Welcome to the latest edition of Bull Case Bear Case. As always, the goal is to give investors a clear, balanced view of both sides of the coin. Today, we preview a collection of Tuscan wines from Vint.

Brunello di Montalcino All-Stars Collection

Vint

6/8 @ 12:00PM ET

Valuation: $43,000

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‍Bull Case

• Top-tier Tuscan. Burgundy, Bordeaux, Piedmont, Tuscany. There are only so many regions in the world which produce wine worthy of a blue-chip status and this collection features producers which fit the bill. Tucked within the rolling hills of Italy's premier wine region grow the vines of Biondi-Santi, one of the most respected and renowned estates in the world. Founded by Ferruccio Biondi-Santi, the estate is now on its seventh generation of winemakers and stretches across 25 hectares. The rise and growth of the Brunello di Montalcino is relatively recent, with the vineyard expanding by nearly 2,000 acres between 1960 and 2020. With a surefire combination of quality and limited supply, demand has flourished and Brunello di Montalcino has continuously priced within the top 10% of most expensive Tuscan wines throughout the 21st century. Unlike many producers around the world, including many in elite regions such as Burgundy, Brunello di Montalcino is made entirely of a single grape. Native to Italy, Sangiovese is a difficult grape to grow and is highly susceptible to disease and blight. Producers in Italy often mix any of the other 350+ grape varieties available to accommodate the lack of ease in growing Sangiovese but Brunello di Montalcino is always made 100% from the red grape which is known for delivering a range of flavors from dry to sweet depending on the climate and growth cycle in a given year.

• Highly sought and highly scored. The Italian fine wine market has exploded in the past decade as volume on secondary markets has grown more than 2500% With the onset of tariffs from the United States on France and other regions during 2020, Italy managed to avoid the extra taxation and saw peak demand which drove record prices. The value of Italian wine traded between January and August of 2020 surpassed the entire value traded in 2019 and when the year had completed, value had increased more than 80% year over year. While scoring does not always dictate the overall market for a vintage, there is no question that a high score can help. Five of the wines in this collection received a 99 point score from James Suckling's Wine Advocate while three secured 100 point totals. Suckling was known to be an avid supporter of the 2015 and 2016 vintages from Brunello di Montalcino and is quoted in calling them the "greatest ever" for the estate. More than 36% of the total collection includes the vintages and their secondary market values have appreciated in recent years, with performance that has outpaced the Liv-Ex index for Italian wines since 2018.

• Historical track record. The Italy 100 Index tracked by Liv-Ex is up 47.2% over the last five years and has gained 27% over the past 24 months. The five-year return outpaces other premier regions include the Rhone Valley, Bordeaux, and is 2.7x better than the general Liv-Ex Fine Wine 50 index. The track record for Italian wine returns, specifically from Tuscany, dates even further back as the value and volume traded for vino from the region is up more than 8000% since 2000. Italian wines are not only popular among investors, but are also seeing record numbers from the collector market. The export value of wines from Tuscany increased 12% between 2020 and 2021 and established a new all-time high in valuation as the world recovered from the pandemic and restaurants reopened.

Bear Case

• The fear of stalled performance. As mentioned above, the Italian 100 is up nearly 50% but recent returns have slowed after the 2020 tariffs were dropped and exports from France increased. Before diving into the returns, it is worth noting that yes, these returns are all still positive, especially compared to more traditional markets. The one-year return for the Italy 100 is up 16.3% and value traded has flatlined over the past 12-months. This return is still impressive, especially considering the current state of the overall market, but compared to the Burgundy 150 or Champagne 50, which are up 50.35 and 49.4% respectively, it is easy to see that the reemergence of France has rebalanced the fine wine market. The Italian wine market saw record returns in recent years but those returns may have been artificially inflated by the whopping 25% tariff placed on France. This collection itself is priced fairly, as Vint will open the 198 bottles at a $43,000 market cap against an estimated fair market value between $37,000-$42,000 based on recent comps, if the current valuation has yet to price in the slowdown of the Italian market, we could see appreciation lag the field as money flows back into France and other regions.

• How long will this bull market last? If you have only been following the fine wine market for the past five years, you might think performance moves perpetually upward. While that has been the case for many of the top regions around the world in recent years, there is concern that global economic uncertainty combined with data showing a slowing retail market could cause a ripple effect that is bound to impact high-end assets. In 2009-2012, it was the Asian market and rising demand from China and Hong Kong that helped keep the fine wine market afloat while most luxury goods struggled to maintain their valuations during the peak of the global financial crisis. Fine wine has long been viewed as an asset class that acts uncorrelated to the overall stock market and to date it has, but the current bull run driven valuations to record highs and could face resistance if investors tighten their pursestrings in the midst of soaring inflation and a lackluster stock market.

• Liquidity, liquidity, liquidity. (Author's note: I feel obligated to include this factor each time, even if buy and hold might be the best long term strategy for this collection). The Tuscan wine region offer collectors and investors a breadth of volume and liquidity, but investors will need to wait to learn just how liquidity will work on Vint. As we have mentioned in previous editions, Vint has hinted that they are working on a liquidity solution that would provide investors looking for a short-term time horizon the opportunity to cash-out early.That said, wine traditionally has a longer hold period than most assets, with a range between 5 and 10 years and there is a benefit to holding onto wine investments, both for tax purposes and the fact that data supports time equals appreciation. It is fair to acknowledge that some investors will be looking to flip their investments rather quickly though and at least today, there is no option in place to accommodate that investing style.

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