By Martin de Saâ€™Pinto
ZURICH, August 24 (Reuters) – Few investors would be happy to see their assets turn sour, but an alternative investment launched recently offers them the chance to make a healthy return from just such a development.
Vinegar may be a unorthodox investment but Stefan Marti, managing director of vinegar maker Baerg Marti, said it has captured the imagination of many investors, especially from Russia and Asia.
â€œI was showing my bottled vinegar to some Japanese clients, and they asked me to sell them a barrel rather than bottles. They wanted their own barrel personalised with their logo so they could be identified with the product,â€ Marti told Reuters.
He said the clients were excited by the product and by its production process — it is matured in the Swiss mountains at an altitude of 3,000 metres for five years or longer in Limousin or cherry oak — which gave it a strong appeal as an investment.
Turmoil in the financial markets in 2008 and the first quarter of 2009 has boosted the attractiveness of unusual asset classes like fine wines, art, rare coins and violins, which investors hoped could perform through the crisis.
Although rallying equities and corporate bonds are pulling investors in once again, interest from around the world in Baerg Martiâ€™s vinegar has been growing, Marti said.
Investors could see returns that outstrip those of many more conventional funds and expected average returns of 200 to 300 percent over five years, he said. However, as the project is new there are no past performance figures.
Baerg Marti is offering 5-year contracts on the vinegars, which use Swiss produce, including apples, strawberries and blueberries, at a cost of 11,500 Swiss francs ($10,850) per barrel, plus a yearly storage fee of 150 francs.
There will be no performance fee, although Marti said one may be introduced for high volume buyers.
When mature, the best balsamic vinegars can cost 3,000 francs and more for just 1 litre, Marti said. A barrel contains some 30 litres.
Investors would be tied in to the five year contract, after which they could hold the investment, resell the vinegar or use it.
The vinegar benefits from temperature changes high in the Swiss mountains, however, one risk is from earth tremors, which can damage the quality.
Marti, who said the main interest in the investment so far has come from Japan, China and Russia. He said the barrels were insured for 11,500 francs for the investment period.
The market is liquid enough to give investors an exit, with demand from buyers in many parts of the world, Marti said, although he was unable to say what sort of bid-offer spread investors could expect if they needed to sell quickly.
He said the initial number of investors would be restricted as the first site, on the Mutthorn mountain in Switzerlandâ€™s Bernese Alps, can hold a maximum of 500 barrels. Another site was in preparation, and would be ready in seven or eight months. ($1=1.060 Swiss francs)