Friday 10 October 2014

The Bottled Wealth TBW Fine Wine Investment

This is not your usual traditional investment. The Bottled Wealth (TBW) purports to be a fine wine investment that they said you could get minimum 10% to 15% returns within one to three years. These kinds of alternative investment we should be wary about as they are not regulated by the government. I would consider this as rather high risk despite what TBW would say.

I was having lunch with my colleague and received a call from TBW telemarketer requesting me to attend a talk on this fine wine investment scheme. To induced my attendance, they offered free vouchers and a free bottle of wine even if I didn't sign up for it. My schedule was rather tight, but the talk intrigue me and of course with the freebies, what's there not to give it a go!

Fine wine investment, anyone?

Having attended some alternate investment schemes previously, one about land conversion in UK and another about the oud oil from Agarwood trees, I believe my mobile number must have been shared and flying around in these circles! And of course most paint a very rosy picture about the possible returns. Still one must be careful.

The Bottled Wealth TBW Fine Investment explained

I was curious about how their scheme worked. So I sat there and listen to this beautiful Caucasian lady from Europe explained the inner workings of this investment idea.

It seems whenever a vineyard grows their grapes, 95% of it are harvested for the normal retail wine market. Vines are grown and quickly harvested for their bread and butter returns. At the same time, the balance 5% of the vineyard is kept as a special plot where the plant is grown and matured in 25 years time, where upon the grapes are harvest and fermented and later bottled.

These wines are considered blue chip wines, liken to the blue chip stocks and shares which has very good market value. Such blue chip fine wines are produced in limited quantities, and as economics goes, scarcity with good demand gives it a higher value. Usually half the stock produced are sold to royalties, presidents, and other dignitaries and very wealthy persons. Leaving about half the stock balance to be sold to wine collectors and wine traders such as TBW.

Though there are many wineries around the globe, TBW only select from Australia because this country provide the best returns versus those from France or other countries. And out of the thousand vineyards, only 105 growers are in the top range graded by wine masters. The grade has to be in the 90+ range from a zero to 100 ranking. And out of these 105, TBW chooses about 20 or so growers for their trading.

To get the profit returns, there are 3 ways to do it, but I could only remember 2 of it, which are:
1. Auction houses
2. Direct sale to collectors

According to TBW, fine blue chip wines such as this can be stored for a very long time, up to 25 years and it will improve in taste as it matures. The graded scale will increase if whenever a wine master gets to taste it and gives it new score, which would increase the market value of the wine.

Because TBW purchases in bulk, they can get 10%-15% off the market value when they purchase from the vineyard. This explanation is reminiscent of the Geneva Gold company that was shutdown by Bank Negara some years back. Anyway, I take it that TBW could get the bulk discount, and so it could get it at a cheaper price.

As to why they open up to public for investing is that the number of blue chip fine wine available, they could not take up all the stock and need funds, and rather than taking up bank loans, they open up to investors who would like to try alternate investment strategy.

So far so good. Now the wine need to be stored in a cool environment and they have partnered with a shipping company CWT Wine Vault in Singapore. TBW will bear the storage and AXA insurance for 3 years only, so if your wine has not been sold by then, TBW will have to start charging you storage and insurance charge.

Meanwhile they map out a strategy to get your returns quickly. After your initial purchase, you will keep it for almost a year, they will aim for the nearest date which is the auction in HK around august, and with the profit gained, you can reinvest to purchase more wine or close your account and take back your money. If you choose to continue, their next auction target is around October to aim for the China market getting ready for the New Year's day and Chinese New Year.

All seems rosy and sound really good for the returns as you get to gain twice within a year of keeping the wine. They also don't want big investors, prefer to go for medium range between RM15k to RM30k investors. I told them I'm rather cash strap, and they said no problem, they could go for a smaller one as there was young girl who was very interested in their scheme and went for RM7k+ value. This value will depend on the stock available, and the wine is not sold on per bottle basis. It is usually sold in crates of 6, 12 or 24 bottles of 750ml each. There is also another type of bottling, I think they called it the magnum size which is 1.5 litres and the double magnum which is 3 litre bottle.

The one that they offered to me is the Hewitson wine, crate valued around RM8k+. The investment sounded intriguing but I can't commit to it due to cash flow issue and going for a passion investment was just not quite my thing.

Anyway, it was a good education on this alternative investment, but I also felt it was very risky. Though TBW mentioned investing in stocks and shares is far more volatile in comparison as the wine value growth is far more stabler. However in stocks and shares, at least I know what I'm getting myself into after checking fundamentals and price trends. For this passion investment, I will need more time to digest and understand its working before plunging headlong into it. And this kind of pressure selling does not give me sufficient time for study.

I had my doubts, and later went to check out the internet for additional information. Seems like there are many negative information about this wine investment scheme and some called it a scam too. In Singapore a group of investors are demanding a refund and even made a police report out of it.

Other wine investment companies that defaulted in their payment includes Assets Wine Management (AWM), Australian Wine Index (AWI) and Universal Asset Group (UAG).

I suppose when in doubt just hold back your greed instinct. Sure, 10% to 15% returns is really lucrative when compared against the paltry fixed deposit 3% per annum returns. Better a secured smaller returns than a high risk unsecured one especially if you have limited funds.

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