Investment wine information document

I. GENERAL CHARACTERISTICS OF THE OFFER

1. Name of the offer "Investment wines"

The Patriwine company is a wine merchant. It mainly markets the Grands Crus of Bordeaux [1] (the "Grands Crus").

The "Investment Wines" offer refers to Grands Crus acquired by Patriwine's client (the "Client") as an investment and stored by Patriwine for subsequent resale by the Client.

Patriwine offers three commercial investment wines:

The "Patricave" offer which includes three assortments exclusively of Primeur Wines predefined by Patriwine according to the amount invested of ten thousand, twenty five thousand or fifty thousand euros.

The Grands Crus of Bordeaux refer to the wines selected in the 1855 classification for appellations on the left bank of the Garonne and in the 2012 classification for the Saint-Emilion appellation.

2. Warning

This document has been filed with the Financial Markets Authority in application of Article L.551-3 of the Monetary and Financial Code and has been registered under number D-20-01.

This statement materializes the finding that the registration number of this information document was assigned after the AMF has verified that it is complete and understandable and that the information it contains is consistent. It does not imply authentication by the AMF of the accounting and financial information presented and does not constitute a quality label or a guarantee of successful completion of the operation.

3. Presentation of the investment offer

Patriwine's investment wine offers allow the Client to acquire Grands Crus by case of 6 or 12 bottles (except for the exceptions mentioned on the Website) with a view to investment for the purposes of asset diversification. Investment wines are thus stored and insured by Patriwine on behalf of the Client until the Client decides to consume or sell them and possibly to realize a capital gain.

Patriwine does not provide any advice on the investment transaction itself with regard to other investments or the Client's financial situation. If the latter wishes to obtain enlightened advice on the planned investment with regard to his financial situation, the composition of his assets and the possible tax consequences of such an investment, Patriwine recommends that he contact a financial investment advisor. or any other person authorized for this purpose.

The Patriwine investment wines catalog presented on its website is exclusively made up of Grands Crus selected according to the notoriety of the Grand Cru, the quality of the vintage, its price, its availability, the diversification of appellations or the rating of the referent experts on the world market (James Suckling, Neal Martin, Antonio Galloni, Jancis Robinson...).

Before each order validation, and regardless of the offer of Investment Wines selected by the Client (Patricave, Cave Patrimonial or Wines Primeurs), Patriwine provides the Client with precise information on each reference: château, vintage, price , experts' notes ... Each Wine also has a technical sheet outlining its main oenological characteristics (grape varieties, production, time to maturity, etc.).

a) Overall diagram of the operation

 

b) Progress of the investment transaction

 

Whatever the Investment Wines offer chosen by the Client, the investment transaction proceeds as follows:

1st step: Selection of investment wines by the Client

Patriwine presents on its website and sells a catalog of investment wines previously selected according to the procedures described in the previous paragraph. For each of the references presented, Patriwine, if it does not have stocks, has allocations (from Châteaux) or reservations (from other merchants) depending on the case.

On the date of the order by the Customer:

The Deliverable Wines are in stock, held in the storage places owned by Patriwine or in the stocks of Patriwine's suppliers.

The price of (re) sale of Primeurs to the Client is fixed, according to the practices of the sector, in accordance with the prices "advised" by the Châteaux; and those of the Deliverables are set at the level of the prices charged on the reference platform Wine Decider.

The Client selects from Patriwine's catalog the investment wines that he wishes to acquire according to the terms specific to the commercial offer selected and the details of which appear on the Website:

"Patricave" offer, Patriwine offers the Client to indicate his level of investment (10,000 euros, 25,000 euros or 50,000 euros) and to validate the purchase of a diversified selection of Grand Crus determined by Patriwine. Depending on the availability of the Grands Crus, Patriwine may have to modify (until the final validation of his order by the Customer) the composition of the "Patricave" offers. The Customer has the option, until the final validation of his order, to refuse certain references from the "Patricave". In this case, his order automatically switches to the "Cave Patrimonial" offer in which the Customer can validate each reference of Grands Crus purchased. , ie approximately 18 months to 2 years before their availability on the market.

Patriwine offers a selection of Primeur Wines on its website depending on the allocations that have been obtained, through sworn brokers, or through the traders from which Patriwine sources. The sale of Primeur Wines is carried out within the limits of available reservations.

The price of Primeur Wines is set for the month of May following the harvest by the Châteaux and producing estates. These result from the ratings given by wine critics (Jancis Robinson, James Suckling, Neal Martin, Antonio Galloni, etc.) during tastings in the month of April following the harvest (September n-1).

 

PATRIWINE recommends that the Client be assisted by a professional specialist in Grands Crus for the composition of its Heritage Cellar and its Primeur Wines.

2nd step: Supply of the investment wines selected by the Client in Patriwine's storage locations

Patriwine has a period of four (4) months from the date of the order to acquire and/ or ship the Deliverable Wines ordered by the Customer to the Storage Location (as this term is defined below) chosen by the Customer. . For Primeur Wines, this period is extended to twenty-four (24) months.

The purchase prices of the Primeur Wines by Patriwine from the Châteaux (via sworn brokers) are set by them while the purchase prices of the Deliverable Wines depend on the conditions offered, according to the references, by the professionals - mainly the sworn brokers and traders;

In the event that a reference ordered by the Customer is unavailable (regardless of the commercial offer chosen: Patricave, Cave Patrimonial or Premium Wines), Patriwine will submit to the Customer a replacement proposal with one or more alternative references. If the Customer refuses to accept the substitution proposed by Patriwine, the sums (including prepaid expenses) corresponding to the purchase of unavailable references will be fully refunded to the Customer within fourteen (14) days from notification of the Customer's refusal.

