Heritage Fine Wines to flood the market?

Red Bigot · Post by **Red Bigot** » Sat Oct 07, 2006 11:16 am

An article in the weekend Australian ( http://www.theaustralian.news.com.au/st ... 43,00.html ) indicates only 300,000 bottles have been returned to investors (for drinking or sale) and that there are 1.1 million bottles that will be sold on the open market, commencing pre-Christmas.

So the trickle of ex-Heritage wine currently on offer in various auctions will turn into a flood, even if they do eke it out over a couple of years.

(Edited to fix the title)

Ratcatcher · Post by **Ratcatcher** » Sat Oct 07, 2006 1:19 pm

It will be very interesting to see the affect this has on the retail market and the secondary market.

Are there actually any good wines amongst their collection? Any you would have actually bought yourself?

BTW - I wonder if Heritage Wines in the Barossa get any negative flow on from the Heritage name?

When I read your topic heading I was expecting to be reading a review of thier wines.

Davo · Post by **Davo** » Sat Oct 07, 2006 1:44 pm

Ratcatcher wrote:
When I read your topic heading I was expecting to be reading a review of thier wines.

Same here.

rednut · Post by **rednut** » Sun Oct 08, 2006 12:55 pm

My friend is CD sales manager there and has had a few enquiries re Heritage Fine Wines but nothing too bad.

Their 2004 vintage is a corker.... :wink:

http://www.heritagewinery.com.au/

tully · Post by **tully** » Sun Oct 08, 2006 8:40 pm

Has there ever been a definitive published list of those heritage wines that we can expect to see hit the auction market in the near future?

Red Bigot · Post by **Red Bigot** » Mon Oct 09, 2006 7:55 am

rednut wrote:My friend is CD sales manager there and has had a few enquiries re Heritage Fine Wines but nothing too bad.

Their 2004 vintage is a corker....

http://www.heritagewinery.com.au/

Yeah, the 2004 Rosscos Shiraz is a ripper and the standard shiraz is pretty good too and both are great value.

Ian S · Post by **Ian S** » Mon Oct 09, 2006 8:05 am

tully wrote:Has there ever been a definitive published list of those heritage wines that we can expect to see hit the auction market in the near future?

I recall a list posted here around the time. It might not represent exactly what's about to hit the market, but may be a fair approximation. Try a search for heritage and it should come up.

Red Bigot · Post by **Red Bigot** » Mon Oct 09, 2006 8:11 am

tully wrote:Has there ever been a definitive published list of those heritage wines that we can expect to see hit the auction market in the near future?

There was a partial list circulating of wines offered to retailers, published on TORBWine, but Ric was leaned on by the Liquidator to remove it.

The stuff that has been appearing on Cellarit, Langtons and Grays and probably other auction is fairly easy to spot though, there are usually 10 or more lots at a time, some of them normal retail labels (Balnaves, Cimicky, Fox Creek JSM, Kilikanoon Covenant etc), others special wines such as Lindner Mouthpiece, Neck Oil, Glaetzer Nefertiti/Nefertari and various others. A lot of wines from 1999-2001 with some 2002 in there too.

If the liquidator is directly running the sale of the wines that investors didn't ask to be returned than it will be easy to see what's there, if they farm it out to other auctions, it will be a little harder. The story seemed to indicate they would run it themselves, why pay Langton's 13-15% when you can avoid that and pick up the buyer commission on top by selling it directly?

Ian S · Post by **Ian S** » Mon Oct 09, 2006 8:16 am

Brian
That must have been where I saw it. Sad they felt obliged to lean on Ric, not worth the argument I guess, but I felt there was a journalistic statement that was well illustrated by the info Ric posted - namely the high prices paid in the 1st place by HFW.
regards
Ian

Red Bigot · Post by **Red Bigot** » Mon Oct 09, 2006 8:24 am

Ian S wrote:Brian
That must have been where I saw it. Sad they felt obliged to lean on Ric, not worth the argument I guess, but I felt there was a journalistic statement that was well illustrated by the info Ric posted - namely the high prices paid in the 1st place by HFW.
regards
Ian

The brief snippet around the list is still there: http://www.torbwine.com/drops7.shtml

How you could buy 2000+ bottles of a wine and apparently pay full retail price or most of the other ridiculous prices in the list is beyond me, it will probably come out in a future court case though.

