Rearing a phoenix....... part 1 – World of Wine Ltd from the ashes of En Primeur Ltd.

'In Greek mythology, a phoenix or phenix (Greek: φοῖνιξ phoinix; Latin: phoenix, phœnix, fenix) is a long-lived bird that is cyclically regenerated or reborn. Associated with the sun, a phoenix obtains new life by arising from the ashes of its predecessor. According to some sources, the phoenix dies in a show of flames and combustion, although there are other sources that claim that the legendary bird dies and simply decomposes before being born again.^[1]'

From Wikipedia

The Phoenix is a rather splendid bird – largely mythological but they can be reared successfully in the UK as this short series of posts may indicate.

To kick off here is a recent example from the UK wine trade where a company has died 'in a show of flames and combustion' but serendipitously its debts 'simply decompose' before a new one is born again.  

Goodbye – En Primeur Ltd! (05949641) ...... Hello – World of Wine Ltd! (09900486)
En Primeur Ltd was founded in September 2006 with Marco Paulo Correia (DOB: 29.9.1968) and Ana Sebastiao as the company secretary. En Primeur Ltd was based in Crawley with Ground Floor 1-7 Station Road Crawley West Sussex as its registered address and trading address: Suite 4, Kelvin House, Kelvin Way, Crawley RH10 9WE. As its company name implies, the sale of en primeur was a major focus. At the height of the demand for Bordeaux en primeur (2009/2010) Correia advertised his company's en primeur prices in January promising to hold them when the actual price posted by the châteaux several months later – surely a gamble fraught with difficulties.....

On 24th July 2014 En Primeur Ltd went into liquidation with debts that were originally estimated at 'low six figures' but which had climbed to unsecured claims of over £2.4 million by September 2015 when the liquidator, Nedim Aliyan of Abbott Fielding, filed his first annual report. News reports from July 2014 here and here.   

The last annual return filed in 2013 showed En Primeur Ltd had share capital of £100 – 85 shares held by Marco Correia and 15 by Roberto Correia. Full details of En Primeur Ltd and its filing can be found on Companies House Beta service.          
Hello – World of Wine Ltd! (09900486) 
The World of Wine Ltd was incorporated on 3rd December 2015. Ana Ligia Sebastiao (DOB– March 1973), who was company secretary of En Primeur Ltd, is the sole director and sole shareholder. The company has a nominal share capital of £100 – with £100 unpaid. Its registered office is Ground Floor, 1/7 Station Road, Crawley, West Sussex, United Kingdom, RH10 1HT and trading address: Suite 4, Kelvin House, Kelvin Way, Crawley RH10 9WE.   

Although Marco Correia is not an officer of The World of Wine he is the registrant of the company website – registered on 11th November 2015. Buying en primeur features prominently on the World of Wines Ltd's website. 

Compare and contrast:
Keen readers may notice a certain resemblance between these two explanations of buying en primeur...... 

 En Primeur Ltd: En primeur wines 

  World of Wine Ltd: What is En Primeur? 

Both explanations conclude with: 

'Buying en primeur allows you to make sure that special vintage you have your eye on doesn't get away.'

I'm not entirely sure that the many individuals listed as creditors of En Primeur Ltd would completely concur with the above ....  

 

From the terms and conditions of World of Wine Ltd:

  

En Primeur Sales 

In the unlikely event that we are unable to supply wines 

purchased on your behalf en primeur due to circumstances 

beyond our control, our liability will be 

limited to any money paid to us. 

It is not clear what happens if the reason why wines are not supplied are due to circumstances within the company's control eg failure to pay en primeur suppliers.... 

The terms and conditions for The World of Wine Ltd limit to right of return to three days from delivery. This is contrary to the 2013 Consumer Contracts legislation that gives 14 days. 

•• 

Doubtless business people should be given a second chance but equally potential clients have a right to know a company's background. I won't be buying from the World of Wine Ltd. 

En primeur sales now exempt from right of cancellation

Under the new Consumer Contracts Regulations that came into force across the European Union on Friday 13^th June 2014 the statutory cancellation rights for en primeur sales have been clarified.