As the Investment Wines are the property of Patriwine until their delivery to the Storage Locations, the transport of the Investment Wines to the Storage Locations is the responsibility and responsibility of Patriwine.

The transfer of ownership and risk will only take place upon delivery of the Investment Wines to the Storage Location chosen by the Customer. The Customer is informed of the arrival of the Investment Wines at the Storage Location by making the final available in his personal Patriwine area.

Crates damaged or missing upon receipt at the Storage Location chosen by the Customer will be replaced by an identical product by Patriwine in accordance with the general conditions of sale.

3rd step: Storage and insurance of investment wines acquired by the Client

▪ Storage

Patriwine has selected professionals specializing in the storage of high-end wine and thus offers its customers two (2) storage places benefiting from optimal storage conditions for Grands Crus (temperature, humidity), namely (the "Places of Storage"):

In Bordeaux in the Bordeaux City Bond cellars;

Each case of Investment Wines has an individual identification number assigned to the order by Patriwine and which is entered on the invoice given to the Client, which ensures the traceability of the Investment Wines. Patriwine's stocks held for its own account are isolated from Patriwine's stocks held on behalf of its Customers.

▪ Insurance

During transport from the provision by the beggar to the Patriwine storage location (BCB), the investment wines travel at the risk and peril of Patriwine and are insured "ad valorem" (value of the purchase price paid by Patriwine) by the carrier's insurance.

For transport between Bordeaux City Bond warehouses to the Geneva Free Ports, Investment Wines are insured "ad valorem" (value of the sale price to the Customer) by the carrier's insurance.

The Investment Wines acquired by the Client are insured with the company Chubb European Group during storage from their receipt at the Storage Site and until the investment Wines are released from stocks on behalf of third parties by Patriwine.

The stock of investment wines held by Patriwine on behalf of its Customers is insured for their present value of the investment wines on January 1 of each calendar year according to the procedure described in point II.3 (the "Estimated Valuation"). The insurance covers theft, broken bottles, contamination and fire of Investment Wines transported and stored by Patriwine.

▪ Financial Terms

In the event of a request for delivery (excluding Storage Locations) of Investment Wines, the transport costs are invoiced to the Customer according to the rate appearing in the General Conditions, namely 45 euros HT or 54 euros TTC per wooden case of 12 bottles for delivery in Metropolitan France.

Storage costs are billed to the Customer at 1.50 euros excluding tax or 1.80 euros including tax per bottle and per year from the delivery of the Products to the Storage Location. Prices are revised each year on January 1. Storage costs are invoiced in accordance with the General Conditions.

The insurance premium is also billed to the Customer annually in accordance with the General Conditions. It amounts to 0.40% of the Estimated Valuation of the Customer's Products on January 1 of the current year.

At the end of each calendar year, the Customer receives an invoice indicating the cost of storage and insurance. Any quarter started is due. For the first calendar year, the invoice is issued upon subscription to the service when ordering.

4th step: Monitoring of the valuation of the investment wines acquired by the Client

Through his personalized account, the Client has direct access to information relating to investment wines and in particular to the present value of his investment wines according to the Estimated Valuation. It is however specified that the information provided by Patriwine within the framework of the personalized follow-up are communicated for information only and cannot engage the responsibility of Patriwine in any capacity whatsoever.

5th step: Consumption or Resale of the Investment Wines by the Client

Patriwine draws the Customer's attention to the fact that he has no right to the take-back or repurchase of his Products by Patriwine.

Patriwine agrees, however, to inform the Client about the various options available to him and their characteristics so that he is able to choose the option most suited to his situation. As Patriwine does not provide investment advice, no recommendation in favor of either option will be made.

The Customer is free to choose the date of consumption or resale of its products according to their Estimated Valuation or its liquidity needs. He can thus decide at any time:

To have the products delivered for tasting or to ensure their storage or resale by their own means. In such a case, delivery takes place according to the terms and costs described in Articles 6.4 and 7.2 of the General Conditions.

The Customer wishing a quick transaction will opt for a resale on the professional market (at a lower price, however) while the Customer seeking an optimization of the gain will favor a resale on WineCity (but the duration of the transaction can be very variable):

Resale on "WineCity"

o "WineCity" is the platform for resale of wines between individuals edited by Patriwine, access to which as seller is exclusively reserved for Patriwine Customers who have subscribed without interruption for at least 4 years to the storage service in one of the Locations Patriwine storage facility. Access to the WineCity platform is free for Customers and potential buyers. It is however specified that the sales made by the Customer on WineCity are subject to the payment of a commission according to the terms below;o The Customer accesses the WineCity platform from his personal space on the Website. The Customer sets his reserve price (the lowest price at which he agrees to sell each Product) and confirms his wish to sell all or part of his Products on WineCity.o The Customer follows the sales of his Products in real time on WineCity. He can lower or increase their resale price at any time.o Once the sale has been made with a third party purchaser, Patriwine gives the payment intermediary (Mangopay, an electronic money institution approved by the Luxembourg Financial Sector Supervisory Commission) the order to pay the funds for the sale of the Products on the Customer's bank account (excluding delivery costs and after deduction of commission costs of 5% HT) and organizes the delivery of the products to the new purchase Storage and insurance services are exclusively reserved for investment wines and are not accessible on WineCity.o In order to optimize Customers' resale opportunities on WineCity, Patriwine will post WineCity resale offers on the Wine Searcher market (www.winesearcher.com).

