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The Australian Wine Exchange (AWX) is an issuer of wine-backed shares that can be traded on the stock market. It sources individual cases of pre-release and limited release wines directly from the wine producer and offers them to the public through a prospectus. The wines are purchased by investors in the form of a wine-backed share and can be traded on the Australian Stock Exchange (ASX). This fledgling market - the first of its kind - has attracted plenty of interest in recent years and may well have the potential to become an important new way of buying and trading wine.
The appeal of the AWX market is that it is attractive for both wine investors and wine enthusiasts. Most of the wines, either emerging or established wine labels, are initially offered at discounted values in the prospectus. The concept of ‘buy earliest, cheapest, lowest’ is a fundamental of wine investment. The 2001 Giaconda Chardonnay - offered in the current 5th prospectus at a relatively high value (more than cellar door but less than full retail price plus a year’s storage and insurance is included) - is allocated, difficult to source and highly desirable. An offering last year of Orlando Jacob’s Creek Ltd Release Shiraz Cabernet (clearly not an investment wine) represents good value drinking. The emphasis of this emerging market is on access, investment, trading and pleasure.
Stephen Thompson, the founder of AWX, describes the market process as “Buy - Hold - Sell - Drink”. The wines are first purchased through a prospectus in the form of an initial public offering (IPO) of wine-backed shares – each share representing a single case (6 or 12 bottles) of wine. The 5th prospectus comprises shares backed by wines of Giaconda, Howard Park, Katnook Estate and Mountadam. The prospectus opens on February 3 and closes on March 3, for launch on the Australian Stock Exchange (ASX) around April 1.
The wine-backed shares can be traded on the ASX for approximately one year before de-listing. A prospectus can be obtained through AWX Tel. 03 9694 2810 or www.awx.com.au or contact any of the stockbrokers and financial institutions on the AWX website.
When the prospectus closes the wines are physically delivered from cellar door to professionally managed storage facilities operated by Toll Holdings Limited Australia’s largest logistics suppliers. The IPO price of the wine also comprises insurance and storage charges for the listing period.
During the listing period the wines can be traded on the Australian Stock Exchange – with the wine-backed shares changing hands while the wines themselves remain in storage. The investor is provided with a CHESS statement at the close of the prospectus and ASX Perpetual registers each trade on the ASX through a share registry.
While trading can be relatively quiet during the initial listing period, there is every expectation that liquidity will increase as market and pricing information (through national newspapers and stockbrokers) becomes more readily available. Already Clarendon Hills Astralis (one of the original Australian cult wines) is trading at a significant premium to the initial offer price.
At the end of the listing period the final registered shareholders have several options. They can take delivery of the wine and cellar it privately (or drink it), hold the wine at Toll Holdings at appropriate fees and charges, or sell through the secondary wine market.
In 2001 Langton’s formed an association with the Australian Wine Exchange (AWX). In order to foster a more informed market Langton’s provides the AWX and the wider stockbroking community with independent research, investment analysis and tasting notes on Australian wine. The wines proposed for each AWX prospectus are sent to Langton’s several months in advance of the prospectus launch. The wines are slotted into our normal tasting programme and all are tasted blind. Most of the wines selected by the AWX are from emerging or established wine producers. Clarendon Hills, Giaconda, Howard Park, Katnook Estate, Mountadam, Orlando, Redbank, Tarrawarra, Tyrrell’s and Xanadu have all participated. Experience shows that the wines are generally of very high quality. From a market perspective provenance is a major plus. Wines with good vintage, producer and regional reputations attract the most interest - a feature common to the wider secondary wine market.
