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Ep 20 TNWG Wine Times: Budburst and New Financial Year Asset Allocation



It is a fun filled time of year right now in the wine industry.

All the trade shows are close to having been completed (VinItaly not withstanding) and then it is all about Wine Tradelist releases as well as En Primeur season in Bordeaux.

Meanwhile, away from the buying side, is also a critical time on the vineyards themselves. It is of course, BUDBURST time!


What is Budburst?


Well, take a look outside! Can you see various buds appearing on trees and shrubbery in your vicinity to your home (UK climates based)? I always liken it in my garden to the time at which I start to see tulips arrive, which is a personal favourite of ours in our household.

Budburst arrives when spring temperatures provide that cue for physiological changes to take place in the flowering world. In wine land, budburst is a crucial part of the grape cycle. The requirements for budburst are that between March and April in the Northern Hemisphere and September to October in the Southern Hemisphere, the average air and soil temperatures need to be above 10 degrees celsius (50 degrees Fahrenheit). 


It marks the end of vines being dormant and the season of winter dormancy, whereby the vines had effectively been holding onto and storing those carbohydrates and having a well deserved rest post harvest season. 


The buds swell and open and lo behold, out pops green shoots. The first to be seen are seen as 'compound buds' which began to develop in the previous growing season. 





Depicted above is indeed the first budburst seen in the UK (as far as I am aware) and comes from my good friend, Oliver Shaw, head winemaker at New Hall Estate in Essex. The first signs that budburst is upon us. The key though is whether or not the vines have been tricked into budburst too early thanks to a few mild days that we saw across Easter. This can be potentially ruinous for the year if then it follows with some cold days where frost can potentially harm the burst buds. So fingers and toes are now crossed for consistent temperatures from here onwards. If there is a cold frost, this can destroy the buds and potentially lower the yield for the whole year.


Why are we not yet seeing Budburst all across the UK?


It is actually still quite early but there are a range of factors involved in the timing of budburst. Higher soil temperatures for example can encourage roots to create earlier budbursts. If you think about the structure or composition of the soil this can have a material difference too. Sandy soils will typically be better free draining soils than say clay soils and therefore heat up quicker.


The type of grape varietals being grown also can have a bearing on the timing of budburst. Early budding varietals such as Pinot Noir Precoce are created to do just that and prone to bud early and ripen early to suit the UK climatology. 


There is also the human intervention side too. When did pruning take place, if it was late into the winter in the dormancy period then this is likely to delay budburst timing too, which can act as a good reason against things like frost as a frost protection tactic for a common risk in the UK. 


However, one thing is for sure, this is a super interesting time. Look out for more captions no doubt as we start to see the budburst sweep across from East to West in the UK and more vineyards announce the stage. From there, we hold with abated breath as we look to the weather conditions to dictate the quality and quantity of the grape juice for the harvest in 2024. 


One step down in the cycle! Roll on Shoot and Leaf Growth.



🍷 UNUSUAL WINE OF THE WEEK 🍷




Not strictly an unusual wine, given the above is a Gruner Veltliner from Austria which is the most likely white wine if you were to guess the grape varietal off hand. HOWEVER, this is a very special wine from Weingut Jordan. The winery itself dating back to 1858 and their knowledge of the Weinvertel region second to none. Currently in the 4th family generation owned, this is depicted as 'Steinzeit' = Stone Age. It is the Reserve 2021 and could easily be my favourite Gruner Veltliner of all time too (Father Christmas, please take note!). 

The reason it is unusual is that this is fermented and matured in GRANITE barrels for 12 months. Primary rock soil, 13.5% ABV and WOW just WOW. Stone and yellow fruits, with depth, complexity, richness and purity and what a finish. 



🗞️ LATEST DRINKS INDUSTRY ARTICLES 🗞️


TOP ARTICLE OF THE WEEK


This article caught my eye this week. It is something that has been on my mind in terms of my own wine choices and how I develop a Specific Niche orientated Wine Club. Consumer preferences are evolving all the time and the thought process around it being app based for most goods including luxury goods like wine, is more appealing to the majority of the population. I'm not sure this is anything new in this article, with price and simplicity the two key components to a successful consumer base, however, customer loyalty to the 'app brand' is something to consider for my eventual methodology. Any thoughts?


OTHER ARTICLES THAT CAUGHT MY EYE THIS WEEK



📈 MARKETS IN BRIEF 📉


On the week (as at 3rd April 15:45 LDN) changes:


EQUITIES: FTSE 100 flat; ⬇️ DAX down 0.187%; S&P 500 flat; ⬇️Nikkei 225 down 2.45%; ⬇️ Dow Jones down 0.88%;

COMMODITIES: ⬆️ Brent Oil up 4.98% ; ⬆️ Crude Oil up 5.33% ; ⬆️ Gold up 5.2%; ⬆️ Silver up 9.4%; ⬆️ Copper up 4.7%

BONDS (in yield terms): ⬆️ UK 2yrs higher 0.0815%; ⬆️ UK 10yrs higher 0.146%; ⬆️ German 10yrs higher 0.083%, ⬆️ US 2yrs higher 0.119%; ⬆️ US 10yrs higher 0.181%;


The US bond market is still dictating terms across the fixed income spectrum. Gold and Silver are at new highs, with oil also in the ascendancy as the Middle East situation somewhat worsens, so hold onto precious metals is still worth a mention, albeit looking at little toppy at these new highs. The FOMC members over the past 48 hours have been quick to continue to bang the drum of 3 cuts expected this year which has given a jolt in the arm of investors looking at a reduced number thanks to better than expected data prints. However, the likelihood of a large cutting cycle in the largest economy is certainly up for question as we get closer to the Presidential elections too.


