by Christian Prat dit Hauret, university professor and member of WI&NE Nouvelle-Aquitaine
English version translated by Nathalie Parent Dumoulin, Founder, NEXT EDITION, WI&NE Nouvelle-Aquitaine
Family offices are essential players in a country’s economy, as they manage part of a family’s wealth by investing in value-creating activities. As per the AFFO (which stands for the French Family Offices Association), “a family office organizes and produces a range of advice and services for the harmony and economic interest of families in a transgenerational perspective”.
As owners of capital, family offices are wondering what kind of investments to make. Any investment decision is the result of a twofold trade-off: firstly, optimizing the profitability and risk-taking ratio, and secondly, diversifying assets. According to financial economist Harry Max Markowitz, it is best to broaden your investment portfolio (gold, stocks, bonds, life insurance, real estate, forests, vineyards, and collectibles). As Miguel de Cervantes puts it in his timeless tale ‘Don Quixote’ : “It is the part of a wise man to keep himself today for tomorrow, and not venture all his eggs in one basket.” As such, investing in a winery has emerged as a store of value that provides attractive wealth diversification for a family office.
It is fair to say that a winery is a long-term investment that responds to multiple purchase motivations, whether economic, emotional or psychological. From a psychological standpoint, captains of industry can successfully leverage the opportunities that a wine farm purchase can offer as a rejuvenating brand-building project. This newly acquired playground will mobilize the professional qualities of the leading team, who will soon reap the rewards of this new business venture. Buying a vineyard also meets a solid emotional and symbolic expectation. The apprentice winemaker, albeit an experienced entrepreneur, will make his dream come true. Producing and marketing his wine and, at the same time, penning a new page in the château’s history. What a magnificent ambition!
However, managing a wine estate is complicated, and assessing the investment option from an economic and financial perspective requires careful guidance and advice. The bottom line is that caution needs to be exercised in purchasing a wine farm, but if the fundamentals are good and the assets are leveraged optimally, it can still be an excellent long-term investment.
“Never did a great man hate good wine.” —François Rabelais
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