In the following short video, Liv-ex Managing Director and Co-founder James Miles discusses the importance of the internet for the fine wine industry, how the market has changed since Liv-ex was launched in 2000, and what the future holds.
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In the following short video, Liv-ex Managing Director and Co-founder James Miles discusses the importance of the internet for the fine wine industry, how the market has changed since Liv-ex was launched in 2000, and what the future holds.
Following on from his presentation at the Wine Industry Conference in Hong Kong on the fine wine market and speculation, Liv-ex Managing Director James Miles was interviewed by Guy Collins of Bloomberg to talk about current trends and value within the market.
Liv-ex was established 15 years ago. The following video, released today, provides an overview of what Liv-ex is and how its services help merchants to transform their fine wine businesses.
We hope you find the video interesting. If you have any questions, or would like to find out more about Liv-ex, please email co-founder James Miles on email@example.com.
Vine provides storage, settlement and distribution services built specifically for fine wine. In the below interview (a follow-up to the Vine overview we produced last month), Ashley Hopkins - the Head of Vine - explains how Vine came about, outlines its vision for fine wine logistics and discusses some of its current and future innovations.
We hope you find the video interesting. If you have any questions, or would like to find out more about Vine, you can email Ashley on firstname.lastname@example.org or call on +44 (0)20 7062 8755.
随着40亿美元的优质葡萄酒市场不断变化， Liv-ex上周五推出优质葡萄酒1000指数。在Liv-ex交易的葡萄酒范围自2010年来上升了85％。波尔多市场上的主导地位已下降， 而其他地区的市场份额則有所增加。Liv-ex创造优质葡萄酒1000，以便酒商、投资者和消费者尽可能准确地测量这个不断增长的市场。
2001年，Liv-ex创建行业指标的优质葡萄酒100指数來跟踪最抢手的优质葡萄酒的动态。该指数包括92％ - 反映其当时的市场份额 - 的波尔多；而今天其已下降至80%以下。取而代之，来自勃艮第、香槟、罗纳河、意大利和新世界的优质葡萄酒的需求則有所增加。Liv-ex优质葡萄酒1000采用Liv-ex的中间价格跟踪来自世界各地的1,000款葡萄酒。它是按月计算，并于2003年12月已重订为100基数。
On Friday we published the first part of Liv-ex's interview with Antonio Galloni, wine critic and founder of Vinous. In the second part, published below, Antonio discusses the wines from his favourite regions, the importance of temperature control in cellars, and why Italy is the country with "the brightest future".
You recently published a report on the 2010 Tuscan vintage where you called it “one of the great all-time vintages in Tuscany”. What is great about the vintage?
The 2010s are some of the most viscerally thrilling, young wines I have ever tasted. I started following the wines from barrel in 2011, and even then, it was pretty clear they had the potential to be special. The best wines have dazzling fruit and plenty of mineral-driven intensity from the late, cool harvest. In my view, the finest 2010s are simply breathtaking. However, it is important to note that Tuscany is a big region and there often are significant differences between the wines of Chianti Classico, Maremma and Montalcino, to name just three of the broader appellations within Tuscany.
How does it compare to other recent ‘great’ years, such as 2009, 2006 and 2004?
Broadly speaking, the 2006s are big, powerful wines built for cellaring. The 2004 are more aromatic, silky in texture and finessed. I consider both exceptional vintages for the majority of top Tuscan properties. I would not put 2009 in the same category. The warm vintage was challenging, especially on the coast, where conditions are already hot to begin with and generally lack the diurnal shifts typical of some of the inland zones, Chianti Classico in particular.
Italy is one the most diverse countries in terms of its different grapes and regions, but the market tends to focus on the top wines of Tuscany and Piedmont. Which other Italian regions should command the market’s attention?
The simple answer is all of them! Here’s a breakdown of some of the highlights, keeping in mind there is something to discover in every region.
Veneto, Valle d’Aosta, Lombardia, Campania, Abruzzo, Umbria, Sicily and Sardinia for reds. Think about the diversity. Amarone is a tremendous wine, yet it gets so little attention. Valle d’Aosta excels with mountain reds built in energy and tension. In Lombardia, the local Chiavennasca (Nebbiolo) is air-dried to produce Sforsato and a number of other wines full with character. The reds of Campania boast a rich history that goes back millennia, well before any chateau was classified in Bordeaux or vineyard awarded Grand Cru status in Burgundy. Montepulciano from Abruzzo ages beautifully. In Umbria, Sagrantino can be compelling when the tannins are handled well. Sicily has Nero d’Avola in a variety of places on the island and Nerello Mascalese on the Etna. Sardinia has Cannonau, Carignane and a host of other indigenous grapes.