  • Resale on the professional market. Exceptionally, for Customers who would like to resell their products quickly, Patriwine offers Customers to subscribe to a resale mandate on the professional market (Liv-EX for example) subject to the following conditions:
    • The sales mandate is subscribed by the Client exclusively for the benefit of Patriwine for a firm and irrevocable period, by derogation from the provisions of Article 2004 of the Civil Code, six months from its acceptance by the Client (the"InitialDuration");
    • The sales mandate will be renewed by tacit renewal for an indefinite period. At the end of the Initial Term, the Client will have the opportunity to terminate the sales mandate at any time by recommended letter with acknowledgement subject to a 15-day notice.
    • The Customer must not have granted any other sales mandates to a third party regarding the references of the wines subject to the sales mandate, nor must have put his wines on sale on a resale platform between individuals.
    • Patriwine is committed to selling Customer Products in the "Liv-Ex" marketplace reserved for professionals. Patriwine is free to sell the Customer's Products in any other market place of its choice, without having to inform the Customer beforehand.
    • The Customer gives Patriwine all the power to achieve the sale of all or part of its Products at the minimum resale price indicated in the sales mandate signed by the Customer.
    • The minimum resale price is offered by Patriwine from the valuation of wines according to the Estimated Valuation (TTC) (the average WineDecider price) minus VAT (20% because the rating of wines on the professional market is tax-free if the customer has bought the TTC Wines) and a discount between 20% and 30%, linked to the fact that the transaction takes place on the professional market.
    • Patriwine has no obligation to result if no purchaser shows interest at the price indicated by the Client during the Initial Term or once renewed. Patriwine undertakes to inform the Customer immediately if he receives an offer to purchase the Customer's wines at a price below his minimum resale price which the Customer will be free to refuse or accept.
    • In the event of the sale of the Customer's wines, Patriwine agrees to pay the transfer price to the Customer within 8 days of receipt of the funds, after deducting the commission fee of 2% HT, at the customer's expense. It is specified that in the professional market, the receipt of funds usually takes place in the month of the completion of the sale.
    • The payment of the transfer price will be made by transfer to the bank account whose bank details will be communicated by the Customer.
  • Each resale option has specific features.
    • For example: The WineCity option offers a more attractive return outlook since retail prices are higher than professional selling prices but resale opportunities are scarce (low liquidity of Investment Wines)
    • The resale option on the professional market (via the LIV-EX platform offers a less attractive or even negative return prospect given the 20% to 30% discount to be taken, the high probability that the sale will be made tax-free and the intermediation commission but greater resale opportunities.

The choice between any of the resale options will depend on the Client's personal situation (urgent need for liquidity or a desire to maximize the return on the transaction).

  • Patriwine draws the Customer's attention to the fact that the investment wine markets (individual or professional markets) experience daily fluctuations both up and down. The level of the reserve price can therefore greatly influence the speed at which the product resale is executed.

c) Summary table of investment wines offerings

 

Offer "Patricave"

Offer "Patrimonial Cave"

Offer "Premium Wines"

Offer description

Pre-defined assortment of Grands Crus for an investment of 10,000 euros, 25,000 euros or 50,000 euros.

Custom assortment of Grands Crus for an amount defined by the Customer

Opportunity to acquire Primer Wines available between 18 and 24 months after the order.

Services

Transport to the storage area supported by Patriwine and entrusted to a specialist provider.

Same conditions from the delivery of the Wines to the chosen storage location.

Storage of the Grands Crus proposed by Patriwine and entrusted to specialized companies according to the Place of Storage chosen by the Customer:

BORDEAUX CITY BOND (Service billed annually)

GENEVA FREE PORTS (Service billed annually)

Same conditions from the delivery of the Wines to the chosen storage location.

Insurance of investment wines stored by Patriwine on behalf of Clients with Chubb European Group up to the Estimated Valuation on 1 January of each year. Service billed annually.

Same conditions from the delivery of the Wines to the chosen storage location.

Minimum investment

€10,000

No minimum investment

No minimum investment. Limited availability

Maximum investment recommended

About 5% of the investor's net wealth

Recommended investment time

4 years from the delivery of Investment Wines to the Storage Place If the duration is less the customer will not be able to proceed with the resale via WineCity

End of the operation

Tasting of wines by the ClientRevente by the Customer by his own means, on WineCity or on the professional market (via a resale mandate entrusted to Patriwine).

3. Legal regime of the intermediary in miscellaneous goods

Patriwine meets the criteria for the practice of intermediary in miscellaneous goods within the meaning of Article L. 551-1, II, of the Monetary and Financial Code.

4. Risk factors associated with the transaction

By choosing to acquire Investment Wines from Patriwine, the Client is exposed to the following main risks:

  • Risk of lack of liquidity: Investment Wine offers are medium- to long-term investments, depending on many factors. Patriwine does not insures or guarantees the liquidity of the Products purchased by the Customer who has no right to the takeover or redemption of his Wines. The Customer determines the timing of the resale of Investment Wines and is informed that the search for a potential buyer can be long and unsecured
  • Capital loss risk: One of the objectives of the investment proposed by Patriwine is to realize a capital gain when reselling Investment Wines. However, the resale price of Investment Wines is subject to significant uncertainties, notably due to fluctuating markets, differences in the valuation of wines according to the target resale market (professional market vs. private market for example - see item II.3 below) or the occurrence of a fall in the price of Grands Crus for various reasons such as: loss of notoriety of an estate, degraded economic context, regulatory changes (customs fees, for example), ... The Client is informed that his capital consisting of the value of his Investment Wines is not guaranteed and that a total or partial capital loss may occur at any time.
  • Counterfeit risk: In order to astain the origin of the investment wines it acquires, Patriwine uses the services of sworn brokers for each acquisition of Products from producers and traders and to buy and resell whole cases of 12 bottles. However, despite the precautions taken to asstain the origin of The Investment Wines, Patriwine cannot completely rule out the risk of being a victim of counterfeiting.
  • Risk related to the relevance of the selection: the investment wines selected from Patriwine's catalogue are the result of a methodical analysis and Patriwine's experience taking into account, among other things, the reputation of the Grand Cru, the quality of the vintage, its price and the rating of the experts. However, the Client must take into account the fact that Patriwine cannot predict the future evolution of the Investment Wines it selects. This risk may be high for purchases of Primeurs Wines for which the final quality of the Wines is not known on their sale date by Patriwine.
  • Property risk: Investment wines are transported and stored for several years. There is therefore a risk of deterioration and theft. This risk is covered by The insurances taken out by Patriwine but the Client must be aware of the possible length of the collection procedures.
  • Risk of supplier failure: Patriwine sources itself from merchants in Bordeaux Square; one of them may experience difficulties and may not be able to honour Patriwine's order. In this case, Patriwine may offer the Customer to change his initial order and send him a new order proposal that the Customer will be free to accept or refuse.
  • Tax risk: the capital gain on disposal is taxable under the furniture property scheme when the transfer is greater than 5,000 euros. The capital gain is discounted by 5% per year of detention from the 3rd year. She is therefore totally exempt after 22 years of detention. The tax rate is 19%, plus social contributions at a rate of 17.2%. The tax system can change at any time and Patriwine recommends that the Client be closer to a tax advisor.
  • Patriwine's risk of failure: Patriwine, like any private company, may be forced to cease operations. In this case, the Customer will have to ask Patriwine to make his wines available and pay the corresponding disposal costs if necessary. The sums paid by The Customers to Patriwine for the purchase prices of the orders are not protected, and a default or cessation of Payments by Patriwine occurring during the period of about 4 to 24 months (in the case of Premium Wines) before delivery, up to the Place of Storage, may result in, for customers, the total or partial loss of the invested capital.
  • Risk related to the deferral of the transfer of ownership: The Customer is informed that he becomes the owner of the Investment Wines only after they are delivered to the Storage Place chosen by the Customer. Until the transfer of ownership (i.e. for up to four (4) months for Deliverable Wines and twenty-four (24) months for Primeurs Wines), the Client is informed that he holds only a right of debt against Patriwine, i.e. that it does not have the right of continuation to seize the Products in the hands of a third party, nor the right of preference in relation to other chirograph creditors even though its claim would be the oldest. Prior to the transfer of ownership of The Investment Wines, the Client is therefore exposed to the risk of Patriwine's default which could result in the total or partial loss of the invested capital.
  • Risk of conflict of interest: Not offering a management service, and as a trader (mainly) in Grands Crus, displaying the same prices at all times for all its clients, Patriwine does not identify conflicts of interest in the course of its activities. Only thirteen clients are also direct shareholders of Patriwine or indirect via the BCN SARL. If, on an exceptional basis (since this case never actually occurred), Patriwine had to cancel one or more orders (validated by customers) due to the unavailability of Investment Wines, then Patriwine would apply, in case of multiple orders and cancellations, a purely chronological rule (by cancelling the most recent orders first). The advantage of Patriwine's thirteen shareholder clients is that they can access inside information about the company presented at general meetings, mainly social accounts and the management report. With the exception of the management report, documents prepared as part of the approval of the company's accounts in accordance with the applicable regulations will be presented to shareholders before publication and therefore before being accessible to any Customer.
  • Risk related to the nature of Primer Wines: Investment Wines offers are partly composed of Primeurs Wines which first present a risk of total loss of the product before its delivery in one of the Patriwine Storage Places. Indeed, until this date, Primeurs Wines are present in the estates and castles that own them. They are therefore under the responsibility of third parties and are not covered by Patriwine's insurance. Until the availability of Primeurs Wines, Patriwine was therefore a creditor of each estate and castles. In the event of the disappearance of a domain or castle between the Customer's order and the delivery of Primeurs Wines, Patriwine's debt may not be recovered and Patriwine will be unable to deliver the Primeurs Wines purchased by the Customer, which could potentially lose up to its entire investment. On the other hand, the quality of Primer Wines before they are put on the market is uncertain, with therefore a risk of deflation in relation to the selling price applied by Patriwine.
  • Risk related to the lack of guarantee of the profitability of the investment: All fees paid by the Client detailed under heading III. Fees and Commissions of this note may have a significant impact on the profitability of the investment, which could prove to be zero, even if the wines were to be valued, and result in a partial or total loss of the invested capital. 

6. Investor Profile-Type

The Investment Wines offer is aimed at any adult with the following characteristics:

  • Customer with an appetite for the wine sector and a minimum knowledge of the different asset classes (real estate, insurance, financial products and tangible assets);
  • Likely to lock in a portion (in the order of up to 5%) of his savings in the medium term; The recommended investment period is 4 years from delivery and storage;
  • Able to suffer a significant or even full loss of the capital initially invested.

Patriwine draws the Customer's attention to the fact that:

  • The proposed Grands Crus can reach their taste maturity after a shelf life of 4 to 10 years,
  • Grand Crus prices are highly volatile and each benchmark is subject to frequent upward and downward variations and for the most part unpredictable.

As a result, the Patriwine offer is aimed at clients with a high risk propensity who will not need their savings in the short or medium term or need to unlock them urgently.

Each client must take these elements into account in order to adapt their investment decision to their own personal situation. It is advisable to limit the invested capital to 5% of its overall savings.