En primeur sales are now exempt from the right of cancellation providing three specific conditions and one general condition are met:
‘the price has been agreed at the time of the conclusion of the sales contract’, ‘the delivery of which can only take place after 30 days’

‘and the actual value of which is dependent on fluctuations in the market which cannot be controlled by the trader.’
“It is important that all three conditions are met for the exemption to apply,’ says Andrew Park of APP Law*.

This rules out exempting already bottled fine wine from the right to cancellation because delivery can normally take place within 30 days. My guess is that many scam wine investment companies will fail to inform their investors properly of their rights.     

In addition the customer has to be properly informed that en primeur is exempt from the right of cancellation as well as various other pieces of information such as the identity of the trader, the geographical address, telephone and fax number, email address so as to ‘enable the consumer to contact the trader quickly and communicate with him efficiently’, the total price of the goods etc. (Article 6 of the Directive 2011/83/EU). 

This information has to be provided in a ‘durable’ form – print or email. If this information (Article 6 of the directive) is not provided the customer is not  ‘bound by a distance or off- premises contract’.

This could mean that a customer, who had not been properly informed, could still cancel an en primeur contract after delivery (eg two years later) as they were not bound by the contract.   

The en primeur exemption represents a victory for the WSTA, who have campaigned for an exemption since the Distance Selling Regulations 2000 came into force. Before Friday 13^th June 2014 the right to cancel an en primeur order once the customer (or a third party agent is a bonded warehouse) took delivery of the bottled wine had always been a grey area and had never been tested in the courts.

The Consumer Contracts Regulations 2014 implements the EU Consumer Rights Directive of October 2011. There are a number of significant other changes. The right to cancel has been extended from 7 days to 14 days following delivery, which should happen within 30 days of placing the order, unless it is agreed otherwise.

Consumers have to be reimbursed within 14 days. If a consumer is not properly informed of their right to cancel they can cancel up to a year from delivery plus the statutory 14 days. Excessive charges for using a credit card are banned, only the costs involved in using a card can be charged. Premium priced telephone lines cannot be used by customer service centres. 

If a customer has not been properly informed or has been misinformed then the cancellation period from delivery is extended from 14 days to a year plus the statutory 14 days. Previously this had been extended to three months plus the then statutory 7 days.

The new regulations have implications for all companies involved in distance selling. A company’s terms and conditions need to be amended to meet the changes as the consumer is not contractually bound until they have been informed in a ‘durable medium’. 

* Andrew Park APP (http://www.appwinelaw.com) article on changes here. http://www.appwinelaw.com/distance-selling-of-wine-cancellation-period-increased-en-primeur-now-exempted/

Companies wishing to reply on Park's advice need to contact him directly. 

Beaumont Vintners Ltd in liquidation – few assets

Marriott Hotel, Bexleyheath: venue for creditors' meeting

Beaumont Vintners Ltd duly went into liquidation on Thursday 5th April 2012. During a meeting held Marriott Hotel in Bexleyheath, Nedim Ailyan of Abbott Fielding and David Ingram of Grant Thornton have been appointed as joint liquidators. The deficiency is understood to be £1.5 million and there are few assets. The deficiency includes between £600,000-£700,000 of orders placed by clients Beaumont Vintners Ltd for Bordeaux en primeur believed to be 2009s. Beaumont placed orders for between £30,000-£40,000 of en primeurs and these I understand from Nedim Aliyan are currently thought to be the company's sole assets. 

Samuel Philips, the sole director, was present at the creditors' meeting. Philips was appointed on 10.11.2011 following the resignation of Stephen Carpenter _ appointed 8.10.2010. It was clear from the meeting that Philips was a nominal or patsy director as he was not a signatory to the company bank account. Apparently Carpenter had remained a signatory. A Richard Evans had also been a director of the company – appointed 28.6.2010 and resigning on 9.2.2011. investdrinks understands that during the meeting at the Philips declined to name those who actually ran the company, which was set up on 18.6.2010.         

