According to the annual Luxury Investment Index by Knight Frank, fine wine is one of the most reliable and low-risk investment assets. Over the past decade, its investment attractiveness (the Knight Frank Fine Wine Icons Index) has grown by 120%. In some years, including 2016, wine investment earnings exceeded the S&P 500 index. However, unlike those who invest in real estate or shares of tech giants like Google, wine investors need to have an extensive knowledge of the matter and know where to store the precious bottles and where to sell them. With Vindome, a new smartphone app that appeared in Russia in March 2021, anyone can take up fine wine investing.
Accessibility of wine as an asset
Investment in fine wine is a safe idea, for this asset does not depend much on the volatility of the traditional financial markets. It also promises big returns and is relatively inexpensive as compared to, say, a limited edition Lamborghini. However, in many countries, this activity is complicated.
For instance, in Italy and France one needs to obtain a license to become a wine market participant, and the entry barrier is high: to invest through the Wine Investment Fund, one will need to pay at least £10K.
In Russia, it is illegal to resell alcohol: individuals cannot openly sell a hypothetical bottle of Lafite Rothschild or purchase it from another individual without a license. It forces Russians to do all the procedures abroad.
Many countries have similar laws. The Vindome platform was designed to eliminate these barriers and allow for investing in wine in a simple and secure way.
Victoria Palatnik, who has invested in tech projects for over 15 years and has an extensive knowledge of the banking environment, came up with an innovative idea to create a platform for anyone who wants to become a wine investor and has €150 to spare.
“When I spoke with bankers who offered their clients various investment assets, they often complained that it was difficult to work with wine, especially due to the reseller charges at all stages, from the chateau to the client’s door. It makes wine investing way too demanding. I saw a need to make the process simpler, particularly as I am interested in wine and investing in it,” said Victoria, founder of Vindome and managing partner of Massa Group investment fund.
Victoria Palatnik put €1 mio in developing the startup. Another €1 mio was added by Massa Group in October 2020, with Victoria as its co-founder and director.
In the fall of 2020, the platform was launched in several European countries: Italy, Switzerland, UK, Germany, Austria, and the Netherlands. Along with Victoria, Vindome Sarl co-founder and general director Ingrid Brodin, who has over 20 years’ experience in international business development, also joined the team. Mario Colesanti, who has worked in the fashion industry for 25 years, became the company’s sales and marketing advisor.
The Vindome platform is a place to make investments, a tool to provide professional assistance for choosing the best assets, and a service for remote storage of purchased bottles of wine — all making it a complex product that allows clients to keep things as simple as possible.
Wine can be purchased in two ways. The first one implies investing money in collections with different payback periods of two years and more, and waiting until this period ends to dispose the asset. For making such investment, the platform offers special wine collections that include several sorts of fine wine in a single batch with various investment payback periods.
Another option of making investments using the Vindome platform is online trade, with a marketplace where investors monitor fine wine offers and make purchase and sale transactions. The latter can be conducted through an auction, with a batch price offer, or through a traditional method of offering a sales proposition compliant to the announced lot.
The online trade entry threshold is €100, and €150 for purchasing a prepared collection (a box of six bottles). Vindome will deliver purchased bottles to your home or store them at a customs warehouse; investors will see purchased items in their personal member accounts.
Storage services are provided by JF Hillebrand, a leading logistics provider to the alcoholic beverage industry for over 175 years. The warehouses are located in Pietrasanta, Italy and Bordeaux, France, the locations in the closest proximity to production facilities, with ideal environmental conditions and safety guaranteed.
In case a client chooses purchased bottles to be stored at the warehouse, VAT becomes frozen and will be paid on the cost of purchase, instead of its market value, while selling the product. The minimum storage fee is $1 per month. Currently, most clients prefer to keep their purchases at Vindome warehouses, with only 2-3% opting to have them delivered to their homes.
Vindome also provides advisory services to investors — both to beginners who have no idea what to choose as their initial assets as well as to more experienced ones. Experts can be reached by phone and email in real-time; they are ready to create a portfolio depending on the budget, personal wine preferences, and a waiting period for profit. Even if a requested wine is unavailable for online trade, the Vindome team will look for it at offline suppliers such as retail chains and wine chateaus.
“All wines are bought directly from chateaus, with 60% purchased at the best Italian and French wineries owned by premium winemakers such as Chateau Cos d’Estournel, Chateau Pontet Canet, Chateau Lynch Bages, and Rocca di Frassinello Baffonero. We provide an immediate access to vintage wines and En primeur, when wine is sold before it is bottled, which makes Vindome a unique service,” Victoria Palatnik says.
Today, Vindome is operating in 173 countries and has been available for both Android and iOS users in Russia, where it is the first and the only wine investment app, since March 2021.
As of March, the app has seen more than 50K downloads, with over 3K registered users who include wine producers, investors and consumers; European users’ average purchase amount is €600.
The platform makes profit through service fees, with sellers and buyers charged a transaction fee of 4%. The founders do not disclose the project’s profit rates; yet, by late 2021, they expect 13K users and profits of over €9.5 mio.
The platform provides investment opportunities for any budget, with wine prices starting at €25 per bottle and the cost for collections ranging from €150 to €9.3K (14 boxes). Items are divided into groups depending on investment periods: short-term (to be resold in 2–5 years), mid-term (5–9 years), and long-term (over 10 years). Wine collections are regularly renewed.
The app now has a full range of functions to use; the current aim is to increase the number of users and expand wine collections. Efforts are also made to improve services — particularly, plans include deliveries of purchased wine to Russia, with talks with a major distributor already underway and the service expected to launch soon.
By Christina Firsova