When a wine is traded at auction there can be huge variation in price, as shown on the chart below (auctions are green). This is due to differences in quality: for example the bottles may not be in their original wooden case (OWC) or there may be damage to the labels. Consequently, potential buyers have to establish the condition of the packaging before committing to the lot. Liv-ex trades (below in red), by contrast, show little price variation. This is due to Liv-ex’s standardisation of contracts: Standard In Bond (SIB) and Special.
SIB stock adheres to the high standards under which fine wine is traded amongst wholesalers. Bottles must be in their OWC, in bond, and in good condition. Liv-ex’s logistics arm, Vine, has a dedicated and specialist warehouse team that thoroughly check delivered cases to ensure that SIB standards have been met.
The Special contract indicates that stock is not SIB-compliant. This may be because the wine does not meet SIB packaging standards, but a trade can be offered under a Special contract for a number of reasons. The case may be duty paid rather than in bond, or the seller may be looking to trade a minimum number of bottles, e.g. 25 cases of 12x75.
SIB was established to ensure that when members trade wine they know exactly what it is they are trading. This not only creates liquidity but also enables trades and prices to be compared like-for-like, and is one of the reasons why Liv-ex price data is the industry benchmark. Fine wine enthusiasts can access this data in real time through Cellar Watch – Liv-ex for collectors.