    

Bordeaux UK Ltd – an update on the liquidation

It has still not been possible to establish final figures, partly because the company's system was so poor and inadequate. There is between £300,000 and £400,000 worth of stock at the Octavian bond in Wiltshire, where it appears that customers' stock was switched without their knowledge between named customer reserves and Bordeaux UK's own account. There is over £2 million worth of 2009 en primeur that the company bought. It is planned to sell this through Sothebys auction house, although the timing of the sale will be delicate if the liquidators are to realise the best price for this stock. It is hoped that this will raise between £2.5 million - £3 million.

Overall current claims from creditors are between £8-£10 million but the actual figure is understood to be around £6 million as a number of creditors have claimed what they think their wine ought to be worth rather than what they paid for it. Furthermore because the figures have yet to be finalised Revenue and Customs have not yet be able to submit their claim for unpaid tax.

As things stand creditors are likely to get 30p in the £. investdrinks understands that due to the lack of proper systems of control at Bordeaux UK, the same stock might be sold several times over to different customers.  

Bordeaux UK on the BBC   

The BBC will be featuring Bordeaux UK later today with Paul Lewis covering this story and problematic wine investment on BBC Breakfast and then later on Money Box (Radio 4) at midday. See BBC story by Bob Howard here.

**

Lessons to be learned

Nedim Ailyan of Abbott Fielding estimates that investors may have lost over £100 million over the last four years as more than 50 wine investment companies have 'collapsed'. 

Although Bordeaux UK Ltd bought substantially more wine than Beaumont Vintners Ltd it appears did Beaumont Vintners Ltd, customers of both companies are going to be substantially out of pocket and for some this will represent a substantial loss on their life savings and consequently a reduced standard of living for their retirement. This is long-term mugging.

Do not fall for cold calls and aggressive, high pressure telesales tactics

Check out companies carefully before buying. This is particularly important when buying en primeur. Chris Kissack has some good advice here on en primeur particularly related to the 2011 Bordeaux vintage with the campaign just beginning.

Use price checkers like wine-searcher to see whether you are paying over the odds.

Set up your own account at a bonded warehouse making sure that your wine is quite separate from the company. With a customer reserve account your wine remains under the control of the company and your wine can be moved or even sold without your knowledge. 

Spread your risk – do not put all your savings into wine. 


Wine investment, except for wine funds, are not regulated. So if things do go wrong there is no compensation scheme. 


See also the WSTA (Wine & Spirit Association) wine investment guide.     

CBV Vintners: 2010 Lafite offered before release

The ability to look into the future is a most useful skill as this email (15th June 2010) from Stephen Miles of CB Vintners shows. 11 days after Stephen Miles sent his email (26th June 2011) Lafite has yet to release its price for the 2010. It is also not know how much will be released.

If I was the recipient of this email I would decline Mr Miles' kind proposal despite his apparent ability to purchase 'the best and most sought after stock'.  

From: Stephen Miles
To: ***
Sent: Wed, June 15, 2011 5:13:55 PM
Subject: Your request for further information on fine wine investment

Dear •••

I hope that you are keeping well.

You recently requested some information on wine investment opportunities. Please see below our latest offer.

The 2010 Bordeaux vintage is in the process of being released at the en-primeur stage. The 2010 vintage is set to be one of the top 5 vintages of all time. The demands from all over the world and especially China are far exceeding the supply. In the last couple of years we have seen astronomical returns in a short period of time. In fact as an example from the spring of 2009 to date Lafite Rothschild 2008 has increased by 700%...I know amazing. The Chinese cannot get enough of this wine. As I have been operating within the market place now for 15 years, I am in a favourable position when it comes to purchasing the best and most sought after stock.

At this stage, I would like to offer you the opportunity to purchase up to 3 cases of the superb 2010 Lafite Rothschild. The price of each case will be £12,500. I believe that this wine – the most sought after wine in the world has the capability to double in value over the next year to 18 months if we observe the performance of previous vintage

I would recommend that you take advantage of the proposal that I am offering you.

I look forward to any questions that you may have. Please email me.