Alto-Adige excels with whites that are endowed intense varietal character and pure mineral drive. In Friuli, whites tend to be a little richer in body, but just as compelling, especially at the top properties in the Collio, Colli Orientali and Carso. Campania impresses for its volcanic-inflected whites. High-quality Soave in Veneto is delicious and ages exceptionally well. In the Marche, Verdicchio is equally distinctive and capable of myriad expressions from bone-dry to late-harvest versions that have a little bit of sweetness. Most of the whites in Sicily and Sardinia are quaffers, but there is always a time and place for that as well.
There has been a recent spate of ‘great’ Champagne vintages, of which 2002, 2004 and 2005 are normally included. Have any Champagnes from these vintages stood out for you?
Of those three vintages, 2002 is the most consistently exceptional, as a number of wineries made superb Champagnes. Some of my favorites include Dom Pérignon and Dom Pérignon Rosé, Bollinger La Grande Année and Vieilles Vignes Françaises, Dom Ruinart, Pierre Péters Les Chetillons, Taittinger Comtes de Champagne, Roederer Cristal, Vilmart Coeur de Cuvée, Philipponnat des Goisses and the Jacquesson lieu-dits.
There is a lot to like in 2004 as well. The wines are more focused and less exuberant than the 2002s. Overall, it is a vintage of tightly wound, energetic Champagnes that should age beautifully. Some of my favorites include Dom Pérignon, Roederer Cristal, Bollinger Grand Année, Pierre Péters Les Chetillons, Taittinger Comtes de Champagne, Vilmart Coeur de Cuvée, Philipponnat des Goisses, the Jacquesson lieu-dits, Le Brun Servenay’s Vintage Cuvée Tresor Exhilirante Vieilles Vignes and Cédric Bouchard’s Roses de Jeanne La Haute Lemblée.
Vintage 2005 is by far the most variable of the vintages you mention. A number of wines have begun to show mushroom notes and are aging prematurely. In my view 2005 is an average vintage at best for Champagne. I am not buying any 2005s to cellar.
I am also excited about a number of smaller grower estates, including, Jacques Selosse, Chartogne-Taillet, Marie-Courtin, Georges Laval, Ulysse Collin and Francis Boulard, who don’t necessarily vintage date all of their wines, but who continue to push the envelope with regards to what Champagne is and what it can be.
Does it frustrate you that Italian and Californian wines still don’t get the same attention from the trade and press as the major French regions?
I think that might be true in Europe, but it is not true in the US, especially when it comes of California wine. The simple reality is that most of the top California estates can sell their entire production in the US, so they tend not to seek global markets. Personally, I feel that is a mistake, but it is also understandable.
As we discussed previously, Italian wine is taking off in a big way. It has been the most imported category in the US for multiple years now, and it is about to explode onto the consciousness of collectors in a broader and far more meaningful way than at any other time in the past. The best estates offer superb quality, the wines are more affordable than the top labels in Bordeaux and Burgundy, and far easier to source than the top Burgundies. Take it from someone who has put the best Italian wines on the same table with peers from other regions around the world. Italy’s finest wines are as great as the best First Growth Bordeaux, Grand Cru Burgundies and Napa Valley Cabernet Sauvignons, and they cost a fraction of the price.
Are wineries in California run differently to those in Europe?
Again, California is a world, an agglomeration of regions, each with their own personality. There are smaller, artisan, family-run properties that embody the same values we see in Burgundy, Piedmont and other regions where most of the top estates are still run by families. At the other end of the spectrum, California has also attracted a number of successful entrepreneurs (mostly in Napa Valley), who will make totally economically irrational decisions in search of excellence. The biggest difference to me is in technology, where California wineries tend to invest heavily. It is not unusual for a Napa Valley estate to employ a vineyard manager, a vineyard consultant, a winemaker a consulting winemaker and any number of other experts specializing in soil analysis, irrigation and more. The sorting lines are million-dollar pieces of equipment. And of course, the great irony is that none of the iconic wines of decades past in Napa Valley or anywhere in the world were made with that type of technology.