As Patriwine is not intended to provide advice on wealth management or miscellaneous assets, it is recommended that the Client consult a duly authorized financial advisor.

7. Duration of investment

Investing in Grands Crus is a medium- to long-term investment. Patriwine recommends considering an investment horizon of more than 4 years after delivery and storage.

The Customer remains free to put on sale his Investment Wines before the expiry of the 4-year period, either by his own means or via the Professional market (less profitable) The Client freely determines the shelf life of his Investment Wines and has solely the decision of their sale.

The shelf life of the Wines depends on the year of the vintage of the wine held. In general, the price of wine is appreciated until the Grand Cru has reached its taste maturity, i.e. at least 10 years.

There is no maximum period of detention. However, after 20 years, a Grand Cru should no longer improve.

II. ECONOMIC AND FINANCIAL CHARACTERISTICS OF THE OPERATION

1. General economic features

The turnover of the French wine industry is estimated at 32 billion euros in 2016. In production, all wines are estimated to have a turnover of almost 12 billion euros (INSEE Agricultural Accounts) and downstream for companies in the wine sector of 16 billion euros (Financial Observatory of Agri-Food Companies 2013 - Crédit Agricole). For companies in the wine brandy sector (Cognac, Armagnac and Brandies), it is estimated at 2.7 billion euros.

1.1 Volumes traded

In 2015, France produced 4.7 billion litres of wine, or 16% of the world's production. France is the second largest in the world by volume but the first place in value terms. This list is due in particular to the success of Bordeaux wines. In 2014, Bordeaux produced 5.5 million hectolitres, the equivalent of 730 million bottles for a turnover of 3.8 billion euros, of which 1.8 billion were made export. Bordeaux wines accounted for 58% of the volume of wines on the hexagonal market in 2015. France sold nearly 170 million bottles of Bordeaux in supermarkets alone for a turnover of 898 million euros.

For export (42% of volumes), Bordeaux wines reached 2.03 Mhl, or 271 million bottles, for a turnover of 1.83 billion euros. This success is particularly linked to Bordeaux's dominant position in very high-end wines worldwide. An active influence maintained by the various producer organisations, a dynamic trade, a strong inter-professionalism: Interprofessional Council of Bordeaux Wines as well as the Union of Great Wines of Bordeaux.

1.2 Market organization

The organisation of the wine sector is complex and involves a multitude of players whose main players are:

  • Independent winemakers and cooperative wineries,
  • Sworn brokers,
  • Traders

1.2.1 Winegrowers

The majority of winemakers, both owners and operators, participate in all stages (production, processing, marketing). The cooperating winemakers work the vines, harvest the grapes but generally do not intervene in the winemaking process, while the independent winemakers make the wine entirely. From growing vines to bottling and winemaking, they can also market their wine.

1.2.2 Cooperative Caves

It is in particular thanks to wine cooperation that many small producers have so far been able to be preserved. Cooperative cellars, based on the principle of the pooling of production costs, play an important role: they promote on the one hand the quality of the wine by encouraging the technical training of winemakers and on the other hand, they regulate the market thanks to the importance of the volumes processed and their storage capacity. They have an important role in marketing because they have their own sales networks, both in France and export, and also supply trading houses.

1.2.3 Brokers

Intermediate between the professional players of the Place de Bordeaux, the sworn broker is a major player in the Bordeaux system. Its mission is to ensure the compliance of transactions between Castles and traders and between traders (quantity, quality, price, packaging). Its intervention helps to guarantee the origin of the wines.

1.2.4 Trading Houses

Most of the production is marketed through trading houses (a sworn broker then intervenes and acts as an intermediary). Traders buy the wine in large quantities before selling it to the supermarket, foreign importers, individuals or restaurateurs. Some merchants, known as "manipulators", buy must - grape juice - or grapes and process the wine.

The role of trading houses is twofold: they ensure the marketing of selected wines and participate in the breeding of wines marketed under brand names that guarantee a know-how to the consumer and a regular supply to distributors.

1.3 Focus on the Bordeaux market

While many castles sell their wines live, to professionals and individuals alike, in the same way that wine is bought from a winemaker in The Loire or the Rhone Valley, the Grands Crus have a separate operation.

1.3.1 Primers

About 300 castles and winery in Bordeaux sell all or part of their production in primeurs, that is, before they are bottled.

The wines in primeurs are sold through the merchants of the "Place de Bordeaux". At the end of the presentation of the first-timers in April-May following the harvest, the traders obtain allowances from the castles for a certain volume of bottles of a wine still aged in barrels and which will not be available until 18 to 24 months later.

The merchants then take care of selling these wines in primeurs to French and foreign customers (food distribution, winemakers, restaurateurs, importers).

The system of selling in primeurs has several advantages: supply at an attractive price with a perspective of price appreciation, choice of the size of bottles (bottles, 1/2 bottles, magnums etc...) and booking a volume of wines.

Sales in primeurs also have drawbacks because the quality and volumes of the wines depend on the vagaries associated with the ageing of the wine and the risk of loss of the goods.

1.3.2 Deliverables

Some castles prefer to sell their wines only after bottling (e.g. Château LATOUR).

The marketing conditions are the same as for first-timers.

Since the beginning of the 2000s, there has been a very strong increase in the number of international buyers and a major media coverage, and since 2009 the arrival on the market of Asian operators. Journalists' ratings influence the market (e.g. Robert Parker). Some brands end up with a demand far greater than their offer.

2. Financial characteristics of investment in miscellaneous goods

2.1 Patriwine's tariff policy

It has been pointed out above that the selling prices of Primeurs Wines to the Customer are set from the prices "advised" by the Châteaux; and those of The Available Wines (set by Patriwine) take into account the prices charged on the reference and/or sales platforms between individuals - in generally free access.

