Bond that pays out vintage bottles

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The Independent Online
INVESTORS LACKING the self-control to lay aside a few top-quality bottles for special occasions will find the challenge simpler when Tuscany's biggest winemaker, Marchesi de' Frescobaldi SpA, floats an ECU10m wine bond issue.

The bond offers a cost-price option on forthcoming vintages of its prized Brunello di Montalcino Castel Giocondo.

To be issued in early October, each ECU2000 bond will give investors four warrants with options on a six-bottle case of the 1996, 1997, 1998 and 1999 vintages when the bond matures over four years from 2001.

The bond was launched by Giovanni Geddes di Filicaia, chief executive officer of Marchesi de' Frescobaldi, at a sumptuous presentation in the Frescobaldi family palace in Florence.

"This is not the same as the wine futures, which have become so fashionable in France," said Mr Filicaia.

"This is a genuine financial instrument, which to date has only been used once before by the Antinori winemakers, who did not float theirs internationally."

The bond, to be handled by the Italian investment bank Mediobanca, will be placed in Italy, Switzerland, France and on other European markets, Mr Filicaia said.

The funds will be used to expand production facilities at the company's Pomino estate, north-east of Florence, where the ancient Florentine wine- producing family has been active for centuries, said Vittorio Frescobaldi, the chairman of the company.

The estate, the first to import French wine stock to Tuscany more than 150 years ago, produces Chardonnays and a Sangiovese-based red on the rolling hills of the Chianti Rufina zone.

At its Castel Giocondo estate in Montalcino, the Frescobaldi family produce what experts agree are some of the highest-quality Brunello and Rosso di Montalcino wines on the market.

According to Italy's leading Gambero Rosso wine guide, however, the 1992 vintage of the estate's most prestigious product - the vintage of the Brunello now on sale to be offered to bond buyers - failed to meet the wine's usual high standard.

The bond issue is the latest in a series of moves to enhance production and sales, moves which have taken output up from 5 million bottles in 1995 to 6 million this year.

Production at Pomino alone is expected to double to 1.2 billion bottles, thanks to the investment of income from the wine bond.

More than 60 per cent of Frescobaldi's output is exported, with the United States taking the lion's share.