In my view, the most important thing at this moment in time is the ability to control temperature in the cellars. I don’t think I have seen a winery in California with passive winemaking and aging cellars, but this is still the case in parts of Europe. Burgundy, Piedmont and Tuscany come to mind. I remember a grower in Burgundy telling me his 2002s were adversely affected in barrel by the scorching heat of 2003. What a shame. Given the extreme volatility in weather today, passive cellars are simply no longer viable for the production of world-class wines. Of course, there are exceptions, but there are many more wines that aren’t reaching their full potential because of a lack of temperature control. Tuscany is one of the biggest culprits, largely because of a cultural aversion to air conditioning. A few months ago, a winemaker in Tuscany told me he was disturbed by the cultural aesthetic of having cooling equipment in his cellar. So he chooses to ‘refresh’ his oxidized wines with a younger vintage before bottling. The same is true of the conditions where wines are stored at wineries. The lack of temperature control is the main reason so many Tuscan wines fall short of the level they could and should reach.
Sadly, the same is true of restaurants, where storage conditions aren’t often up to the level of the wines. Over the summer, at a restaurant with a Michelin star, I was served a bottle of San Pellegrino, chilled from the refrigerator, and a bottle of Le Pergole Torte at 27 degrees Celsius (81 degrees Farenheit)! It saddened me deeply to see a bottle of water treated with more respect than one of the world’s great, icon wines. Yet this too often is the reality. It’s time for Italy’s restaurants to get serious about their wine programs. The world is watching.
What impact do you think that wine critics have on both the market and on growers?
Although critics might have some impact over the short-term, I believe markets as a whole are pretty efficient over the long-term. That is why some cult wines that are rarely reviewed are highly coveted, with prices to match, while other wines struggle to keep their value over time, high scores notwithstanding. When that happens, the market is telling you those wines are overpriced given their quality.
I firmly believe it is not a critic’s role to tell growers – or even suggest by way of commentary/criticism – how to make wine. Any sense of giving direction to growers is completely antithetical to my philosophy.
In the last couple of years Liv-ex has begun to see broadening interest for wines beyond Bordeaux. Have you? If so, where do you think the emphasis lies?
There is no question Italy is the country with the brightest future and the greatest upside for the next 20+ years. The actuality is that very few consumers can actually afford to drink Bordeaux, particularly the best wines. In addition, the world of restaurants has moved swiftly to more informal settings. How many occasions are there to enjoy a great First Growth? I love Bordeaux for its classicism and timelessness, but there is little question the region needs to re-connect with consumers to remain relevant. Bordeaux has priced itself out of restaurant wine lists, and very few people can afford to drink these wines even at home.
The best Burgundies are made in tiny quantities, so unless something dramatic happens to the global economy (let’s hope it doesn’t!) the market for those wines will remain very strong. California benefits from a huge domestic market and wines that are mostly labeled by variety (Pinot Noir, Chardonnay, Cabernet Sauvignon) that are therefore intrinsically easier to understand.
Italy has something no other country has. The most coveted and desired lifestyle of all. As people increasingly seek to eat healthier foods they turn to the Mediterranean diet. That means olive oil over butter and a generally more ingredient-focused cuisine. I love Burgundy, but the food is heavy. Italian food is food you can eat every day. And you need something to drink. Italy offers a superb, dynamic and varied culinary repertoire with world-class wines to match. This is Italy’s greatest strength, and no other region matches it, to be frank, except for California, which has a great food and wine culture. Italy needs to improve its messaging to the trade and ultimately the consumer, but the raw potential for growth is enormous.
What wines do you like to drink at home?
I usually choose what we are going to drink based on who is coming over for lunch or dinner and what I think our guests will enjoy. That is why I like having a diversified cellar. When it is up entirely to me, we drink a lot of Champagne, white and red Burgundy, California Pinot and Cabernet Sauvignon, and Sangiovese and Nebbiolo-based reds. I am looking for purity, focus and transparency in wines to pair with the food we like to cook at home, which is simple and obsessively ingredient-focused.
Antonio Galloni, former critic for The Wine Advocate and now founder of wine website Vinous, kindly set aside some time for an interview with Liv-ex. Published in two parts, the first is shown below, and focuses on how Antonio's interest in wine developed, his plans for Vinous, and his passion for Italy, Champagne, California and Burgundy. Please visit the blog on Monday for the second half of our interview, where Antonio discusses in depth the regions and wines that excite him.