The 5th AWX prospectus offers shares backed by the following wines -
(1) The 2001 Giaconda Chardonnay is a beautifully focused and incredibly complex wine with apricot/melon/citrus aromas and hints of lanolin, underlying grilled nuts and savoury/toasty oak. The palate is superbly balanced with apricot/pear/melon flavours perfectly foiled by savoury/malty oak, fine mineral almost slatey acidity finishing with plenty of flavour length. An exceptionally good - indeed remarkable - wine. 99/100 points. Short to medium term drinking: Now - 2008
(2) The 2000 Howard Park Cabernet Sauvignon is still quite elemental/youthful but has superb definition and cellaring potential. The wine has intense gingersnap/malty/cassis aromas. The palate is deep-set with ginger cassis/chocolate flavours, fine slinky tannins, underlying mocha oak, finishing firm. This vintage (usually a Cabernet-merlot blend) is solely made from Cabernet. 98/100 points Medium to long term cellaring potential: 2006-2014
(3) The 1998 Katnook Estate Odyssey Cabernet Sauvignon is an essence of Coonawarra style with impressive elements, but still needing time to meld. It has intense blackcurrant, plummy aromas with touches of mint and malty oak. A richly flavoured well-concentrated wine with beautifully focused blackcurrant plum cherry fruit flavours and malty oak characters, fine grained almost silky ripe tannins and plenty of length. 88/100 points. Medium to long term cellaring potential: 2004-2012
(4) The 1999 Mountadam The Red Cabernet-Merlot is a more elegant style with pure black cherry/cassis/musky/violet aromas, touches of anise and underlying cedar complexity. The palate is loose knit with black cherry/blackcurrant/musky flavours balanced by cedar oak, fine lacey/grainy tannins, building up grippy and tight towards the finish. Classically restrained wine that will certainly reward a few years cellaring. 89/100 points. Medium term cellaring: 2003 –2008
The AWX market is totally unique in the world of wine. The strict rules and regulations of the Australian Stock Exchange ensure security of share ownership and a transparent trading platform. The AWX market also has the potential of broadening the field of ultra-fine wine trading in a meaningful way. The retail wine environment is narrowing creating new pressures on emerging and existing wine brands. The AWX market provides wine producers with a potential new channel of distribution. However this market relies on the supply of high quality stock, which means the support of top (and enlightened) wine producers and the participation of a widening circle of fine wine buyers.
The share market is inextricably linked to the wealth creation and economic health of Australia. The emerging AWX market is a curious subset of the multi-billion dollar Australian stock market. It is unlikely that wine-backed shares will ever become serious mainstream investment stocks. There just simply isn’t enough good wine to achieve this. It is difficult, for instance, to imagine the All-ordinaries index being effected by a waxing tasting note. The pure investor, however, needs to pay particular attention to initial price offer, wine provenance and overall secondary and primary market performance. In the meantime the pure wine drinker can just look forward to a good drop.
The Australian stock market has been quite sluggish in recent years with a number of high profile businesses collapsing. The wonderful thing about a wine-backed share is that at the end of the listing period – regardless of its share value – it still represents a single case of wine. There is not that much you can do with an HIH or One-Tel share.
Currently listed on the AWX -
Wine-backed share wines
2001 Clarendon Hills Astralis Shiraz, McLaren Vale
De-list date: January 12, 2004
1999 Clarendon Hills Liandra Shiraz, McLaren Vale
De-list date: April 14, 2003
1999 Clarendon Hills Moritz Shiraz, McLaren Vale
De-list date: July 10, 2003
2001 Giaconda Chardonnay, Beechworth
De-list date: March, 2004
2000 Hewitson Shiraz, Barossa
De-list date: July 10, 2003
1998 Howard Park Cabernet Merlot, Western Australia
De-list date: April 14, 2003
2000 Howard Park Cabernet Sauvignon, Western Australia
De-list date: March 31, 2004
1998 Katnook Estate Odyssey Cabernet Sauvignon, Coonawarra
De-list date: March 31, 2004
2000 Katnook Estate Cabernet Sauvignon, Coonawarra
De-list date: April 14, 2003
1999 Katnook Estate Prodigy Shiraz, Coonawarra
De-list date: July 10, 2003
2000 Katnook Estate Shiraz, Coonawarra
De-list date: July 10, 2003
1999 Knappstein Lenswood The Palatine, Adelaide Hills
De-list date: April 14, 2003
1999 Mountadam The Red Cabernet Merlot, Eden Valley
De-list date: March 31, 2004
1998 Mountadam Merlot, Eden Valley
De-list date: April 14, 2003
1999 Orlando Jacob’s Creek Ltd Release Shiraz Cabernet, Barossa
De-list date: April 14, 2003
1998 Orlando Lawsons Shiraz, Padtahway
De-list date: July 10, 2003
1998 Peter Lehmann Stonewell Shiraz, Barossa Valley
De-list date: November 20, 2003
2000 Redbank Sally’s Paddock, Redbank Victoria
De-list date: April 14, 2003
2001 Tarrawarra Pinot Noir, Yarra Valley
De-list date: July 10, 2003
2001 Two Hands Lily’s Garden Shiraz, McLaren Vale
De-list date: November 20, 2003
1998 Tyrrell’s Vat 1 Semillon, Hunter Valley
De-list date: November 20, 2003
1998 Xanadu Cabernet Reserve (Lagan Estate), Margaret River
De-list date: April 14, 2003
Andrew Caillard MW
Langton’s Fine Wines
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