Kind Regards

Stephen

Primeurs 2010 - when to publish? asks Jancis Robinson MW

Jancis Robinson MW@a conference in Porto December 2010

Good and thought-provoking article by Jancis Robinson MW asking how journalists covering the 2010 Bordeaux en primeur tastings can avoid becoming part of Bordeaux's sales machine:

23 Mar 2011 by Jancis Robinson

'It looks, against all odds, as though Bordeaux may just have another sought-after vintage on its hands with the 2010s (see Vintage reputations - the struggle for truth). Asian markets, with the tragic exception of Japan, seem to be on fire for classic, investment-grade wines. The Americans look ready to come back into the picture for Bordeaux primeurs, having sat out 2009s to a great extent. Many economies are in a much healthier state than the British one, and even in the UK there is no shortage of potential investors with, for example, bonuses burning to find an amusing home. No wonder the UK's fine-wine traders are in such fine fettle. This year they don't even seem to be bothering to demand reasonable pricing from the top Bordeaux proprietors - who are currently rolling in cash, as any visitor to the Médoc and its myriad building projects can attest.

I have already tasted some 2010s and can see that there will be considerable interest in them. I am going back to Bordeaux twice, once at the end of this month and once at the beginning of next, to taste this embryonic vintage as thoroughly as is possible as usual, but I really do wonder what to do with my tasting notes.'

Read the rest here: http://www.jancisrobinson.com/articles/a201103204.html

**

Probably the only way for journalists to escape Bordeaux sales machine is not to go until the wines are closer to being ready and after the prices have been released. By which time, of course, most of the wines will have been sold and a critics comments may not be very relevant.

See also the open letter from Michel Bettane, the prominent French wine critic, to Sylvie Cazes of the UGCB. 

1855.com – awaiting en primeur deliveries?

I have been contacted by several people about outstanding en primeur orders from 1855.com. If anyone is waiting for an order for Bordeaux en primeur wines (vintages: 2003, 05, 06 and 07) ordered through 1855.com, I would be very grateful if you could send me the details of any outstanding orders including when it was ordered and the price paid.

Please email me through jim@investdrinks.org.

Encarta Fine Wines Ltd: 'the worst case scenarios from our company' (part 1)

I have received a recent enquiry from HM about Encarta Fine Wines Ltd

HM

'I have been approached by Encarta Investment Group regarding investing in wines. They are offering 2009 Carruades de Lafite - Rothschild. Half a case for £2,200. They cold called me earlier this year.

I declined their offer then, but said I might be interested in the future. Since then I have received calls and emails.

My response

Encarta Fine Wines Ltd was set up on 9th July 2009 with Dean Doughty as the director and Lucy Damato as the company secretary. A further director, Matthew Hart, was appointed on the 19th August 2009. The company's website was registered on 5th October 2009. Its registered office is at Mayfair House, 14-18 Heddon Street, London W1B 4DA.

However, the Encarta Fine Wines' website explains that its origins were earlier than this:

'Encarta Investment Group was founded in 2006. When the company was formed, we believed that there was the need for a good, down to earth, friendly and helpful fine wine investment company offering a range of fine wines from Bordeaux. A sort of antidote to the increasing anonymity and sameness of the big chain stores. We have been rewarded in the enormous increase in wine investors and the resulting growth in demand for en premier first growths.'

Encarta Investment Group is not a limited company. Its address is Fox House, 135 High Street, Bromley BR1 1LF. There is one similarly named limited company in the Bromley area – Encarta Associates Ltd, which founded on 5th August 2009 at Imperial House, North Street, Bromley BR1 1SD. This was also the registered office of Encarta Fine Wines Ltd until 7th October 2009 when it was changed to Heddon Street.

However, the company would appear to trade from the Bromley as this just ad indicates:

'Encarta fine wines (London/South East) Full Time Tuesday, January 5th, 2010

Job Description:

We currently have full time investment broking vacancies in our team on the trade floor, this is available for driven, money motivated individuals with a passion for sales. Those with experience in stock broking, wine broking or land broking are ideal – although if you have a strong sales background and are sharp on the phone, we want to hear from you! with a basic salary and a strong ongoing commission structure, this is the perfect role for those looking to develop their sales career in an exciting, fast paced broking environment

This is not a job for those afraid of hard work, the job involves speaking to investors across the UK and IRELAND, no matter how wealthy! The hours are long, the job is tough & demanding, BUT the rewards can be tremendous!

hours 10.30-7.30pm

salary is 800pcm to begin with (comissions on top) with huge potential for promotion in a short period of time for the right candidate.