1. You studied music at university and then worked in the financial services. How did you get into writing about wine?
I was introduced to wine as an integral part of life at an early age. My paternal grandfather had decidedly simple, rustic tastes. He would put half a peach in his white wine at lunch, a long-forgotten Sicilian custom. Sometimes the simplest things are the most beautiful. My maternal grandfather had more refined tastes. He introduced me to many of the great wines of France, including Bordeaux, Rhône and Burgundy. I still remember my first Côte-Rôtie and Latricières-Chambertin, two wines I tasted for the first time at his house. When I was a child, my father told me there were two great wines in the world: Barolo and Champagne. That was my early introduction. Today, nothing gives me more pleasure than enjoying a few good bottles with my parents.
Later on, my parents owned a food and wine shop. They specialized in Italian wines and Bordeaux futures. It was before wines at that level became prohibitively expensive. I remember them regularly bringing home wines from producers like Giacosa, Gaja and Antinori and others.
I was always fascinated by wine, even at a young age. I would look at the labels for hours. Each label told a story of a place, a vintage, a grower and a grape. I wrote my first articles about wine for my high school French class. One year it was Burgundy, the next Bordeaux. A restaurateur friend of my parents collected labels from the bottles she opened at her restaurant, and they became the basis for my articles. My parents encouraged my interest by charging me with ordering the wine every time we went out for dinner. It was a great education.
I became immersed in American wines when I supported my musical career by waiting tables for a few years. It was the early days for wineries like Alban and Harlan Estate. I also remember selling a lot of Corison, Frog’s Leap, Shafer and Peter Michael.
Later, my financial career took me to Milan, where I was an expatriate for three years. I traveled all around Italy visiting my clients. I had spent a lot of time in Italy as a child, but living there was totally different. I loved it. The dollar was strong. Let’s just say I made the most out of my time there. During the weekends I tasted in cellars frequently, especially in Piedmont, and collected a lot of first-hand information. As much as I loved wine, the wine press didn’t really resonate with me. I began taking notes of wines I tasted for my own reference.
A few years later, I returned to Boston to pursue an MBA. By then I was sharing my tasting notes with friends. My friends at business school pushed me to follow my passion in wine. Soon thereafter I launched Piedmont Report, the first English language newsletter focused solely on Italian wine. It was 2004. Right after launching, I spent a month in New Zealand doing a consulting project for school. One day I looked at our site during a break and all of a sudden we had readers in 25 countries. It was an exhilarating experience.
I met Robert Parker through one of my professors. Bob offered me a job at The Wine Advocate in 2005. I politely declined, as I was having a lot of fun watching Piedmont Report take off. In 2006 things changed, as my wife and I had our first child. At that point, I couldn’t sustain both a demanding career in finance and a burgeoning wine newsletter and be a good husband and father. I joined TWA in September 2006 and thought wine writing would remain a part-time occupation.
2. How have you found the experience of going solo (with new site vinousmedia.com)?
Launching Vinous has been an amazing experience, and one of the best decisions I have ever made. When I joined TWA I made sure I retained full ownership rights to all of my content. Vinous was born with an archive spanning nine years and 25,000+ reviews plus hundreds of articles, vertical tastings and videos. We now have several thousand subscribers in 40 countries. One of the things I missed from the Piedmont Report days is a direct relationship with the customer, something I have again at Vinous. The support we have received from readers thus far is both gratifying and humbling. I wake up every day full of energy and enthusiasm.
3. What are your aims for Vinous? How do you want it to stand out among the other critics’ websites?
Vinous represents the ideas for modern-day wine criticism I have been conceptualizing for a decade. I think of myself as a consumer and wine lover first, and a critic second. As a consumer, I often felt the traditional wine press was speaking to me. I don’t want to be spoken to; I want to be spoken with. In my view, modern-day wine criticism should be a conversation, not a lecture.
I have found certain segments of the wine press to be incredibly polarizing. To me, great wine is a connector. Think about the great bottles you have enjoyed. Surely you remember who you were with, where you had that wine and the occasion. Wine has an ability to forge relationships and create memories that last years, decades and even generations. I want Vinous to be a positive force of connectivity for people who love wine all over the world.
