History of Liv-ex
Despite the fine wine market being around for centuries, in years gone by the fine wine market was traditionally regarded as a very opaque market, only available to an exclusive few who had access or knew someone who had access to a negociant who worked directly with the chateau. Since the incorporation of the London International Vintners Exchange (Liv-ex), the global market place for trading fine wine, the fine wine market has become much more efficient and transparent, enabling the everyday investor to reap the benefits of this unique alternative investment class. In short, Liv-ex have created an online trading platform where merchants from all over the globe can trade tens of thousands of different wines at the click of a button.
Formalised exchanges have existed for anything from stocks and fuels to metals and goods for hundreds of years, however it was not until the formation of the Liv-ex exchange in March 2000 that one was available to fine wine merchants. Liv-ex is no different from any other exchange, it provides an independent meeting place where it’s members, bound by a common profession, can come together to find out what is happening in their market and identify opportunities for profit.
The earliest evidence of wine production dates back over 8,000 years and it is likely that people have exchanged wine for profit for just as long. Chateau Haut Brion, classified as a First Growth in 1855, was first referenced in Samuel Pepys’s diary in 1663 and is still one of the most traded wines on Liv-ex today. For a long time the market was dominated by French and British merchants, but today it is a global market with producers, merchants, investors and collectors spanning every populated continent of the world.
The Liv-ex Exchange was launched in March 2000 and today has 450+ members in 35 countries spread across six continents. They use Liv-ex’s internet trading platform to check prices, spot opportunities and match and settle trades. Members enjoy the considerable convenience and economy of transactions by pooling the world’s fine wine traders in one place, allowing them to better serve both their customers and the producers they represent. Liv-ex guards its independence jealously. Its membership committee vets new members, sets rules and policies disputes. It has created a standard industry contract, the Standard In-Bond Contract, to codify the condition, tax status, payment, and delivery terms of transactions on its exchange. As in other markets this contract has simplified the terms of trade, avoiding the expense and uncertainty of negotiating each bargain anew. Trading is fully automated and secure and the prices at which wines are actually traded are transparent. Its indices and data services inform trading decisions and provide benchmarks to price changes. All trades are anonymous and Liv-ex operates as central counter party between buyers and sellers on its platform.
Vintage Associates Affiliation with Liv-ex
At Vintage Associates we are one of only 450+ trading members of Liv-ex and simply give our investors access to every wine traded on the platform. All wine invested in through Vintage Associates will be 100% owned by the client and our investors have complete control on when and how they decide to sell their acquisitions.
Vintage Associates only trade fine wines on behalf of our clients exclusively through the Liv-ex platform. This ensures that all wines purchased have been sealed in bond (SIB), ensuring that the wines have been kept in optimum condition since being bottled. All wines have been kept in their original wooden casing and go through stringent condition checks before being listed on the exchange. By going through Liv-ex it ensures that our investors collections of fine wines are in pristine condition from the moment they are purchased.
Our role is to educate our new and existing clients on every aspect of the fine wine market and provide recommendations on certain wines that are currently being traded. Through our detailed conversations we will begin to get an understanding as to the type of investor we are dealing with and ascertain your depth of knowledge on the wine market. Our experienced portfolio managers will tailor a specific portfolio plan based on our investors personal requirements.
For investors that are new to the market the majority of wines that we recommend will be from the first growth classification system or “Premier Crus” wines. First growth wines from Bordeaux have always been the bedrock of the fine wine market and have always been known as the best and most desirable wines in the world. It is no surprise that historically these wines have been the best performers on the market. Although the more experienced investor may look to diversify into other regions such as Burgundy, Italy and California,
It is always important to initially start your investment within a comfortable dealing range however diversification is key. For the perfect investment strategy we would recommend to invest in wines from various different regions and chateaux.
The process is very simple, we first recommend that you digest all the relevant information that has been provided to you and do as much research about the wine market as you can. Once you feel you have a good enough understanding about the market, your portfolio manager will then discuss your investment preferences.
Once we have an idea as to the type of investor you are, your portfolio manager will then provide recommendations of certain wines we feel would benefit your investment portfolio. It is at this stage where your portfolio manager will provide all the necessary information on the wines that have been recommended. You will receive information on the history of the chateau, tasting notes, historical performance, average production size, vintage, critic scores and photos of the wine you are potentially investing in.
If you are then happy with the recommendations, we will purchase your desired collection off the Liv-ex exchange and purchase the wines on your behalf. Your portfolio manager will then arrange your own storage account to house your wines and your wines will usually arrive in bond within 4 weeks of purchase. Once the wine has arrived in bond, you will receive a certificate of ownership and this will be used as proof of ownership.