Fine wines may be some of the best investment opportunities on the market. In fact, according to Benzinga.com, “The Liv-ex Fine Wine 1000 index tracks prices from 1,000 wines across the world. Over the past five years, it has recorded a spike of +50% and +14.1% year-to-date (YTD), which places it well above the Nasdaq’s -33.91% and S&P 500’s -24.95% YTD returns. This isn’t the first time that fine wine scored a decisive victory over major investment trusts during difficult times. It survived the 2008 market crash almost entirely intact. Over the past 121 years, fine wine has returned a decent 8.5% annually, and it’s looking very likely that it’ll continue to do so in the coming years.” That’s all beneficial for companies like Gaucho Group Holdings Inc. (NASDAQ: VINO), LVMH Moet Hennessy Louis Vuitton (OTC: LVMUY), Vintage Wine Estates (NASDAQ: VWE), Constellation Brands (NYSE: STZ), and Brown-Forman Corp. (NYSE: BFB).
Even better, the luxury wines and spirits market could be worth nearly $1.2 trillion by 2028, according to Market Research Future. “Internet users have significantly increased, and internet usage is rising. The majority of major participants in the market for premium wines and spirits plan to advertise their goods on social media channels.” Also, “there is a higher level of health awareness, followed by a sharp increase in disposable income, increasing people's purchasing power. These are some reasons that are creating potential opportunities for the industry.”
Look at Gaucho Group Holdings Inc. (NASDAQ: VINO), For Example
Gaucho Group Holdings, Inc. (NASDAQ: VINO), a company that includes a growing collection of e-commerce platforms with a concentration on fine wines, luxury real estate, and leather goods and accessories, today announced that its subsidiary Algodon Wine Estates has received approval from the Mendoza’s Departamento General de Irrigación to drill its third water well to service the estate’s 4,138 acre wine, wellness, culinary and sport resort and luxury residential development, in San Rafael, Mendoza, Argentina. This follows previously announced news of approval to create the estate’s first and second water wells which have since been drilled. The Company believes this continued initiative can significantly enhance the property's valuation, as it further primes the real estate project for expansion.
Algodon Wine Estates anticipates applying to the local municipality to drill for additional water wells with a goal of a total of 6 throughout the property. The successful completion of this initiative is intended to allow access to natural aquifers that can service the expansion of the estate's real estate project, vineyards and winery, and other amenities. Algodon Wine Estates' (algodonwineestates.com) luxury residential development is comprised of over 400 estate lots in its Phase 1 plan and also features the vineyards and winery responsible for producing the wines of Algodon Fine Wines (algdoonfinewines.com), as well as a boutique hotel (algodonhotels.com), with amenities such as a nine-hole golf course (with an additional nine holes forthcoming), grand slam style tennis courts, a year-round restaurant serving traditional Argentine cuisine, and other services. More than 100 vineyard lots overlook the golf course, and the wines cultivated at the estate have garnered multiple awards from international tasting competitions.
The Company is also continuing to build out the infrastructure of its revised masterplan for an ultra-luxury 60-room hotel and spa, that is also slated to include 30-50 residences, for which Algodon Wine Estates seeks to co-brand with a luxury hotel brand. The revenue potential from the hotel rooms and branded residences could generate an additional $25 million per year. The masterplan further builds upon the estate’s award-winning vineyard development by emphasizing the existing winery and 1946 vines, the local Mendocino culture, as well as the estate’s existing terrain, amenities, and features. The masterplan includes development of an additional 200 lots, ranging in size from 2.47 acres to 6 acres. The Company anticipates sales of these additional lots could ultimately generate more than $100 million in revenues.
“People may forget that the majority of Mendoza sits in a high-desert climate, and in such an environment, access to freshwater is vital,” said Scott Mathis, CEO, and Founder of Gaucho Group Holdings. “We came to San Rafael, Mendoza, with a plan to develop the finest world-class wine, wellness, culinary and sports lifestyle resort and residential development in the region, and we feel as though we have done just that. Every additional amenity we develop is a step further to add even more value to this extraordinary project. We believe individuals are now prioritizing health and well-being, now more than ever. These days, big cities have lost their allure, and our award-winning rural community can provide many with a unique peace of mind only found in a natural, socially distanced living community."
Other related developments from around the markets include:
LVMH Moet Hennessy Louis Vuitton, the world’s leading luxury products group, recorded revenue of 56.5 billion euros in the first nine months of 2022, up 28% compared to the same period of 2021. Organic revenue growth was 20%. In the third quarter, organic revenue growth was 19%, in line with the trends observed in the first half of the year. Europe, the United States and Japan, up sharply since the start of the year, benefitted from the solid demand of local customers and the recovery in international travel. Asia (including China) saw a lower level of growth over the first nine months of 2022, though growth in the latest quarter accelerated there due to the partial easing of health restrictions. The Wines & Spirits business group recorded revenue growth of 23% over the first nine months of 2022 (14% in organic). LVMH’s Champagne Maisons enjoyed excellent momentum, which increased pressure on supplies. Growth was particularly strong in Europe, the United States and Japan. Hennessy cognac was driven by its consistent strategy of value creation. The firm policy of price increases across all regions offset the effects of the logistical disruptions in the United States and the impact of health restrictions in China. Moët Hennessy strengthened its global portfolio of exceptional wines with the acquisition of the Joseph Phelps vineyard, one of the most renowned wine properties in Napa Valley, California.
Vintage Wine Estates announced that all of its California estate wineries and vineyards have been certified sustainable through the California Sustainable Winegrowing Alliance (CSWA). These certifications are a direct reflection of Vintage Wine Estates ongoing commitment to environmental stewardship through sustainable practices including water and energy efficiency, waste management, supply chain oversight, healthy soils and low risk, cultural pest management. “Certifying our wineries and vineyards was one of our major goals for 2022 and in line with our sustainability strategy which focuses on people, climate, water, packing and waste,” shares the President of Vintage Wine Estates, Terry Wheatley. “This certification promises continuous improvements in both vineyard and winery. Our sustainability and production teams and our vineyard management partner invested significant time and energy to achieve the certifications across our California properties and we expect that investment to demonstrate value for all of our stakeholders over the long term.”
Constellation Brands, a leading beverage alcohol company, announced that it has reached an agreement with The Wine Group to divest a portion of its mainstream and premium wine portfolio, including Cooper & Thief, Crafters Union, The Dreaming Tree, Monkey Bay, 7 Moons, and Charles Smith Wines. This decision builds on the company’s efforts to establish a bold and innovative, higher-end wine and spirits portfolio with distinctive brands and products, delivering exceptional consumer experiences. Constellation divested the majority of its popular and mainstream wine and spirits portfolio in 2021 and is focused on competing predominantly in premium and fine wine and craft spirits segments, while continuing to invest in the growth of its remaining strategic mainstream wine and spirits assets.
Brown-Forman Corp. announced it has reached an agreement to purchase the Diplomático Rum brand and related assets from Destillers United Group S.L. (Spain). Upon completion of the transaction, Brown‑Forman will add the Diplomático Rum family of brands to its portfolio and acquire a production facility located in Panama. The Diplomático Rum family of brands is the No. 1 super- and ultra-premium rum and the No. 2 super-premium+ rum worldwide (IWSR, 2021). Super-premium+ rum has grown at an annual rate of 17% over the past five years, with rum accounting for approximately 8% of global spirits.
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