Vinous is also indelibly shaped by the years I spent in the hospitality industry, probably the best industry for learning how to take care of people. I believe businesses are ultimately owned by their customers. If you fail to serve your customer you won’t be around for too long. Everything we do is driven by the desire to deliver a world-class product with matching service. I want Vinous to be a welcoming, inviting place for all wine lovers to learn about wine and share those experiences with others.
Our goal is to take readers off the sideline and put them into the game. I have the privilege of attending a number of fabulous tastings all over the world. I used to feel those bottles were wasted on just one person. Today, I want to bring those experiences to all of our readers. We use video, and soon other multimedia, such as audio podcasts, to give our readers access to experiences they might not otherwise be able to enjoy.
I want to have a personal relationship with our reader – this is something that is very important to me. Each week I write an email to our mailing list to share the latest news on the site and invite further dialogue. We want our readers to be participants, not observers.
Vinous is published in a continual stream, as we want our readers to be consistently engaged. There are no deadlines and no ‘issues.’ Vinous represents a break from a formulaic past. In a typical week we publish 4-5 new pieces, some small, others large, with a rotation of regions that ensures there issomething new, and hopefully interesting, for everyone.
We are now in the process of hiring another critic and will begin introducing a collection of expert voices to the site. In time, Vinous will become for wine and all things wine – such as the culture of the table – what MTV was for music, CNN for news and ESPN for sports.
Lastly, I want to build a world-class organization that attracts the best people in our field. I am not interested in building a better mousetrap. My goal is to revolutionize wine journalism.
4. You have stated that Vinous is for a younger demographic. What are the challenges in getting young people to appreciate wine?
Wine is for everyone. So is Vinous. Whether you are looking for an affordable, every-day wine, a bottle for a special occasion, or reviews of the latest releases, we can help. Of course, I am interested in my generation because I see that interest is so high, yet for many of the reasons I mentioned a while back, no one is really speaking to a large and important segment of the market. Today’s younger consumers are often well traveled and are accustomed to eating cuisines from around the world. Tastes are changing in response to a higher level of sophistication and that craves diversity and the thrill of discovery.
The main challenge in getting people – of any age – to appreciate wine is awareness. I saw this when I would open bottles for my ‘non-wine’ friends. As soon as we spoke about what was in the glass, light bulbs would go off, even with so-called ‘geeky wines’ like Chablis and grower Champagne. That light bulb is people learning to understand their own palates. Now, we want to make a million light bulbs go off.
A second challenge is delivering information in the way people can use it efficiently, which is something we continue to strive towards as we build out our technology platform. At Vinous, we lead with technology rather than employ it as an afterthought. For example, we spent a lot of time building out the smartphone version of our site, which I think is one of the very best out there. Our recently launched Playlists feature is the first piece in the increased customization we will be offering readers in the coming months.
5. When you were at The Wine Advocate you reviewed wines from Italy, Champagne, California and Burgundy. Will you continue to focus on these regions on Vinous?
Yes, I will continue to review the wines of Italy, Champagne, California and Burgundy. I will also start reviewing Bordeaux with the 2013 vintage. We have begun to add coverage of craft spirits, an area I am especially excited about.
6. What is it about these regions that excites you?
In Italy it is the sheer diversity of the regions and wines. There is always something to learn. I also think Italy embodies a set of values that is totally in tune with the way an increasing number of people want to live today. Thirty years ago, few people knew about extra-virgin olive oil, balsamic vinegar, mozzarella di bufala, risotto and many of the other staples of the Italian kitchen. Today, those items are virtually household words. There is no country with more potential right now than Italy.
Burgundy is the best region in the world to train your palate. There is no question about it. Imagine walking into a domaine that makes wine from 20 appellations. The wines are all Pinot Noir and are all vinified and aged the same way. The only thing that changes is the place where the grapes are grown. What a great school for understanding subtlety and nuance. Burgundy tugs at the heartstrings in a way no other region does, with the possible exception of Piedmont.
California is a complex, multi-layered, wonderfully nuanced book that still needs to be written. If it were a separate country, California would be the fourth-largest wine-producing nation after France, Italy and Spain. Think about the diversity. Napa Valley alone is home to a dizzying number of terroirs. Sonoma is three times larger than Napa Valley. Santa Barbara excels with cool-weather varieties, as does the Santa Lucia Highlands. In Paso Robles, Rhône varieties reign supreme, while the Santa Cruz Mountains is arguably the most overlooked region in the entire state. A new generation of young winemakers is pushing the boundaries of what is possible. If you are not excited about what is going on in California maybe it’s time to take another look.
