue the ex-member of staff. This way through the discovery process the information will be open for everyone to see and judge.

    One question, why not 10% mark up like the industry norm? the explanation that they are more expensive because they do not buy very well is understandable, but they have not explained why their markup is 15% and was 25%. In fact it makes it worse, 15% on top of an already expensive price...

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  2. well i have to say mr grant you are right the past is the past and moving on from that you make right. i have to say i have wine with BWC and have made money on the sale too !!! the service i get from BWC is next to none i have wine with other companies and much prefer BWCs way of doing things
    I realy dont care what he or his partner did in the pas all i know is that to have a company for 8 years and still be here making US the clients money my hat is off......
    all you have to do is read the news as of late that many wine companies are getting closed down every day for bad practice...
    I will keep going with BWC no matter what

    Regards

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  3. I have had dealings with BWC and have received a good service. I would however like BWC to drop the 15% up front commission. If that were the case i would consider buying more from them. I have yet to sell any of my wines purchased but my 2000 Mouton which i purchased in Jan 09 is now making me a profit, even after |BWC's 15% mark up. I could have made a higher profit without the 15% and made some more trading with BWC if the 15% was missing. Finally, i have received with all my contracts with BWC my Ownership doc's and have had that stock transferred into my Direct a/c.

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  4. Anon. That is the crucial point your profit would have been greater had you purchased from a cheaper source, Admittedly less important when the market is rising sharply but very important when the market is flat as it generally was from after the 1997 Asian crisis to around 2006

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  5. We am very happy that you are happy as far as your wines being supplied and very happy to hear you have gone on to make a profit as advised by BWC, especially over a period where most other markets have not.

    Our charge of 15% is not a mark up but a management fee. All wine brokers, wine funds and investment companies will charge you a yearly management fee for advisory and execution, we are no different. Our fees are broken down as a 3% annual fixed rate
    charge for the first 5 years in advance, a total management fee of 15%.

    As for our mark-ups it is between 10% and 25% which is not far from the industry standard.

    Thank for your support and understanding.

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  6. Jim

    Your case for buying the wine cheaper would increase profits for the client is fair but you fail to understand that the interest of both the company and the client must be aligned and this can only be done with a profitable pricing structure. For our service to be consisitent and beneficial to the client we must remain profitable.

    One need only to look at the case of Dunbar Fine wine based in Scotland. Not set up to defraud or charge high prices yet failed and ended with some clients failing to receiving their wine due to the company not maintaining a profitable status. This is always a danger if the company does not price properly.

    Of course clients want lower prices but their is a danger for smaller well intended companies to fall into financial problems, especially if trying to compete with the larger more financial stable merchants, this is due to their lack of buying power.

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  7. In reply to Jim's comments. I agree and that is why cannot buy further stock from BWC until or if they drop their up front commission. My money goes further in trading with companies who charge a selling commission. So, it is now down to BWC to consider how best to run their business, but for me it has been and still is a learning experience and Jim's sight has been a useful tool in this respect

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  8. The really useful tool I think has been wine-searcher bringing greater price transparency.

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  9. im the guy who put up the second comment you have to have a look around yes not a problem but as i said BWC im sure is not a charity ???? am i right im sure they have costs???? at the end of the day wine is not a bad investment and i have made money with BWC its more than i can say for the other wine companies i have wine with.

    Realy when you look at wine you really want to go with a company who has...
    Been around a good amount of time
    Knows what they are talking about
    and have made therr clients money you dont want any one who has been about for 5 min thats when you get your Hands BURNT!

    What im trying to say if you look any where on the net you can get things cheeper BUT i pay for the service i get and trust me its next to none...



    Regards

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  10. Anon. It would be interesting to know what other wine companies you have bought from and haven't given good service.

    Providing investors are aware that they can buy the same wines from long established and reputable merchants for less money I have no problem. The problem arises if there is a hard sell, particulalry from a cold call, and the client is led to believe that they are getting a very good deal pricewise on the wine they are buying as an investment.

    My advice remains to do your research properly, speak to a number of merchants and to use wine-searcher and to set up your own account with a bonded warehouse.

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  11. I have wines with a few merchants and with a wine fund and they charge me a yearly management fee as well as a percentage for selling, which over five years amounts to more than the 15% charged by BWC, which i presume is not a mark up but a management fee?

    After reading what has been said, it seems all the clients of this compnay have received their wines and gone on to make profits, why begrudge a company its right to make itself profit??

    I don't have wines with BWC but seems to me that they have been very upfront about their dealings and how they trade so one should look past the 'you can find it slightly cheaper' arguement and focus on purchasing a wine from a company that has a track record for delivering the product and the returns.