2.2 Contracts involved in the transaction

2.2.1 Marketing Terms

The Investment Wines offer is marketed:

  • on the company's website at: www.Patriwine.fr (the "Website") and;
  • through financial investment advisors.

Patriwine draws the attention of Clients to the fact that any Client who is offered a commercial offer from Patriwine by an intermediary not authorized to provide advice on the realization of transactions on various goods will not be able to benefit from the rules of protection of their interests in verifying the adequacy of the investment to their experience, their knowledge, their financial situation. , their investment objectives, their ability to suffer losses and their risk tolerance.

Including when the marketing takes place through a financial investment consultancy, any order for Investment Wines will be conditional on the Client creating a personal account on the website at which he must declare:

  • Have become aware of the terms and conditions of sale;
  • Have read the briefing note.

This declaration will be renewed with each order of Investment Wines.

2.2.2 Types of Contracts

By validating and paying for his order, the Customer enters into a sales contract with Patriwine (agreement of the parties on the thing and price) whose effects of the sale (transfer of ownership) are postponed to the date of the transfer of ownership from which the Customer will acquire full ownership of Grands Crus' crates.

The transfer of ownership to the Customer will take place on the date of receipt of the Investment Wines in one of the Patriwine Storage Places. For Primeurs Wines, the transfer of ownership can take place up to 24 months after the date of the order by the Customer. The transfer of ownership is materialized by the issuance of the final invoice by Patriwine and its availability in the client's personal space on the website.

The transfer of ownership takes the allocation of Investment Wines to the Client materialized by the allocation of an identification number of each case of wines.

The Client will only have a property right on Investment Wines from the transfer of ownership (i.e. the date of delivery of The Investment Wines to the Storage Place chosen by the Customer). Before that, for a maximum of (i) four (4) months for Available Wines and twenty-four (24) months for Primer Wines, the Client will have a simple right of claim against Patriwine under which the Client does not have a right of continuation allowing him to seize the wines in the hands of a third party, nor a right of preference over other thrographic creditors even though his claim would be the oldest.

Once the owner of its Investment Wines, the Client entrusts Patriwine with the mandate to store in accordance with the provisions of Article 1915 and following the Civil Code and to insure its Investment Wines on behalf of Patriwine and on his behalf with specialized professionals.

In the event of non-payment of the Services, Patriwine may terminate the mandate entrusted by the Client and implement its conventional right of guarantee in accordance with the provisions of Article 2 of the terms and conditions of sale.

If the Client uses Patriwine's services for the resale of its Investment Wines, he can put his Wines up for sale on the private resale platform "WineCity" published by Patriwine or seek from Patriwine a sales mandate on the professional market according to the conditions detailed above.

All contracts between Patriwine and the Client will be subject to French law.

2.3 Investment Universe

Patriwine offers only Grands Crus falling under the 1855 classification for the appellations of the left bank of the Garonne or the 2012 classification for the appellation Saint Emilion.

The reasons for this choice are:

  • A very strong internationalreputation. The Grands Crus (Mouton-Rothschild, Pontet-Canet, Angélus, ...) are known to fans all over the world.
  • An organizedmarket. In Bordeaux, the Châteaux have large areas, often 10 to 80 hectares (by comparison the plots rarely make more than a few hectares in Burgundy). These lands allow sufficient harvests for an audience that goes beyond a small circle of initiated amateurs.

The Castles produce, but sell very little directly. A large part of the distribution is carried out by merchants from the Place de Bordeaux who have their own distribution channels and have the ability to trade among themselves. So there is a second market in the Place de Bordeaux.

  • An extremely readable ranking. The classification of the Grands Crus is official and the number of appellations selected is stable and known, 88 castles for the classification of 1855 and 68 castles for the classification Saint Emilion 2012. The choice to invest in Grands Crus is therefore made in a defined universe.
  • The quality of thevintage. All Grands Crus are rated by experts, known as critics. The best known are James Suckling, Neal Martin, Antonio Galloni and Jancis Robinson. These notes, which are decisive when the clientele is international, are references. Thus, Patriwine does not select any Grand Cru with a rating of less than 90/100.
  • Prices and availability of GrandsCrus. All Grands Crus are sold by a case of 6 or 12 bottles per Patriwine and most often come from allowances or reservations obtained from The Castles and Traders and more rarely from Patriwine's own stocks.

2.4 Management Strategies Developed

Patriwine does not propose an investment wine management strategy and limits itself to advocating a minimum shelf life of 4 years.

The Customer owns his Grands Crus cases and decides how long he wants to keep them and when they will be resold.

Patriwine provides the Customer with the WineCity private resale platform.

2.5 Technical Management Terms

Patriwine ensures for every purchase of Investment Wines:

  • their supply through a sworn broker to ensure their origin;
  • transport them to the Storage Place to ensure their preservation in optimal conditions;
  • Compliance with orders placed by Customers
  • Storage under optimal storage conditions
  • their coverage by an insurance company
  • make them available at any time at the request of the Customer.

All of these services are carried out according to current professional standards and procedures that guarantee the traceability of the bottles. Computerized account receivable management allows you to track all transactions carried out by a customer at any time.

3. Valuation of Investment Wines

Along with the various publicly available valuations, Patriwine uses the average price set by the Wine Decider database to determine the Estimated Valuation of a Wine. This information is available at all times in the Customer's personal space. It will be updated weekly by Patriwine.

Wine Decider is a price comparison of all offers available on the market for a given wine (approximately 250 traders, professionals, websites and retailers). The base lists more than 100,000 wines.