Champagne is a whole universe to discover, from the grandes marques to the increasing number of growers making world-class wines. The awareness of terroir continues to unfold, and it is a fascinating story. What are the differences between the Chardonnays of Le Mesnil, Cramant, Oger and Avize? Or the Pinots from Aÿ, Mareuil, Ambonnay and Bouzy? What are the attributes of 100% Pinot Meunier wines? What is the potential of emerging areas like the Côte de Sézanne and the Aube, which in many ways resembles Chablis more than Champagne? We are just starting to find out.
Bordeaux is a classic, and the classics never go out of style. The origins of fine wine and the wine trade as a whole remain deeply rooted in Bordeaux. I have always loved Bordeaux for its ability to age and timeless elegance. Here, too, my instincts tell me there is a much richer fabric to discover and a number of stories that remain untold. For example, I saw a tremendous amount of diversity in soil types when I visited earlier this year. I can’t wait to spend more time in Bordeaux. To be sure, Bordeaux has to reinvent itself, especially with consumers, but I am convinced it will.
7. There were some controversies surrounding your split from The Wine Advocate earlier this year. What are relations like between you and Robert Parker now?
Bob and I have always had a great relationship. Nothing will ever change my feelings for Bob and Pat Parker.
Please visit the blog again on Monday, where we will be publishing the second half of our interview with Antonio Galloni.
Liv-ex 董事 James Miles在 The Wine Cellar Insider与Jeff Leve谈论 Liv-ex及优质葡萄酒市场。
我倾向于只买喝的，虽然我也有小拉菲(Carruades)和杜哈-米龙(Duhart Milon), 但類似的酒對我來說已太贵了。我一般只購买好年份較便宜的葡萄酒品牌。我有很多次級的2009s大瓶裝。我也有零星的Fourrier, Chateauneuf du Pape 的Clos des Papes 及Boillot。我不倾向于任何要支付超过500英镑的酒。我的酒窖主要集中在第二和第三級的波尔多，像靓茨伯(Lynch Bages), 巴顿(Leoville Barton) 和宝得根(Pontet Canet)。
我们发布月度市场报告給我们Cellar Watch (收藏家酒窖管理工具)的用户。我们第一次这样做是为了好玩，在我们的报告中提出了這個想法; 便引起了傳媒的想象。彭博及路透社询问可否在其平台上列出我们的指數！自此，指數100已经成为业界的指標，这是一个巨大的成功！
Liv-ex Director James Miles discusses Liv-ex and the fine wine market with Jeff Leve from The Wine Cellar Insider. You can read the interview in full here.
For people not familiar with Liv-ex, what is your core business?
Liv-ex is an acronym for the London International Vintners Exchange. I guess everything you need to know is in the name. People often find it hard to get their head around what an exchange does.
What is the business model for Liv-ex?
Our business is about information. Our unique selling point is our price data. Merchants come to us to find out the current transaction price, where their competitors are actually trading. They can’t get this from anywhere else. They also come for liquidity.
Where does Liv-ex earn its income from?
65% of our income comes from transactions, 30% from data and subscriptions and the balance from storage, settlement and transport.
What was the inspiration behind starting Liv-ex?
At the time we were stockbrokers. We were struck by the similarities between stocks and wine. We had bought and sold a small amount of fine wine in the traditional way and became fascinated by the market. Our observation was that it was both opaque and inefficient. We had a hunch the Internet had the potential to change this and revolutionize the way fine wine was traded.
Were either of you involved at all in the wine trade? Or was your primary experience in trading stocks?
We weren’t qualified for much. We knew little about wine and even less about the market. But we understood how markets worked. Justin was an equity salesman. I was an equity analyst. If we had been better informed, we would never have attempted it. Not being from the trade also helped us to establish our independence early on, which was vital.
What was your next step in putting together Liv-ex?
Our idea was to build a wine exchange for merchants along stock exchange lines. Most people felt the Internet provided the opportunity to cut out the middle man. Our thinking was that an exchange would work along Business to Business lines.
With that spark of an idea, what did you do?
We saw the opportunity, not in terms of removing unnecessary middlemen, but in terms of cost. By driving down the cost of distributing information to almost nothing, the Internet opened a gap in the market for our ideas. Our vision was to make trading wine more transparent, efficient and safe.
You make a big issue of transparency. Is transparency more important than price?