OTE 50,000 to 100,000 a year

Location: Bromley, Kent

Compensation: 800pcm

Telecommuting is ok.

Encarta Investment Group Address: Fox House
135 high st
Bromley - BR1 1JF
Kent

Contact: Dean'

Back in February in an exchange of emails Matthew Hart explained the company background:

'Encarta Fine Wines Ltd was registered with companies house in 2009, however has been sole trading since 2006 on very a small scale basis, but must also highlight a mistake* you have which is I am not the sole director, our prices are generally around 25% above the prices shown from some of the larger Merchants for example Farr Vintners, but within this increased price we include storage for up to 5 years**, and of course advice on purchasing.

We can resell to existing clients & potential new clients, portfolios of existing clients thus offering only a 5% selling commission. So I agree we may be more initially to purchase, but also offer investment advice for this service, but are less expensive to sell the portfolio.

I myself have been a lover of fine wine and have visited Bordeaux region wine tasting etc, as this is a passion of mine.'

My notes:
* Correct Dean Doughty is also a director
** Five years storage at LCB's Private Reserves is £71.91 inc vat.

2009 Carruades de Lafite - Rothschild

There is no doubt that the price of Carruades de Lafite has shot up in spectacular fashion over the past few years. In June 2006 you could have bought a case of 2005 Carruades for £335. Today the cheapest price on wine-searcher is £2600. This rise is entirely down to the Chinese affection for Lafite. and not through a re-evaluation of its intrinsic quality. Carruades is essentially the second wine of Château Lafite, although grapes from some parcels of vines that wouldn't go into the grand vin are included and it has a higher proportion of Merlot. In China it is apparently known as baby Lafite. All in all an example of a bubble that may or not not burst – hardly the sort of wine with which to start an investment portfolio. 


From the Encarta website:
'At Encarta we take great pride in helping our clients build the perfect investment portfolio of fine wine.'

 

'Our experts will help you source and choose the wines that represent good value.'

Encarta's price for six bottles of 2009 Carruades is £2200 (equivalent to £4400 for a case of 12).A quick look at wine-searcher.com shows that a number of companies are offering a full case (12 bottles) of Carruades at prices ranging from £2400 (Albany Vintners) to £2800 (Farr Vintners are at £2700). In this instance Encarta are a whopping 83% more expensive than the cheapest established fine wine merchant. Encarta: 'the wines that represent good value'!!

I emailed Matthew Hart asking about both the pricing and the choice of Carruades de Lafite as a starter wine for a portfolio. 

Matthew Hart's response (15.7.10): 

'You seem to pick the worst case scenarios from our company, In our opinion Carruades de lafite offers fantastic investment grade wine & returns.

What about the 2007 Lafite Rothschild that we are selling at present for £6000 are you willing to say that this is not competitive??

It seems to me that you have nothing better to do that contact us and keep checking up on our pricing structure!

I suggest you try and track down the scam companies out there that are not actually purchasing wines!!

I am sure one call to LCB and they will confirm that we have a constant stream of wine going into accounts held there.

I will not reply to any further emails that you send to us.'

My response:
Your price for 2007 Lafite is certainly more competitive than that quoted for 2009 Carruades. However, it is more expensive than any other companies currently quoted on wine-searcher.

It is also more competitive than than the example of growth sent out by Paul Stapleton on Tuesday, June 22, 2010 featuring 2007 Leoville Las Cases, 2005 Lynch-Bages and 2006 Pichon Lalande. All, particularly the Léoville las Cases and 2005 Lynch Bages well over market price.***

Although I could phone LCB and they might confirm that Encarta have an account with them, they are not going to tell me what is in the account nor what comes in and out, nor whether cases enter at a trickle or a flood. Incidentally when did Encarta open the account at LCB?
  
Naturally it is entirely up to you whether you respond to my questions. It remains proper that I give you the opportunity to respond.


