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Portfolio > ETFs > Broad Market

Wine Futures Group Says Its Glass Is Empty

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It seems that the folks at Premier Cru didn’t hear Orson Welles’ famous line in a Paul Masson ad from the 1970s: “We will sell no wine before its time.”

The high-end wine business has filed for bankruptcy amid multiple complaints from clients that it would take their money for wine futures but not deliver anything in return, according to a Bay Area News Group report Monday.

(Wine futures are vintage selections that are aging and not yet bottled. Collectors tend to flock to them due to their inexpensive price tags.)

In its filing last week, the Berkeley, California-based wine company said it owes clients over $70 million but has only $7 million in assets. Its filing lists nearly 1,000 names of customers who are owed wine or money; plus, the group estimates it has up to 10,000 creditors.

After Premier Cru pays administrative expenses, “no funds will be available to unsecured creditors,” the Bay Area New Group story said.

The news organization quotes one Florida client who is owed over $50,000 in undelivered wine. “I wish I was in California and had a baseball bat …” said Ron Talocka about the sitution.

Last month, clients filed 13 lawsuits totaling over $5 million against Premier Cru, accusing owner John Fox of running a wine pyramid scheme. The firm’s clients include billionaire collectors William Koch and Jeff Greene, according to CNBC.

Premier Cru closed the doors to its store in Berkeley before Christmas. An online recording explains that the company is unable to answer calls and is “transitioning its business to online sales.”

Wine Rebound?

The Liv-ex marketplace for wine said the bid-offer ratio on the wines that it sells topped the 100% level this week – a development that hasn’t occurred since July 2010. Meanwhile, the Liv-ex Fine Wine 50 index improved about 1.3% since Jan. 1, the group says, adding that the value of recent bids on the exchange has jumped by £1 million.

A bid-offer ratio above 50% tends to indicate an uptrend in the market, according to London-based Liv-ex, or to serve as a signal for price stability.

The Liv-ex Fine Wine 100 index ended 2015 largely unchanged, at just 0.1% below its December 2014 close. “However, with most financial markets coming under considerable pressure in the second half of the year, the Liv-ex Fine Wine 100 fared relatively better than many other financial assets and physical commodities,” the group explained in  statement.

“The levelling off of the Liv-ex Fine Wine 100 has left the fine wine market cautiously optimistic at the start of 2016,” it stated. “The index closed 2015 above the low it established in June 2014, and Bordeaux’s market share is now back at levels seen in 2004 — before the China bull run and the sharp boom and bust in Bordeaux prices.”


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