The Wine Decider comparator thus establishes an average market price at a given moment from the offer available on a wine.

Patriwine considers the average price of Wine Decider to be a reliable indication of the value of a Grand Crus at any given time. Patriwine reserves the option to switch data providers at any time. In this case, Customers will be informed thirty days before the new valuations of Investment Wines are posted on the website.

Patriwine, however, draws the Customer's attention to the fact that the average Wine Decider price is not an official listing. The same wine in the same vintage can be sold at very different price levels, including in the same market place. The price may vary depending on the supply-demand ratio, the desired rate of liquidation, the seller's ability to trace the origin of the wine and its proper preservation or the market (market reserved for professionals or private markets) on which the wine is put up for sale. The value of a wine will be different depending on whether the wine is sold in a professional market (e.g. Livex[1]) or in a private market (WineCity). Moreover, the value of a wine is conditioned by the quantity available on the market. There is still no reliable method for estimating the residual quantity for sale or the amount consumed.

4. Income distribution terms

The Client does not receive any income from his Investment Wines.

In case of resale by him, he can collect the proceeds from the sale of his Investment Wines. In this case, it collects all the products of the resale. When the sale is made through the WineCity platform, the Customer deducts from the proceeds of the sale the commission of 5% HT of the resale price going to Patriwine, of which 2% corresponds to the fees levied through payment.

III. FEES AND COMMISSIONS

All fees and commissions paid by the Client, directly from the time he owns the Investment Wines or indirectly when purchasing the Investment Wines (indirect fees), are detailed in the table below. Fees and commissions are expressed TTC (unless otherwise stated).

 

Type of charge

Compensation of the intermediary in miscellaneous goods or by a third party

Rate scale and plate or package

How to collect

Indirect costs

Yes

From 17% to 29% of the HT price of Investment Wines

Included in the price of Investment Wines when purchased by the Customer.

Storage costs

Yes

1.50 euros (1.80 TTC) per bottle per year.

Prepayment when placing the order for the first year of storage from the 1st day of the calendar quarter following the order.

Payment in the last quarter of the current year for subsequent years.

During a resale of a wine by Patriwine, any quarter started is due.

Insurance costs

Yes

0.40 per cent of the Estimated Valuation as of December 31 of the calendar year.

Prepayment when placing the order for the remaining period to run from the 1st year of storage from the1st day of the calendar quarter following the order. 

Payment in the last quarter of the current year for subsequent years.

All quarter started is due.

Delivery costs

Yes

45 euros (54 euros TTC) per cash in metropolitan France (possibly customs and VAT), including transport insurance, for delivery to metropolitan France

Payment by credit card in case of delivery request.

Resale commission

Yes

2% HT of the sale price in case of resale of wines by Patriwine on the liv-ex

5% HT of resale price in case of resale on WineCity

Deduction on resale amount

The indirect costs correspond to Patriwine's margin, which is between 17% and 29% of the HT price of Investment Wines.

The fees paid reduce the profitability of the investment since they will have to be deducted from the calculation of the capital gain (resale price - purchase price and fees paid). Patriwine draws the Customer's attention to the fact that the level of fees varies depending on the choice of the resale platform.

IV. INVESTMENT SCENARII

The change in the value of Investment Wines is set by reference to the average Wine Decider price.

Three scenarios are presented below for investment examples involving a selection of seven Grand Crus references during the recommended minimum period of 4 years.

  • The first scenario presents the result of the investment transaction over a period from March 2012 to March 2016

In this example, the investor who invested 6,396 euros for the purchase of seven (7) cases of twelve (12) bottles would have recorded a loss (i) of 1941 euros in case of resale on the liv-ex (professional market ) or (ii) 753 euros in the case of resale on the personal market (average Wine Decider price), to which it is necessary to deduct 102 euros of insurance costs and 504 euros of storage costs over the 4 years.

 

 

 

March 2012

March 2016

Resale price

Available wines

 

Average price WD/bottle

Average WD/cash price

Average price WD/bottle

Average WD/cash price

Private market

Professional market

Lynch Bages Castle 2008

12

€82

€984

€84

€1,008

€957.60

€756

Château Montrose 2006

12

€70

€840

€67

€804

€763.80

€603

Beychevelle Castle 2008

12

€65

€780

€67

€804

€763.80

€603

Château Leoville Poyferre 2008

12

€60

€720

€52

€624

€592.80

€468

Château Cos d'Estournel 2006

12

€99

€1,188

€83

€996

€946.20

€747

Château Pape Clément 2006

12

€83

€996

€79

€948

€900.60

€711

Château Pontet Canet 2006

12

€74

€888

€63

€756

€718.20

€567

 

 

 

 

€6,396

 

€5,940

€5,643

€4,455

The prices shown take into account the commission costs associated with the resale of the wines.

  • The second scenario presents the result of an investment transaction over a period from March 2011 to March 2015

In this example, the investor who invested 5,148 euros for the purchase of seven (7) cases of twelve (12) bottles would have recorded (i) a capital gain of 392 euros in the event of resale on the personal market (i) average price Wine Decider) or (ii) a  write-down of 774 euros in case of resale on the professional market (liv-ex), to which it is necessary to deduct 82 euros of insurance costs and 504 euros of storage costs over the 4 years.