*** I will be commenting on the example of growth sent out by Paul Stapleton in a separate post. See part 2 here.


My advice
Although they may have done a small amount before the company was founded in in July 2009, Encarta Fine Wines Ltd has no track record, particularly in relation to buying en primeur. I wouldn't advise buying en primeur from Encarta until they have established a track and trading record. Nor would I advise buying bottled wine from them until they become more competitive and cease trying to sell investments through cold calls.   

Seale Wines and Château Lafite 2008

I recently received the following message from KA explaining that they had been contacted by Seale Wines Ltd.     

‘Recently I was contacted out of the blue by a company called Seale Wines about investing in some Château Lafite Rothschild 2008 (en primeur) and promising me, well the world. I took all this with a pinch of salt but was already interested so I agreed to give it a go.

Before finalising any of the agreements and signing anything I undertook to do a bit more in-depth research on the wine, the company and the area of wine investment. I couldn't find a whole lot to indicate either way whether the company was good, bad or indifferent. Not a lot to that, I thought, they're a small business and it's a niche area.

Then as I started to look at the area as a whole I found your site, which I found very informative and reassuring. The company in question didn't appear in your list of known dubious operators and as a company they seemed to check out. It wasn't until I read your piece about the instant offices that I noticed one of the addresses you listed is exactly the address Seale Wines are using on some paperwork they sent to me. So, now better informed as a result of reading your site I'm certainly not going to complete the transaction and I just wanted to drop you a line to thank you for providing this information.’

Seale Wines Ltd

The company was founded on 26^th September 2006. Its registered office is Suite 165, 456-458 The Strand, London WC2R 0DZ. This is an accommodation address and Suite 165 is likely to be the number of their mailbox. The previous registered office was at 55 Station Approach, Hayes, Bromley, Kent BR2 7EB, so it may be that the company is another of a number of wine investment companies that are based around the Bromley area.  

The company may have been dormant until at least September 2007 as dormant accounts up to 30.9.2007 were filed on 23.9.2008 at Companies House. The latest accounts (total exemption small) made up to 30.9.08 were filed 

KA was offered the opportunity to buy 2008 Lafite en primeur at £5750. This is a remarkably keen price as a quick check on wine-searcher shows that the cheapest UK price shown there is £7200 from London based DAFT Investments. Slurp.co.uk have it for £7500, while Fine & Rare Wines list it for £7950 a case. The 2008 Lafite is unlikely to be shipped to the UK before the first half of 2011.

Seale Wines Ltd’s Terms & Conditions appear to contravene the Distance Selling Regulations over cancellation rights:

‘Cancellation:  You may cancel your order at any time and for any reason within seven working days of signing the Wine Reservation Form.  Your payment will be returned in full.’

The Distance Selling Regulations allow the buyer to cancel at anytime up to  seven working days from the day after the customer receives the goods not from the time of signing the form. In the case of buying wine as an investment that is already bottled this will be seven working days from day after the wine reaches the customer’s account in the bonded warehouse – either their own account or their customer reserve account. It is less clear with en primeur when the period of cancellation ends. 

My comment

I would certainly go along with KA’s decision not to go ahead with the proposed purchase from Seale Wines Ltd, especially as they would be buying en primeur. Seale Wines has no real track record. Their price for the 2008 Lafite is remarkably low and one has to wonder whether they really will be able to supply it at the price quoted.

From the downloadable brochure their understanding of the UK tax laws in respect to Capital Gains Tax and Income Tax appears to be rather sketchy.    

I have emailed Seale Wines Ltd asking for confirmation of the price of the 2008 Lafite and would also welcome any comments they have on this post.  

Response from Searle Wines Ltd: 24th May 2010:  

Dear Mr. Budd,

Thank you for your recent email. Unfortunately we are not in a position to offer any Chateau Lafite 2008 at this time.

Thank you for your enquiry


Kind regards

Purchase order from Seale Wines sent to KA last Thursday for a case of 2008 Lafite, which they were unable to supply on Monday 24th May. I have added the approved stamps to hide KA's details.

