Investing in Cognac Producing Vineyards to Hedge Wealth While Receiving High Returns
| Author | Hakob Hakobyan |
| Position | CEO of Chatenay & Co. |
| Pages | 65-68 |
ISSN 2410-3918 Academic Journal of Business, Administration, Law and Social Sciences Vol 1 No 2
Acces online at www.iipccl.org IIPCCL Publishing, Tirana-Albania July 2015
65
Investing in Cognac Producing Vineyards to Hedge Wealth While Receiving
High Returns
Hakob Hakobyan
CEO of Chatenay & Co.
Abstract
e general trend over the last decade for investments has been moving towards emerging markets,
where investors are promised high returns for risky investments. ese kind of investments favor
the brave and bold, but are frightening for the risk averse. In this paper I will be presenting the
opportunities that an investment into cognac producing vineyards can oer. High return and
relatively low risk investment opportunities that exists in France. Included in the paper will be
examples of large investments made recently into the industry. I will analyze the trends in the
market over the past 8 years for the prices of land, cognac itself and the ease of sales of such
products. ere will also be an in-depth explanation of why cognac is today’s least risky product
to invest into, comparing it to the Champagne regions’ similar historic trends. e ndings show
that land prices have increased at an average of 10% while simultaneously the price of cognac, has
grow at an average of 14%. is product also has a unique hedging opportunity for investors. In
short, excluding the growth of cognac prices in general the product itself gains value the longer it is
stored, by an average of 12%. In this industry there are 5 big players that compete with each other
on quality and also access to future stocks. is reality gives an investor the unique ability to sign
futures contracts for 100% of their production over a 5 year period (standard market contract).
Similar contracts can be signed with cooperatives who manage the lands for the investor, making
the investment hassle free. is allows for an assured projection of both costs and returns for
an unprecedented length of time compared to any other industry today. In conclusion, cognac
producing vineyards are an investment that can potentially bring high returns, while being able to
hedge the investment and see capital gains over the course of time. ere will be a nal simulation
of a 5 year investment into vineyards of 10 Hectares. e only issue le is to nd vineyard owners
that are willing to sell.
Keywords: Cognac, Vineyard, Hedge wealth, Economy, Law.
Introduction
is research paper will look at the investment opportunities of vineyards producing
cognac. Since the crisis of 2008 the world’s investment market has shied towards Asia.
e low returns and high taxes of the European Union and the relative instability, of
recent years, has forced investors to go abroad. Similarly the fall in the purchasing power
of the currencies of developing countries has also resulted in a signicant fall in foreign
direct investment in the EU. is trend can be observed in almost all spheres of business
in Europe, except cognac. Over the last decade investors from Russia, China and beyond
have ocked to the region to invest their fortunes into this noble drink. At rst glance this
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