London International Vintners Exchange (Liv-ex) is an exchange for investment-grade wine based in London. Liv-ex, which was founded in 1999, provides a marketplace where wine merchants are able to trade wine, and also publishes two wine price indices based on these transactions which are widely used to gauge general price developments for the "fine wine" market in general.
Trading on Liv-ex
The wines typically traded on Liv-ex are collectible or investment grade "fine wine" that have a significant trading volume on the second-hand market, and these wines are traded by the case. This largely means a number of high-end French wines of highly rated vintages, mainly recent vintages and vintages in early maturity. In difference from wine auctions, private collectors can not trade directly on Liv-ex, and older vintages or otherwise very rare collectible wines are not traded.
In 2010, trading on Liv-ex received attention and some criticism for allowing actors to short sell en primeur Bordeaux wines before they had been released by the producers and given an initial ex-château price. Château Lafite-Rothschild 2009 was the first wine where such trades were made. Liv-ex defended the practice by mentioning that this type of trade is standard on other asset markets.
Liv-ex Fine Wine Indices
Liv-ex publishes five different wine indices. The prices that are used to compute the index are wines in bond in London, priced in Pound sterling. In their construction these indices are similar to a stock market index. The composition of the index is regularly updated as wines are added and removed from the index, and their index weight revised.
Liv-ex Fine Wine 50 Index
The Liv-ex Fine Wine 50 Index tracks the daily price movement of the most heavily traded commodities in the fine wine market - the Bordeaux First Growths. It includes only the ten most recent vintages (excluding futures, currently 2004-2013), with no other qualifying criteria applied.
Liv-ex Fine Wine 100 Index
The Liv-ex Fine Wine 100 Index is the industry’s leading benchmark. It represents the price movement of 100 of the most sought-after fine wines for which there is a strong secondary market and is calculated monthly. The majority of the index consists of Bordeaux wines â€" a reflection of the overall market â€" although wines from Burgundy, the Rhone, Champagne and Italy are also included. The index is calculated using Liv-ex Mid Prices and is then weighted to account for original production levels and increasing scarcity as the wine ages. As such, the index is designed to give each wine a weighting that corresponds with its impact on the overall market.
Liv-ex Bordeaux 500 Index
The Liv-ex Bordeaux 500 is Liv-ex's most comprehensive index and reflects trends in the wider fine wine market. It represents the price movement of 500 leading wines and is calculated monthly using the Liv-ex Mid Price. It has been backdated to December 2003.
The index comprises six sub-indices: the Fine Wine 50, the Right Bank 50, the Second Wine 50, the Sauternes 50, the Right Bank 100 and the Left Bank 200.
Liv-ex Fine Wine Investables Index
The Liv-ex Fine Wine Investables Index is designed to track the wines commonly found in a wine investment portfolio. The index consists of Bordeaux red wines from 24 leading chateaux. The component wines date back to the 1982 vintage and are chosen on the basis of their score from Robert Parker. The wines are priced using the Liv-ex Mid Price with various scarcity weightings applied to account for older vintages and wines produced in smaller quantities.
The index dates back to January 1988 and was rebased at 100 in January 2004. Liv-ex has been calculating Mid Prices for selected wines from 2001 onwards. Component prices prior to that date are the result of an extensive collection of historical price data from leading fine wine merchants.
Liv-ex Fine Wine 1000 Index
The Liv-ex Fine Wine 1000 tracks 1,000 wines from across the world using the Liv-ex Mid Price. It is calculated monthly and was rebased at 100 in December 2003.
The Liv-ex Fine Wine 1000 comprises seven sub-indices: Liv-ex Bordeaux 500; Bordeaux Legends 50; Burgundy 150; Champagne 50; Rhone 100; Italy 100; Rest of the World 50.
Vine
Vine is a specialist warehouse and freight-forwarding service offered by Liv-ex. Services include condition checks and verification, stock consolidation and escrow, labelling and export documentation, and various storage and transport options. Vine has an online information system to track orders, create reports and view photos.
Prime
Prime is an international collection and delivery service. It is available exclusively for Liv-ex members to support their trade on the Exchange. It offers collections and delivery services across Europe and Asia.
The service is run by Vine, Liv-ex’s storage and distribution business, based at the heart of the global fine wine trade in London. Prime uniquely offers a simple per case charge with no minimum quantity.
Cellar Watch
Cellar Watch is a cellar-tracking/price-search tool provided by Liv-ex. It allows wine collectors to search for current and historic prices, monitor the value of their wine cellars, and analyse market movements.
LWIN
The Liv-ex Wine Identification Number (LWIN) - a unique seven digit numerical code - serves as a universal wine identifier for the wine trade.
LWIN helps to avoid problems associated with complex product names that make transactions prone to error and delay.
Each L-WIN refers to the wine itself (i.e. the producer and brand, grape or vineyard). The first six numbers of the code represent each wine’s unique identifier, while the seventh number is a “check digit†that minimises input errors.
Additional information, such as the vintage, pack and bottle size can be appended to the L-WIN in a standard format, or added as separate fields.
The L-WIN standards for including additional data are:
- LWIN: 1234567 â€" Example winery, Cabernet
- LWIN-11: 12345672012 â€" Example Winery, Cabenet, 2012
- LWIN-16: 1234567201200750 â€" Example Winery, Cabernet, 2012, 750ml bottle size*
- LWIN-18: 123456720121200750 â€" Example Winery, Cabernet, 2012, 12 bottles of 750ml
- *All bottles sizes are expressed in millilitres in a five digit format.
Bordeaux classification
In 2009 Liv-ex has updated the Bordeaux Wine Official Classification of 1855, emulating the original method while using modern price averages from the last five vintages (2003-2007). The list was assembled applying Médoc and Pessac-Leognan wines with a minimum production of 2000 cases, disregarding any second wines that would qualify.
References
External links
- Liv-ex official site
- Liv-ex Blog
- Cellar Watch
- Forbes: Wine Futures