THE REPUTATION OF A DOMAINE AND PRODUCER SIGNIFICANTLY IMPACT THE MARKET PRICE INCREASE OF THE LAND
Evolution of the Land Price, 2010 to 2019 in numbers
Over the last decade, the price of land for producing fine wines has increased significantly.
According to SAFER (the French land registry organisation), OMC (in Italy) and the Silicon Valley Bank (in the United States), in super prime regions including Burgundy Grands Crus and Pauillac, the value of the land has increased significantly in the last 10 years. This growth has been extending into smaller and up-coming appellations around the world.
This significant optic has been driven by a global increase in fine wine consumption in the United States and Asia, combined with a global trend toward the production of high-quality wines.
A growing number of new-generation winemakers are now farming sustainably.
These up-and-coming producers are seeking to lease and acquire vineyards in order to produce high-quality wine according to sustainable methods. Many are motivated to buy the land after an initial lease period, as it is a key asset for the development of their brand. We therefore see an opportunity to work closely alongside these top winemakers to acquire judiciously chosen plots offering opportunities to achieve a strong return on investment.
Why invest with VTF
VTF Portfolio Managers have a combined 50 years’ experience in the wine and financial industries. We work closely with both established and up-and-coming winemakers, and these exclusive partnerships give us access to the most promising plots and vineyards. Additionally, VTF gains short-term returns by leasing the land to those winemakers, thereby making the asset work from day one. At the end of the lease period, typically 5 years, VTF can sell this sustainably-farmed land to those lease holders or to other potential buyers.
We work closely with top winemakers and rising stars of the wine business.
Top winemakers have unparalleled knowledge about plots of land available for purchase and know which ones have the quality needed to make great wine. The market is ultimately closed to new investors and transactions happen at massive premiums. Among the benefits of investing alongside the winemakers themselves are the right to choose parcels and priority options to select land. For the VTF this means that we can select quality assets with the support of winemakers, and then lease these assets to the winemakers themselves for 5 years. This creates value for the Fund beyond the appreciation of the land.
Our partnerships with winemakers give us priority access to the best land and vineyards.
Once the land has been farmed for 5 or more years by a selected winemaker, the Fund has the option to sell the land to our partners if they have been able to raise sufficient funding by that time. Alternatively the land can be sold to another investor, who will have our guarantee that the vineyard and the soil have been developed and maintained according to the highest sustainability standards.
In addition to land appreciation, the asset will generate income from the lease.
It typically takes 3 years for a château to transform a new plot according to grand cru standards, usually with the help of chemical fertilisers. By partnering with select winemakers, VTF is eliminating this time barrier, as the soil will already have been farmed and maintained according to the highest industry standard.
Valuation of Vineyards & Land.
Valuation of vineyards is calculated by region and sub region on an annual basis.
Valuation levels accord to the local terroir official public records made by the land registers of individual countries. In France we use SAFER, which is the official summary of all transactions made in France, and is therefore the benchmark for taxation between land owners in the country. The equivalent official public records for terroir in Italy are maintained by the OMC, and by the Silicon Valley Bank in the United States.
Vineyards & Land Investment Activity.
In recent years, there has been a global trend among UHNWIs and Silicon Valley tech entrepreneurs, as well as luxury conglomerates such as LVMH and Kering Group, to buy vineyards and estates, leading to significant price increases in the corresponding regions.