They are related. Transparency gives buyers confidence in the price.
Is wine a personal passion for you?
We love wine. But we were drawn to the trade by the business idea rather than a passion for the product. This makes us pretty stupid I know!
What wines do you purchase for your own your personal cellar?
I tend to only buy to drink, although there is stuff in my cellar like Carruades and Duhart Milon, which has got too expensive for me. I tend to only buy less expensive wines in the great vintages. I have a lot of lesser 2009s in magnum. I also have a smattering of Fourrier, Chateauneuf du Pape from Clos des Papes and Boillot. I don’t tend to pay more than £500 per case for anything. My cellar is heavily concentrated in second and third tier Bordeaux like Lynch Bages, Leoville Barton and Pontet Canet.
What is your guess as to the value of fine wine traded today on an annual basis?
In 2011 it was about £4bn, but 2012 was down 30-40%.
How much of that is Bordeaux wine?
In 2011 94% of Liv-ex trade was Bordeaux wine. In 2012 it was 85%.
How much of that is devoted to the First Growths?
Currently about 30%, by value. But that is lower than normal.
Do you think the current system of selling Bordeaux wine En Primeur will continue in its present form?
Yes. It is a brilliant system for the producers. I don’t see the structure changing in my lifetime. However, it could be more transparent, efficient and safe than it is currently.
Where is the fine wine market headed these days?
The underlying themes are unchanged and positive. More people are drinking wine and the rich are getting richer, particularly in emerging markets. Prices got way ahead of themselves, particularly those wines that were sought after in China, like Lafite Rothschild. The correction has been tough. But it is cyclical and not structural. The underlying demand and interest in fine wine hasn’t gone away.
How have things changed for you at Liv-ex, since you first got started?
The Internet has made the market much more transparent and information travels much faster. This has made the market more accessible and opened a multitude of new opportunities making it much larger.
Why did you create the initial Liv-ex 100 in 2004?
We publish a monthly market report for subscribers to our Cellar Watch, which is a cellar management tool for collectors. We first did it for fun to demonstrate a point in one of our reports. It caught the imagination of the press. Bloomberg and Reuters called asking if they could list our index on their platform! Since then the 100 has become the benchmark for the industry which was a huge coup!
How much has the 100 Index changed since its inception?
The 100 index is weighted by multiplying price by production and scarcity. We depreciate supply as the wine ages, to reflect the fact that wine gets scarcer as it gets older. So there is a natural bias to young wines with high production and big prices. This means the index is heavily weighted towards recent vintages of the First Growths. This reflects the reality in the market. Lafite Rothschild from Pauillac makes 25,000 cases at £5-10,000 per case. Clearly it is always going to be more important than a top Rhone, Burgundy or a garage wine in California, where prices are high but quantities are tiny. The vintages have changed, but the brands that matter have not.
Are you still focused on business to business transactions exclusively?
Yes. We have no interest in trading with consumers or producers. Our members do this very well. Our job is to facilitate trade among our members, not to put them out of business. If they do well, we do well.
How many members are currently part of the exchange?
We have 420 merchants in 35 countries!
Which countries are the most active?
UK and France. London and Bordeaux is still home to 9 out of 10 of the biggest players in the world. The biggest wine merchants in Europe are also the biggest in China.
Aren’t consumers better off purchasing wines at auction, than through traditional merchants?
Definitely not! Outside of the US and possibly Asia for the time being, auctions are an irrelevance. It is much cheaper and more convenient to trade with a merchant. That is why the merchant market is 10 times larger.
What is your opinion regarding the decision by Chateau Latour to no longer offer their wines for sale as future?
The decision is impossible to fathom. Not because it is bad for the market and the consumer, which it is, but because it makes no sense for the owners. When you can sell your wine for 500 Euros per bottle in a single phone call to a courtier, with minimal distribution or marketing cost, at gross margins of 98% and hold no stock, why would you want to change a thing? It is a high risk, low return strategy.
What wines should consumers looking to invest in?
Well stored older drinking Bordeaux wine represents great value for drinkers and investors relative to recent vintages.
What do you think will happen to the Bordeaux market when Robert Parker retires?
People will pay more attention to the consensus. I think this will be healthy.
How pervasive is the problem of counterfeit wines today?
Thankfully the chateaux are starting to take the problem more seriously. Technology like proof tag is making a big difference! It is not a large problem for us currently. Most of our business is in young wines and the chain is easily tracked back to the producer. But it is important that we all remain vigilant.