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  12. Anon. Thanks for your comment. The great advantage of wine-searcher is price transparency. Track record is clearly important and if you can find a lost established track record with a good price then it is clearly sensible to opt for this.

    I certainly don't begrudge a company the right to make a profitbut if an investor can buy cheaper and safely elsewhere it clearly makes sense for them to maximise their potential profit.

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  13. 'BWC

    Your case for buying the wine cheaper would increase profits for the client is fair but you fail to understand that the interest of both the company and the client must be aligned and this can only be done with a profitable pricing structure. For our service to be consisitent and beneficial to the client we must remain profitable.'

    Undoubtedly a company has to be profitable to survive – that is self-evident. However if a company is offering wine as an investment it also needs to be competitive or offer such extraordinary service that its higher prices are worth it. The problem for many 'wine investment' companies is that they are an additional link in the supply chain and so are not competitive.

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  14. It sounds to me that they have a fundamental misunderstanding about the value of money, markets, capital growth or investment management. They are a boiler room sales business who exploit the lack of regulation in the wine market to sell to unsophisticated investors. Their right to a profit is absolutely fair, the consumer also has rights, someone like Jim Budd does a good job at uncovering the rotten apples. How many companies over the years has Jim been wrong about?

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  15. And that last comment above pretty much sums up this argument in a nut shell.

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  16. After some 15 comments posted plus a few that I have chosen not to publish, I will probably not be publishing further comments as I think the various points have been thoroughly covered. Of course if I receive a comment that says something new that would be different.

    However BWC has been and is run, both Anthony Grant and Frederick Achom are disqualified from being directors of any UK company. The disqualification running from 23/07/2002 to 22/07/2013. If wine investment was regulated (as it should be) neither Grant nor Achom would presumably get FSA approval to run an investment company.

    Indeed I have to wonder whether they have breached the terms of their disqualification by running, as is clear from Anthony's comments, The Bordeaux Wine Company Ltd.

    Thank you to all who have commented.

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  17. Anon. Thanks for your message received today. I need more detail before being able to post your comment please.

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  18. I checked with the bonded warehouse to make sure BWC did store thier wines there. The bond confirmed and offered to open up my own account. This is tempting but as we pay a 15% fee, which is presented as storage and no exit commission then I left it as was.
    I benchmark to the LivEx wine report to see if I am in the black. If BWC want to add value to thier fee they ought to send thier clients investment status reports as most investment companies do.

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  19. All this makes me a little nervous as BWc are forthcoming about the prospects for a wine when they are trying to tsell it to me but as mentioned, investment status reports are not forthcoming and they withhold their telephone number which makes my relationship with them somethin of a one way street. The news about the directors concerns me greatly

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  20. You should be nervous and concerned Richard. I would steer well clear of their outfit!

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  21. Kirsten Durwar26 August 2011 12:37

    I would just like to add belatedly to this discussion regarding Bordeaux Wine company. My father and I had both bought wine from their company and quite frankly I have found their service to be shocking. We are only contacted when they want to sell us something. Last Christmas I was harassed by them for not paying a transfer charge (when I had not requested a transfer) and had demands to release a wine that I did not even own. My father was harassed over the phone. Phone calls to them remained unanswered, as did emails both to my 'dealer' and through their website. Messages left on voice mail were not responded too. Eventually I received a short terse message that my father's account had been accidentally merged with mine and that is where the error occurred. No apology to either party. I have several times asked them for a valuation on my wines purchased in good faith. I have several times asked for guidance on the wines I held. I had been told to buy en primeur and to sell after bottling in April. Contact in April for further advice remained unanswered. Resorting to a wine valuation website I checked out the market myself, and sent a request to confirm that what I had found out was correct, received a terse response that 'wine x is selling for about that.' Eventually took the decision to transfer my wine to a private account, this took over 2 months as phone calls again remained unreturned, letters unanswered and when eventually I was contacted by someone; they requested information that I had already given in writing 3 times to my initial contact. Their service is atrocious so their high commission is shocking at both ends; also I have found that the 2008 wine I was sold en primeur was sold at an inflated price; and 4 months later was actually worth half of what I paid for it (a loss of over 2000 per case). I now have a wine account with an online access so I can see at any time what I have and receive regular reports on values, and suggestions as to what to do to improve my portfolio. The people in this company should be ashamed of themselves and I will do whatever I can to promote how they behave in order that other people are not fooled by them

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  22. My husband invested with BWC, and has been trying for 2 years to get them to sell his wine. He still has not managed to get back a single penny of his investment. He is no longer able to speak to them on the phone without having to endure a full hour of sales pitch, during which he can't get a word in edgewise. I recommend you avoid them like the plague!

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