Seeing the opportunity of bringing solutions in the financial markets to fine wine, James Miles, CEO and Co-Founder of Liv-ex, launched the London International Vintners Exchange (“Liv-ex”). Through standard contracts, guaranteed trades, and a plethora of data, Liv-ex is making the fine wine market more transparent, efficient, and safe. Though the Liv-ex 100 and 1000 indices are what it may be best known for, it is an end-to-end trading platform. Listen to James explain it all as well as market trends on this episode of XChateau! Detailed Show Notes: Liv-ex backgroundFounded in 2000Based on the similarities between wine and stocks, leverages financial solutions for wineMission - make the fine wine market more transparent, efficient, and safeAn exchange for wine - London International Vintners Exchange (Liv-ex is the acronym) - an end-to-end solution to buy and sell wine, including price discovery, trading, and logistics to ship wine globallyCustomers (merchants) in 42 countries, Liv-ex doesn’t compete and sell to restaurants, hotels, or represent producersTrading on Liv-exAn order matching system - customers place buy and sell orders on the platformBids are firm, cannot cancel orders - a new concept for wine, which is usually “subject to availability”Created standard contract for wine trading - includes condition, when to pay, and when it will be deliveredThe order book is a queuing system - 1st based on price, 2nd by the time of bid, the book is always openWine traded on the platform2010: £55M traded across 1,000 wines - 97% Bordeaux, top 10 Bordeauxs + DRC = 70%2022: £100M traded across 15,000 wines - Bordeaux ~35%, Burgundy, ~25-30%, Champagne / Italy ~10%, CA growing; France still ~70-75%Transactions are growing ~20% per year, but avg price is decliningMerchants>580 merchants on the platform2022 - UK ~35%, Europe ~40%, USA - ~15%, Asia ~10%Fastest growth - USA, Europe, slowest - AsiaProvenance/condition of winesJoining Liv-ex requires review by the membership committee - look at financials, where wines are bought, etc.Has data-sharing initiatives with customersHas special contract for older / rarer wines (takes into account more information)Liv-ex DataLiv-ex Fine Wine 100 index - tracks most traded wines, uses production and scarcity weighting vs. just price (multiplies price by # of cases and depreciates this over time; price is mid-point of bid-offer spread or last transaction price)Liv-ex 1000 - price-weighted, top 100 wines and last 10 physical vintages, breaks down to regional indicesIf no price from the platform takes price from customer listings or valuation committeeAn active market in ~15,000 wines but tracks ~350k winesCustomers have ~$1.5B of wine actively marketingMarket trendsBurgundy is the big winner; Champagne & Italy did well, especially w/ US tariffsTop increases: DRC, Roumier, Leflaive, Selosse, Salon, top Italian wines / BarolosEverything w/ a hint of Leroy doing well (e.g., Arnoux Lachaux has risen 4x having worked for Leroy in the past)Wine has been doing well so far against macro headwinds (e.g., Brexit, tariffs, Covid, war, inflation), and physical assets are an excellent place to beBusiness modelMembership fee - based on features used and amount of data consumedTrading fee - 2-3% commission on both sides, usually ~5% of total trade (low vs alternatives - wholesaler - 10-20%, auctions - 25-30%, importer/agent - 30%+)Settlement fee (per unit fee) for logistics Get access to library episodes Our GDPR privacy policy was updated on August 8, 2022. Visit acast.com/privacy for more information.