JamieBahrain · Post by **JamieBahrain** » Mon Oct 09, 2006 9:10 am

Some HFW clients have already taken good short term profits on the Mt Langi Ghiran Shiraz 1999 and we look forward to more of the same with this 2000 vintage.'

The cost? $AU6,900 to include two years storage and insurance, so $AU46 a bottle.

I found this gem when looking for some drinking windows for my Langi 99 shiraz. I had a bottle last night- I loved it. Tell tale Langi spice, pepper and black & blue fruit, a touch of ostentatious oak, and a generous and lingering finish with some heat. 91pts.

I paid Cliff Edge price for 12 bottles of the wine ( mistake ) at a restaurant in Hall's Gap. Despite Langi shiraz being world class in my opinion, paying Cliff Edge prices ( $20 ), would be the only way to make any profit from this wine that has traditonally under performed on the secondary market and doesn't have high demand on the export scene! Throw in lack of Parker recognition, storage costs, vintage ect.

Who were these 'investors'?

tully · Post by **tully** » Mon Oct 09, 2006 10:12 am

I was at a bbq last weekend and discovered that my sister-in-law's father had a substantial investment with Heritage(I also believe he had some holdings with Wine Orb, which he says of that ensuing debacle being handled far worse than that of the Heritage fiasco) to the tune of somewhere between $80-100k :shock:

He had confirmed that the Heritage ongoings were soon to be wrapped up and was due to collect some 3000+ bottles of wine in the next few weeks.

I'm not sure about actual numbers with regards to dollar amounts sunk in Heritage by other investors, but if the above is any indication I get the feeling that there must be a huge amount of wine that's about to come onto the secondary market.

I'm in the process of building our first cellar, which I'm loving/obsessing over(the wife thinks I need help!) and I've dreamt/visualised what I thought would be my ultimate, bees knees of a stocked cellar, but after hearing about my S-I-L-Fathers dilema I would seriously have to consider purchasing the neighbours place and turning it into a dedicated cellar/wine bar. Surely storage for that amount of wine can't be cheap?

I'll ask S-I-L whether she can get a list of his wines that he's expecting to collect.

n4sir · Post by **n4sir** » Mon Oct 09, 2006 3:19 pm

I think a very interesting aspect of this will be specifically how the auction houses deal with their Heritage consignments. The market has really picked up in clearance rates/prices over the last 12 months and a flood of wine from this is the sort of thing that could potentially torpedo it if it's not handled wisely.

I think the big factor will be if the auction houses choose to quarrantine the Heritage effect by identifying the particular lots, which is bad news for the liquidators but good news for the other vendors.

For example one auction house earlier in the year identified several lots recovered ex-Heritage, and in similar moves another has grouped particular stocks for various other reasons (in one case a well known cellar of impeccable provenance, in another an insurance claim where a compressor failed in a wine storage unit). From what you've mentioned above though Brian it doesn't look like Langton's are, at least at this stage.

Such a move would probably result in the Hertitage stock fetching very low prices, yet if the lots weren't disclosed the whole market could drop disasterously - add to that the growing wine glut at wholesale and retail level, and this could take years to pick back up.

It will be interesting to see how they handle this potential damned-if-they-do-or-don't situation.

Cheers,
Ian

bacchaebabe · Post by **bacchaebabe** » Mon Oct 09, 2006 7:33 pm

Apart from the flooding the market aspect, I'm not sure why these wines would fetch low prices. The one thing you can be sure of is their provenance. They were all stored at Millers in Alexandria from day one. I used to store my wine there and could see all the heritage stuff on the racks in the main warehouse. I had a private bin in another section though.

