Liv-ex: The place to trade investment-grade wines

The London International Vintners Exchange (Liv-ex) is the leading exchange for fine wine. Founded in 1999, the exchange runs an internet and phone based information, trading and settlement platform for fine wine merchants. The bulk of Liv-ex transactions are in the best French labels from Bordeaux, Burgundy, Champagne and the Rhone, but not exclusively so. The best names from Italy, Germany, Spain, Portugal and the New World are also traded.

Standard Contract Terms

• All wines priced under bond in London in British pound (₤).
• Delivery within 14 days (en primeur within 90 days of release from chateau).
• Stock in original packaging and in good condition (re-imports from U.S. or Asia must be sold as special contracts).
• Payment is 14 days from month of receipt.
• Credit subject to insured limit.

The Liv-ex Indices

The Liv-ex 100 Fine Wine Index, is touted to be the world's version of the S&P-500. It is widely acknowledged as the fine wine industry’s leading benchmark. The majority of the index consists of Bordeaux wines – a reflection of the overall market – although wines from Burgundy, the Rhone, Champagne and Italy are also included.

On the other hand, the Liv-ex Champagne 25 Index tracks the price of 25 of the world's most sought-after Champagnes.

Current Market Conditions

Currently, the Liv-ex 100 Index and the Liv-ex Champagne 25 Index have risen 8% and 27%, respectively in the 12 months ending in June. That's against a 14.8% drop in the FTSE-100 during the same period.

According to Justin Gibbs, a director of Liv-ex:

"It's a simple case of demand outstripping supply. People are quick to glug Champagne as soon as they buy it".

He also adds:

"While top Bordeaux reds are typically laid down for 20 years, Champagne is ready to drink as soon as it lines store shelves."

Driven by this demand, the price of Champagnes such as Krug, Dom Perignon and Louis Roederer Cristal have soared over the past year, overtaking the big names of Bordeaux as an investment, at least for the time being.

About a year ago, a case of Krug 1996 would have set you back just under US$3,000 on the auction market, but now it's worth US$4,713.40 (₤2,350). Louis Roederer Cristal 1989 is now worth 39.1% more than in 2007, bringing in $6,417.90 per case.

On the other hand, Bordeaux prices skyrocketed from the strong vintage in 2005 and then held steady on the 2006 wines. The 2007 vintage is considered a weak one by market analysts as some interests turned to Champagne instead. Still, it's not enough to lure leading wine funds away from their traditional staple investment of claret (the British term for Bordeaux red wine).

While Champagne valuations may be driven up by consumption, the price of fine Bordeaux red is driven only in part by the scarcity of supply.