Grapes of wealth
“If you think broadly about truly alternative investment opportunities, all roads lead to Bordeaux vineyards,” asserts Brooks Miller, founder and managing partner of Dumbarton Group, a New York advisory firm that helps identify and broker investments for wealthy individuals and family offices.
“If you think broadly about truly alternative investment opportunities, all roads lead to Bordeaux vineyards,” asserts Brooks Miller, founder and managing partner of Dumbarton Group, a New York advisory firm that helps identify and broker investments for wealthy individuals and family offices. Leading vineyards in France’s Bordeaux region, Miller says, show no correlation with stock or bond markets and have appreciated between 10 and 15 percent annually since 1980. They operate in an inefficient market where information travels slowly, meaning that true insiders can make a lot of money if they know what properties are on the market and what kind of unexploited potential lurks in the terroir.
“For someone who wants to preserve their wealth through diversification and still make double-digit annual returns, buying a neglected vineyard, improving the quality of its wine and then selling it once its reputation has gone up makes a lot of sense,” says Miller, 34. That is, if you’re prepared to wait five to seven years.
Miller is a former Internet entrepreneur who founded and sold online betting site Betzone.com before starting Dumbarton in 2000. His latest project is the European Wine Investment Fund, a fund with a $1 million minimum investment, a 2 percent management fee and a 15 percent performance fee. The fund was set up as a Bermuda-based limited partnership with a seven-year investment horizon and will begin raising money this month. The goal is to raise between $200 million and $400 million and invest 85 percent of the capital in one or two down-at-the-heels Bordeaux vineyards by the second quarter of next year. A further 10 percent will used to buy promising wine en primeur, or before it’s in the bottle. The remaining 5 percent will be invested in vintage collections.
Miller has found his secret weapon: a well-informed insider. World-famous oenologist Michel Rolland, 57, has signed on as one of EWI’s two France-based general partners. The Bordeaux-born Rolland, a close friend of the wine world’s most powerful reviewer, Robert Parker, advises more than 500 French châteaus and more than 100 wine producers worldwide on how to make a better glass of plonk. He encourages his clients to make the kind of powerfully fruity wines that Parker likes. That’s important, as the latter’s reviews in his U.S.-based magazine, The Wine Advocate, can make or break a wine.
Although Miller is himself a knowledgeable wine collector, his own family fortune has its origins in processed cheese, something unlikely to add to EWI’s mystique. His grandfather William Beers was chairman and CEO of Kraft Foods from 1972 to 1979.
Miller’s other general partner is Joel Palous, whose Bordeaux-based company, Wines and Vineyards, advises on the purchase and management of estates. Predicts Miller, “Together Joel and Michel will provide the kind of market intelligence and insight into making wine that should make EWI an investment success.”
At best the partners promise to sell no wine -- or vineyard -- before its time.