The Bordeaux Index, the world’s largest fine wine trader, is seeing sales soar as investors flock to rare wines in part as a hedge against rampant inflation.
Revenue at the fine wine merchant was £80m in the six months to June 30, up 37 per cent from the same period last year. This puts the London-based company on track to beat 2021 record revenue of £126m.
The online merchant’s wine trading platform, LiveTrade, was responsible for the majority of the growth, posting 53 percent higher sales than the corresponding period last year.
Over 600 wines are traded on the platform, with prices varying from the 2019 Tignanello in Tuscany, around £650 for a six-bottle, to £13,000 for a dozen bottles of Champagne’s Salon Le Mesnil 2012 and up to £54,000 for a 12-bottle. Château Pétrus 2018 Bordeaux bottle.
“Interest in wine and whiskey as an asset class has never been higher,” said Gary Bohm, founder of the Purdue Index. People are scrambling for investments that will outpace inflation, which is approaching 10 percent across Western countries. Earlier this week, the Bank of England predicted that UK inflation would reach 13 per cent by the end of the year.
Matthew O’Connell, CEO of LiveTrade, added: “People are still drinking this stuff, but increasingly they are noticing the value of wine as a solid asset with a track record of fighting inflation.”
Last year, fine wine was the top performing “emotional investment,” according to the Knight Frank Luxury Investment Index, with an average return of 16 percent, higher than art and coins.
“Supply is limited, wine is constantly improving over time and there are more luxury consumers than ever looking to buy,” O’Connell said.
Purdue Index’s LiveTrade platform processes approximately 50,000 transactions annually. The company said its user base increased by about a third last year to reach tens of thousands, and declined to provide an exact figure.
In May this year, Société Jacques Bollinger, the family-owned French group behind Bollinger Champagne, increased its minority stake in the Bordeaux Index. Michael Spencer, a veteran and conservative peer who used to work for the brokerage giant ICAP, Bohm owns a 20 percent stake in the company and serves as president.
O’Connell added that increased interest by retail investors and the resilience of luxury goods during periods of consumer downturn would put the rare wine market in a “healthy place” over the next few years, stressing that it “was not a bubble.”
However, others in the industry are less optimistic about the outlook for the rare wine market. Miles Davis said, “There will be a lot of high net worth individuals buying wine as a hedge against inflation, but there may be more people in the middle-rich category less thriving because of the cost of living crisis and pulling back.” From Wine Owners, which operates a database to track the value of fine wines.
Last month, the 2017 Magnum of Champagne Avenue Foch, along with a non-fungible token including the intellectual property rights to the artwork on its label, were sold to Italian investors for $2.5 million.
The Financial Times revealed last month that a barrel of rare Scotch whiskey from an Ardbeg distillery was sold to a private collector in Asia for £16m, breaking the previous world record of £1m set just a few months ago.
“The net effect might be that… the wine market is stable and unexciting for the next few years,” Davis added. “The wine market needs the feel-good factor. It’s just a happy place to invest when things are going well and a lot of people have things not going well.”
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