 

En primeur: wonderful potential for fraud

The main 2009 Bordeaux en primeur tasting week is now drawing to an end. Several thousand journalists and wine merchants have descended on the Bordeaux region this week to taste the 2009 vintage, which is still in barrel and will not be bottled until  sometime next year. Bordeaux will have received more visitors for this primeur week than normal as 2009 is reputed to be a particularly good vintage.

Over the next few weeks the leading Bordeaux châteaux will gradually release their prices with the First Growths (Latour, Lafite, Mouton-Rothschild, Margaux and Haut-Brion) quite possibly not releasing their prices until June. The whole long drawn out en primeur process is like a stately waltz – makes panda mating look indecently quick!

Soon merchants will be releasing their 2009 Bordeaux en primeur offers – indeed for the first time the odd merchant was offering wines before the wines had even been tasted and several months before prices would be released! If you decide to buy en primeur you will pay upfront for wine that you will receive in 18 to 24 months time. This can be advantageous if the  price of the wines rise dramatically from that the initial release price. It is also a way of getting hold of wines that are produced in very small quantities and are rarely seen after their en primeur release. The rarity argument, however, applies more to Burgundy than to much of Bordeaux where many of the famous wines are produced in relatively large quantities.

With en primeur you are essentially extending an interest-free loan to your wine merchant, while trusting that they won't have gone bust or disappeared before your wines are shipped to you or to a bonded warehouse. You are trusting that your merchant will pass your order and your money down the often complex en primeur chain that will include a Bordeaux négociant company and then the château itself. Incidentally any company that tells you that they buy directly from the top properties in Bordeaux is talking nonsense. That is not the way the Bordeaux system works. The châteaux sell to a number of négociants in Bordeaux (often called La Place). The négociants then sell around the world.

Before buying en primeur it is essential to do a little due diligence as in the past a number of apparently reputable en primeur companies have gone bust, leaving their customers disappointed and without the wine they ordered and without a refund. There have been some instances when companies offering en primeur have just been completely fraudulent – just trousering the money and placing no orders. This is what makes en primeur such a potentially wonderful vehicle for fraud. The customer places their order knowing the wine won't arrive for best part of two years. It is only when the two years or so are up and there is no sign of their wine or the company that people start to get worried.

There have probably been even more instances of legitimate companies getting into financial problems, using customers en primeur money to shore up the business only for everything to unravel leaving some very angry, wineless customers. For it doesn't matter how impressive your certificate of ownership looks with crests and embossing, it will be worthless if title (right of ownership) to the wine has not properly passed down the chain. Ownership is complicated since for much of the time your en primeur wine cannot be identified as it is a fraction of some wine in an oak barrel. 

The château retain title to the wine until the Bordeaux négociants pay for the wine they have ordered . At this point a certificate of ownership is issued. Full title to wine does not pass until the wine has been bottled and ownership can be identified.

Thus it is crucial that you make some checks on the financial health and track record of any company from whom you are considering buying en primeur. Down load the latest company accounts and check when the company was founded. If I was going to buy en primeur, wouldn't buy from a recently formed company – the risk is too high. Deal with well established companies who have a track record of buying and delivering wine ordered en primeur. This may be particularly important for 2009 Bordeaux as if there is a huge demand, especially for the top wines, as some predict then it may only be established companies that have the contacts to source the wines.

Also watch out for any cowboys tempted to clamber onto the 2009 en primeur bandwagon with a boiler room team to fleece you and disappear into the sunset.   

I'd distrust any cold calls from unknown companies.

 

The Premier Bordeaux Wine Company

Enquiry:

'I have been contacted by this Company (The Premier Bordeaux Wine Company) and sent a somewhat impressive brochure. Wine is not an area I have invested in, so could you kindly give me advice on this Company.'

*

My response:

The Premier Bordeaux Wine Company was incorporated on 3rd December 2009 and its registered office is 788-790 Finchley Road, London NW11 7TI.