 

 

 

March 2011

March 2015

Resale price

Available wines

 

Average price WD/bottle

Average WD/cash price

Average price WD/bottle

Average WD/cash price

Private market

Professional market

Lynch Bages Castle 2008

12

€45

€540

€80

€960

€912

€720

Château Montrose 2006

12

€60

€720

€69

€828

€786.60

€621

Beychevelle Castle 2008

12

€55

€660

€57

€684

€649.80

€513

Château Leoville Poyferre 2008

12

€40

€480

€53

€636

€604.20

€477

Château Cos d'Estournel 2006

12

€95

€1,140

€85

€1,020

€969

€765

Château Pape Clément 2006

12

€76

€912

€79

€948

€900.60

€711

Château Pontet Canet 2006

12

€58

€696

€63

€756

€718.20

€567

 

 

 

€5,148

 

€5,832

€5,540.40

€4,374

The prices shown take into account the commission costs associated with the resale of the wines.

  • A third scenario presents the result of an investment transaction over a period from March 2009 to March 2012.

In this example, an investor who invested 4,272 euros (iTT) would have recorded a capital gain (i) of 2,124 euros in the case of resale on the personal market (average price Wine Decider) or (ii) of 525 euros in the case of resale on the professional market (Liv-EX), to which it is necessary to deduct 68 euros in insurance costs and 504 euros in storage costs over the 4 years.

 

 

March 2009

March 2012

Resale price

Available wines

 

Average price WD/bottle

Average WD/cash price

Average price WD/bottle

Average WD/cash price

Private market

Professional market

Lynch Bages Castle 2008

12

€34

€408

€82

€984

€934.80

€738

Château Montrose 2006

12

€54

€648

€70

€840

€798

€630

Beychevelle Castle 2008

12

€35

€420

€65

€780

€741

€585

Château Leoville Poyferre 2008

12

€35

€420

€60

€720

€684

€540

Château Cos d'Estournel 2006

12

€80

€960

€99

€1,188

€1,128.60

€891

Château Pape Clément 2006

12

€74

€888

€83

€996

€946.20

€747

Château Pontet Canet 2006

12

€44

€528

€74

€888

€843.60

€666

 

 

 

€4,272

 

€6,396

€6,076.20

€4,797

The prices shown take into account the commission costs associated with the resale of the wines.

V. INFORMATION ABOUT THE ACTORS INVOLVED IN THE OPERATION

5.1 The intermediary at the initiative of the investment offer

The intermediary in various goods is Patriwine, SAS with a capital of 1,230,000 euros, whose head office is 350 Avenue du Prado, 13,008 Marseille.

The company is managed by BCN, a limited liability company, co-managed by Philippe BUREAU and Franck NOGUES since August 1, 2013.

It is specified that three private shareholders hold more than 5%. They never placed an order.

The social object is in France and abroad: the wholesale and retail trading of wines, especially first-timers. And, in general, any commercial, industrial, financial, securities or real estate transactions, directly or indirectly contributing to the above defined social purpose.

The turnovers for the last 3 years are:

  • 2019: €3,057,304
  • 2018: €2,859,917
  • 2017: €3,018,941

Founded on April 19, 2010, Patriwine is an SAS owned by 73 partners and has a capital of 1,230,000 euros.

Patriwine, a wine merchant, proposes to private investors the creation of heritage cellars.

Patriwine now has 2,206 customers and more than 100,000 bottles are stored in its Storage Places. The valuation of Patriwine's stock on behalf of its clients amounts to 4,294,395 euros for bottles stored in Bordeaux City Bond (capitalized by the CCI of Bordeaux) and 12,335,436 euros in the Ports Francs of Geneva in which Patriwine has a private space of 269, 5 square meters on 3 rack heights.

5.2 Expert attesting to the existence of the assets, giving an opinion on their liquidity and valuation

An expert was carried out by Master Aymeric De Clouet, Wine Expert, Expert at the Court of Appeal of Paris, 113 rue de l'Abbé Groult, 75015 Paris.

5.3 Auditor

Orfis, Jean-Louis Flèche, Winter Palace 149 Stalingrad Boulevard 69100 Villeurbanne.

5.4 Distributors

The Investment Wines offer is marketed live on the website or via Financial Investment Advisors. Details of the distributors are provided as an appendix.

5.5 Insurance

Patriwine has the following insurance coverage:

  • Professional liability and property insurance issued by Chubb European Group Company, Le Colisée, 8 Avenue de l'Arche, 92419 Courbevoie, registered at the RCS nanterre under the number 450 327 374.
  • Insurance on goods by storage location (Bordeaux City Bond and Ports Francs de Genève) also issued by chubb European Group Company.

VI. FACULTY OF TAKEOVER OR EXCHANGE

The Client has no right to the takeover or exchange of its Investment Wines by Patriwine.

VII. OTHER INFORMATION

7.1 Tax system

The information below is provided only as an indication and does not engage Patriwine in any way. The Client is therefore invited to consult his own tax advisor who will be alone able to take into account the particular situation of the Client.

In the case of the resale of Investment Wines, the capital gain from disposal is taxable under the furniture regime when the sale is greater than 5,000 euros.

The capital gain is discounted by 5% per year of detention from the3rd year. It is therefore totally exempt after 22 years.

The capital gains tax rate is 19%, plus social contributions at a rate of 17.2%.

7.2 Composition of the file to be handed over to the investor

 

Customers will be able to view all available information on Patriwine's offers on the website, including this Information Note and terms and conditions of sale.

 

In the event of an investment transaction carried out by an intermediary, the Client will be given a paper file containing the following documents:

 

  • Commercial plate
  • Account opening and booking mandate
  • Terms and conditions of sale
  • Backgrounder

 

7.3 The company's chief executive, BCN, represented by its co-managers Philippe BUREAU and Franck NOGUES, take responsibility for this document

 

The data in this document are consistent with reality and do not contain any omissions that would alter its scope.