London International Vintners exchange
While working together in the 1990s as stockbrokers for a boutique investment firm in Hong Kong, James Miles and Justin Gibbs weren’t thinking about wine except perhaps as occasional consumers. But when their employer was acquired by a large corporate entity, both men found themselves unhappy with the change. Trying to find an untapped niche, they reexamined their periodic purchases of claret and suddenly saw potential. It occurred to them that fine wine was traded as a commodity, but no exchange existed. As a result, the process was inefficient as well as lacking in transparency. Miles and Gibbs decided to take the valuation component of fine wine out of the dark ages: they brought a businessman’s approach to transparency, verifiable data and industry discipline and founded the London International Vintners Exchange, commonly known as Liv-ex.
The gamble was a success. Liv-ex is now the top global marketplace for professional wine traders. Through its dedication to transparency, it has advanced its top priorities: securely facilitating the buying and selling of investment quality wines for all parties involved, and offering comprehensive, real-time and historic market data, all of which is used by the market’s major players to assign value to products with informed conviction.
The Liv-ex experience is unique in its access to continually updated indices. Liv-ex 100, which is calculated and updated monthly, represents the price movement of 100 of the most sought-after fine wines for which there is a strong secondary market. The list continues to be dominated by red Bordeaux, followed by champagne, red Burgundy wine, white Bordeaux, red Italian wine and finally, red Rhone wine. Similar to Live-ex 100, the Liv-ex 50 calculates and tracks the daily price movement of the most heavily-traded commodities in the market: the Bordeaux First Growths. Liv-ex 50 only includes last 10 vintages of these 5 first growth wines. Other indices include the Bordeaux 500 and the Bordeaux 1000, both of which are of particular interest to the serious investor.
Members of Liv-ex, who must all pass a robust vetting process, use its services to grow sales while offering an elevated level of expertise to their client base. The data available through Live-ex allows members to tap more fully into the market, gauge trends, reduce capital tied up in stock, expedite cycle time, and simplify the fulfillment process. Additionally, the site also offers Cellar Watch, a cellar-tracking and price-searching tool that allows investors to stay apprised of current and historic pricing as well as monitor their personal stock.
Liv-ex’s transparency has launched new, innovative and more secure trading standards, especially as relevant to behind the scenes contracts. All Liv-ex trades take place under one of three separate contracts designed to verify and ensure the physical condition of the wine, its tax status, payment and delivery terms. Its main contract, the Standard in Bond (known as SIB) contract, holds traded products to conditions of excellence, insures that the bottle has never left Europe and is stored in-bond, and is able to be delivered within two weeks to a Liv-ex warehouse.