Its trading address from its website: www.tpbwc.com is

111 Buckingham Palace Road,Victoria, London, SW1W 0SR. Telephone: 08000 114 219
Email: : info@TPBWC.com
The website was registered on 24th June 2009

(On 2nd December 2009 Premier Bordeaux Wines Ltd, believed also to offer wine investments, was incorporated with a registered office also at 788-790 Finchley Road, London NW11 7TI. Its website is 'undergoing total redevelopment'.

Clients are directing to their trading address: Premier Bordeaux Wines, 145-157 St John’s Street London EC1V 4PY
Tel: 0800 0114 219
Fax: 0845 226 4624
Email: info@premierbordeauxwines.com)

The Premier Bordeaux Wine Company's brochure suggests that the company has been around for rather longer than public records show:

Some extracts from the The Premier Bordeaux Wine Company brochure:

'The Premier Bordeaux Wine Company are passionate about the fine wine market and we are delighted with the tax free returns that we have achieved and continue to achieve on behalf of our clients. Our global network of contacts and strategic partners allow us to source the rarest and most sought after wines on behalf of our clients and puts us in the perfect position to sell their wine at any time.’

‘The Premier Bordeaux Wine Company is keen to secure large amounts of en primeur wines so that we have access to as many of the world’s greatest wines to sell at a future date. Securing wines at this stage provides us with the best opportunity to fulfil future orders.

Of equal importance, purchasing en primeur in significant quantities affords us significant purchasing power in the market meaning we can purchase wines at the best possible price.’

Their 'Income Investment Model that Yields 8.9%+ per annum':

• ‘Up to 500 clients enter agreements with us on current and future en primeur campaigns by purchasing wine futures (each client is the legal owner of the wine he/she has purchased)
• By buying en primeur wines in substantial quantities, TPBWC can obtain the most competitive price. Price differentials can vary by up to 10%.
• TPBWC pays participating clients 8.9% of the total purchase price* (standards charges) in order to repurchase the wine at the same total purchase price in three years time (similar to a Repo transaction in the money markets).
• After three years, TPBWC buys the wine back at the original purchase price.
• The wine is independently valued.
• If the wine’s value has increased from the total purchase price then TPBWC pays the client/seller a further 60% of any upward price movement from the (purchase price plus standard charges). TPBWC retains 40% share of capital growth.
• If the wine’s value has remained the same as or decreased from the purchase price, then no further payment is made. The client has already received an 8.9% return on his/her investment.
• TPBWC either holds or sells this wine to a third party.
• The process is repeated for subsequent en primeur campaigns.

(Elsewhere in brochure TPBWC gives an example of how the scheme works and undertakes to pay clients 8.9% of their purchase price 'within 30 days of receipt of payment' and a further 8.9% 'within 1 year and 30 days of the purchase date'. Then a further 8.9% a year later and three years after the original purchase date TPBWC buys back the wine at the original purchase price and within 30 days of buy-back a further cheque – 60% of the increase in value.)

From public records The Premier Bordeaux Wine Company has no track record. Although each client is the legal owner of wine purchased, there are elements of their Income Investment Model that might be construed by the FSA as a collective investment and therefore require FSA authorisation, which they do not currently have. If this was an FSA approved scheme it is unlikely that TPBWC would be permitted to make the 8.9% guaranteed claim.

In the FAQ section of the brochure is the question: 'What if TPBWC goes bust?'
Answer: 'The Premier Bordeaux Wine Company is run on solid business principles and is not indebted to banks or third parties. Overheads are kept to a minimum and our focus is always long term. However, even if the worst case scenario materialised and TPBWC did 'go bust' clients funds are secure. All wines are allocated by the case to individual clients at the time of purchase and would be easily distinguished by the official receiver.'

Unfortunately as TPBWC was only founded at the beginning of December 2009 the company has naturally not yet been required to file any accounts. Furthermore experience shows that it can often be far from straightforward identifying an individual's wine when they are kept in a company's umbrella account if the company has gone bankrupt.

For en primeur purchases this becomes a nightmare because it is impossible to identify a client's wine when it is part of a barrel of still maturing wine. In a number of cases when en primeur companies have gone bust, their clients have lost all or most of their money.

My advice
I would not consider buying wine, especially en primeur, from The Premier Bordeaux Wine Company nor signing up to their Income Investment Model.