I for one wouldn't have any hesitation in buying any of it that took my fancy and if the prices are a bit lower, due to the flooding the market aspect, all the better. There was plenty of decent wine among all of it. And believe me, there was pallets of the stuff, all carefully stored away - apparently just not very well documented though.

Really not sure what happened there though as I knew all the Millers guys personally. I guess it would have been easy enough just to take stuff and walk out with it. What's on the computer and what's in the warehouse were clearly different things.

Ian S · Post by **Ian S** » Mon Oct 09, 2006 9:55 pm

I wonder if they've considered trying to place it en-masse in a foreign market - in particular, some of the labels won't ordinarily be seen there and there would be little downward pressure on general prices. UK, US, Japan all seem possible options.

p.s. I'm struggling to see how flagging the HFW wines at auction would make any differences to the price paid for them (or insulate other non HFW wines from a weakening of price). It seems they've been well cellared, so I can't see any reason for a price differential between HFW and non HFW wines.

I can however see the whole auction market being hit in price (and volumes if sellers want to secure existing going rates for wine). My guess is that selling %'s will initially drop dramatically as reserves fail to get met and punters seek bargains. Eventually prices will drop as sellers realise they have to cut reserves in order to shift it.

regards

Ian

n4sir · Post by **n4sir** » Tue Oct 10, 2006 9:27 am

bacchaebabe wrote:Apart from the flooding the market aspect, I'm not sure why these wines would fetch low prices. The one thing you can be sure of is their provenance. They were all stored at Millers in Alexandria from day one. I used to store my wine there and could see all the heritage stuff on the racks in the main warehouse. I had a private bin in another section though.

Ian S wrote:p.s. I'm struggling to see how flagging the HFW wines at auction would make any differences to the price paid for them (or insulate other non HFW wines from a weakening of price). It seems they've been well cellared, so I can't see any reason for a price differential between HFW and non HFW wines.

Quite simply it's because it's being liquidated, and unless they're willing to see stock pass in a number of times (which I doubt) it will go for a low reserve or none at all. Smart punters know this and will play it that way - why pay $40/bottle when you can get it for $8 or maybe less?

In regard to the storage a similar thread to this appeared this time last year: http://forum.auswine.com.au/viewtopic.php?t=4289

Back then the administrators made this rather interesting comment: "Existing storage contracts, prepaid by investors and worth $3 million, will not be settled."

Now someone else said at the time they paid for two years of upfront storage, which would mean that as of now they've got less than 12 months to get rid of everything - after that there's absolutely no incentive for the storage companies involved to bear the cost of looking after it responsibly (as they're not being paid to do so).

That makes for quite a large stock of wine to be dumped in a short period of time, or the equally disturbing possibility of it not being looked after in temperature controlled conditions if it's held on to: either way it's a lose-lose situation.

Cheers,
Ian

DJZany · Post by **DJZany** » Tue Oct 10, 2006 9:51 am

Looks like there won't be a liquidation after all.

http://www.theage.com.au/news/business/heritage-fine-wines-investors-say-cheers/2006/10/08/1160246013448.html

The purchase a a whole obviously give the buyer more time to gradually sell the wines.

As a new starter to all this I have to say (from the perspective of pure self-interest) that I wasn't too worried about the potential liquidation, might have been able to pick up a few bargains.

GRB · Post by **GRB** » Tue Oct 10, 2006 9:59 am

Heaven forbid the media would get it wrong but it appears that these folks have bought out the storage contract not the wine. It will be interesting how many investors are willing to take wholesale prices for wines less commision, when in most cases they paid well over retail for the wine. I bet there is more to come on this story yet.

GlenB

Red Bigot · Post by **Red Bigot** » Tue Oct 10, 2006 10:02 am

Interesting how the story changes in a few days. Could be a good result for the "investors", depending on how smart/dumb the Blue Hills customers are.