In the UK, the bias is still for June to be the month of the first cut in interest rates. Inflation is however still a thorn in the side and whilst we can domestically look at better household bills as the spring weather emerges, expect savings rates also to fall this summer too.



📈 NEW FINANCIAL YEAR - ASSET ALLOCATION TIME 📉


🤔Not only is it a crucial time in Wine but it is also a great time to look at Investments too - yes the two things I like to think about regularly. However, it is important because this is the start of the New Financial Year (it will be from Saturday at least).


🤔 First and foremost, make sure you are taking proper advice from the professionals, whilst my musings here are purely my own and my own strategies, if you are ever unsure or want someone in the know then please look up my good friends Mark Johnson or Angeline MacLaren who are both exceptional in their fields.


💡 Here is my take on how I go about looking at my portfolio and rebalancing where necessary in a few steps (there may well be more or other steps people take - feel free to comment and share):


  • End of the FY (admittedly up until Friday): 1) Check I have used my ISA allowance and those that are in the same household have done so too for the year. (I personally like to use my 20k allowance for 16k in Stocks and Shares ISA and 4k in a LISA Stocks and Shares - with the government quickly topping that upto 5k); 2) Check you have placed what you would like to have placed in your pension (albeit you can make up for it over future years). 3) Check how your investments or anything in your portfolio has done over a 1yr horizon - if something hasn't worked, question it. Why didn't it do well? Is your risk profile right for you as it was 12 months previously? 

  • Okay, so now you have assessed last year (it finishes Friday as above), time to look at this year's approach so here is my version of what I look at doing:



  1. ISAs - you get another 20k allowance plus keep an eye on the 'consultation period' for the British ISA which could enable a further 5k investment. Then make a decision based on your profile whether you want to have a Cash ISA, Fixed Term ISA or something like a Stocks and Shares ISA. If it is a non-Stocks and Shares ISA, look at comparison sites to find the best fixed interest rate to maximise your earnings. Also think about transferring in some of your old ISA allowance if you already have an ISA, if the rate is higher than you are currently receiving.

  2. Pension Allowance - you have a good sized annual allowance (£60k) - albeit falling to lower levels depending on your total income, which can be used to negate some tax from the tax office by locking it away for your retirement and unused allowance can be back dated from 3 years previously - not sure, ask the IFAs above.

  3. Savings accounts - I have gone on about interest rates for the last 6 months or more and mentioned that these are elevated currently and we will see the BoE cut rates this year. This I believe will happen and therefore savings rates will fall. So if you can lock some money away after the above, gains will be taxable at your tax rate, then pop some away too. 

  4. Stocks and Shares ISA and LISA Investments. On the back of point 2, I have now invested my £20k (16k and 4k respectively, which is now 5k), so I am now looking at what risk profile I would like to undertake. Again, if you are unsure or not keen on investing yourself, then speak to your IFA for guidance. For me, I will be looking at a balanced portfolio, which will likely start on the basis of the calculation weighting of 100 minus your age is the rough percentage of Equities vs Bonds. However, my profile will be based on my thoughts of the developed and EM markets too. So on that basis, it will need to depend on my existing weightings before I look to invest.

  5. Additionally, are you thinking of moving house or making big purchase decisions like a car or new kitchen etc or school fees? Do you need some more capital available because of the rate rises that we have all been paying? Make sure you have enough funds to cover these immediate cost profiles and living costs. If you are not sure how much you are spending on everything, then do as I do, and literally every month take a note of all your income and expenses on a spreadsheet. This is a great exercise to work out your allowances that you need for all different parts of your lifestyle and more importantly, how much you will need to survive if an event like job loss took place. 

  6. Once you have a buffer calculated where possible (I appreciate this is not possible for all), then and only then, do I like at my investments properly. Assess my current exposures and look at alternative assets like fine wine.

  7. Also, on the topic of rates, have you taken a look at Energy Fixed Cost options - if you take a look at things like The Money Saving Expert's Energy Club there could be some savings now to be made on fixing your energy costs for your household.


🤔 What other tips do you have for everyone beginning the new financial year?


Find out next week, my investment approach, plan and where I have looked to invest in the first quarter of 2024.


📢📢 ANNOUNCEMENTS 📢📢


It has been a slightly less hectic week this week in truth. Thanks to Easter, it was time for some time spent having a little reassess of the first quarter - with a well deserved glass or three in hand!


That being said, more podcast episodes on their way and I am especially keen to mention a number of things to you:




An episode not to be missed! This gives you as the audience and a ring side seat in taking a look inside of one of the fastest growing businesses in the wine and cheese industry right now!



My residency is back and I will be looking at all things 'Pinks, Whites and Reds for Spring' 

We are going to look at 5-6 wines that are made for Spring !

Book your tickets now - only £25pp based at The Picture House Social in Sheffield on Saturday 11th May, from 2pm till 4pm !



In case you missed it last time around and would like the chance to get hold of some Fine Wine without paying the price of it, you can be in with a chance to do so! Winning Cellar run competitions designed to result in the winner receiving some fabulous fine wine as their price. Take a closer look inside the website for details, but a great idea that I fully endorse as a worthwhile competition especially if you are lucky enough to win!!


Stay tuned for next week where we take a closer look at my adjustments to the portfolio on the investment side of things and look ahead to opportunities in Fine Wine Investing, as well as more podcast updates and potentially some new written pieces too :) 


Cheers 🍷🍷

Andy

A.k.a. The Northern Wine Guy

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