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Nov. 17, 2021

Maintaining Ex-Chateau Quality w/ Denis Houles and Erik Portanger, 1275 Collections

Maintaining Ex-Chateau Quality w/ Denis Houles and Erik Portanger, 1275 Collections

Having experienced the difference in taste from wines sourced ex-chateau versus the secondary market, Denis Houles, CEO of 1275 Collections, is on a mission to create a new wine asset class of pristine conditions wines. Denis and Erik Portanger, Head of S


Having experienced the difference in taste from wines sourced ex-chateau versus the secondary market, Denis Houles, CEO of 1275 Collections, is on a mission to create a new wine asset class of pristine conditions wines. Denis and Erik Portanger, Head of Strategy at 1275 Collections, tell us about the industry-wide issues around provenance, particularly with transportation and storage, and how 1275 leverages technology and direct chateaux relationships to build a solution to keep the wines as if they never left the chateaux. 

Detailed Show Notes: 

  • Denis’ background
    • He grew up in the south of France, fell in love with wine in Bordeaux
    • MIT engineering grad lived in Rome, got a Stanford MBA, and worked at McKinsey & Company in London
    • Believes in working in what you’re passionate about and founded Claret Club in 2003 - a private members club centered around wine, having chefs crafts food around the wine instead of vice versa
  • Erik’s background
    • A financial journalist for the Wall Street Journal in London was about to also write about personal passions, which was wine
    • He went to 1st Claret Club even in 2003 with Chateau Palmer and had his 1st wine epiphany
  • 1275 Collections Overview
    • Fully documented, fully transparent way of collecting pristine wine from chateaux
    • Based in the freeport of Geneva - wines held in bond, no sales taxes until removed
    • Purchase directly from chateaux or negociant, sometimes get back vintages
    • “Internet of Bottles” - NFC chips with credit card grade security, for provenance and monitoring of temperature and humidity, pairs with a mobile app
    • Data per bottle and case, only tracked while in 1275’s control
  • Provenance: issues with storage and transportation
    • Provenance is more than just not being fake, but also how many hands the wine has passed through and storage conditions
    • Fine wine often moved between warehouses in trucks - often unrefrigerated
    • LVMH launched its own traceability platform called Aura
    • Octavian Vaults in the UK - requests for photos of bottles has increased ~30% each year for the last few years, highlighting the growing consumer awareness of strong provenance
  • Provenance premium
    • Some are high, e.g., DRC from Drouhin cellar sold for ~$500k/bottle
    • Historically, the premium is meager - ~2-3% because most wines are bought and sold by traders
    • Premium increasing over time - auctions and library wines sold from chateaux selling for higher premiums
  • Traceability solutions
    • Pure tracking
    • Comprehensive - tracking and monitoring (temperature, humidity)
    • eProvenance is a B2B solution for wineries and importers
    • 1275 Collections believes a fully traceable stock of wines will come
    • 1275 believes wine damage from storage/handling is a more significant issue than counterfeit wines
  • Wine Storage
    • There is minimal research on the impacts of storage
    • The more researched area is the impact of transportation  - road transportation is worse than cargo ships
    • Lack of transparency and accountability in the industry
    • Key things to track - temperature, temperature fluctuations (change pressure in the bottle), humidity, circulation of air (to prevent mold), lack of contaminants (free of bad smells) - mostly TCA
  • 1275 Business Model
    • End-to-end solution for people who want a great wine collection, direct from estates with technology to have full traceability
    • Collections start at €25,000
    • 2% annual management fee (includes sourcing, transportation, insurance, and storage)
    • For €100,000+ - a one-off advisory fee of €4,000 and lower management fees (1.4-1.8%)
    • ~€15M+ under management currently (October 2021)
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