How strong is the Asian market place today?
It is very tough particularly in Greater China which includes Hong Kong, Singapore and Taiwan. These markets are at the heart of the slow-down and there are far too many players there currently. There is going to be a shakeout, which will be painful but necessary.
With that as a starting point, what is your view of the Chinese market today, and for the foreseeable future?
It is an exciting new market for the wine trade. There are early signs of some restocking in China which is positive and didn’t happen last year. We expect a gradual recovery. The market is going to be more sophisticated and discerning as it matures. But the interest in wine is real and enduring.
Where are prices for Bordeaux wine and other collectible wines headed?
The picture is more mixed than the headline numbers suggest. Away from the First Growths, mature and third and fourth tier Bordeaux wine continue doing well. Right Bank wine like Angelus and Pavie, which were just promoted in the recentSt. Emilion Classification are at all-time highs. Champagne, Burgundy and Rhone have been relatively untouched. High quality wines at sensible prices will do well.
With wines being purchased solely for investment, obviously excessive shipping is a costly endeavour. What are your plans to lessen the need for movement in transactions?
That is a very big question! The reason stock moves around is that legally, an entity can only prove ownership of a wine if it is actually in their warehouse account.
How would Liv-ex change that?
Our idea is to build and manage a central depository of ownership which would basically be a database of owners above a certified network of warehouses that all perform to the same standards with regards to storage conditions, verification process etc. In this scenario, transferring ownership would become a simple book entry or database transfer. Actual goods would not need to be moved unless physical delivery was a necessity.
On the surface, for investors that do not plan on drinking the wine, not paying for shipping and maintaining provenance seems like a good idea for all parties involved.
If you were to build a supply chain for fine wine today, you wouldn’t build the current one. There is too much movement within the current system. The vast majority of trade is in wines that are too young to drink. 90% of Liv-ex’s trade is in the last 10 vintages. As a result, most of our business is transacted between one storage account and another, even if it is travelling half way around the world in the process.
What are your plans for the future at Liv-ex?
We will continue to obsess about making trading wine more efficient, transparent and safe for the benefit of wine lovers everywhere.
What does the future hold for wine investing?Wine and speculation in wine have been strange bedfellows since the beginning of time. As long as there is wine, there will be speculation. Both have a great future.
Jean-Marc Quarin is an independent wine critic living in Bordeaux. Below he answers questions from Liv-ex on the 2012 vintage, En Primeur and the Bordeaux market, and his role as a wine critic. His tasting scores for individual wines can now be found on both Liv-ex and Cellar Watch.
On Monday we will be publishing a report by Jean-Marc on back vintages of Margaux and Haut-Brion, in addition to offering a discount on membership to his website, www.quarin.com.
Wine and tasting
You were born in Chateauneuf du Pape and you have a family connection with the Languedoc. So what drew you to Bordeaux rather than the wines of the South?
I was born in the Chateauneuf du Pape Appellation and my grandparents used to be winegrowers in Carcassonne. When my parents moved to Arcachon I studied at the University of Bordeaux. In 1980 I started to learn about the wines of Bordeaux for pleasure, and then I obtained a degree in wine tasting at the Institute of Oenology in Bordeaux.
Comparing 2009 and 2010 will probably engage wine lovers for decades. How do you view the two vintages?
In November 2009 I published an article on the 2009 vintage, and called it “a treat impossible not to swallow”. That’s still true. During the harvest I spent 45 days in the vineyards and in the cellars; the special harvest report I wrote is still available on my website.
The 2009s display a fascinating velvet structure. 2010 is a cooler vintage, with lower PH resulting in a firmer structure. Although full-bodied, the 2010 wines are not as round as the 2009s. The low PH in the 2010s gives a fresh aroma to the finish.
There is currently more pleasure to be had in the 2009s – this will come later for the 2010s. Both are superb vintages but have different styles. Consumers who are used to new world wines and look for instant gratification will like the 2009s better. But there will be classical Bordeaux consumers who can foresee the potential of the 2010s, and they will be ready to wait for them.
You described the 1982s as “disappointing” today – could you elaborate further?
Last October I was disappointed by numerous 1982s. Several wines were diluted with unripe and angular tannins and an acidic finish. Techniques [in winemaking] have very much improved since the 1982 vintage. Improvements in the vineyards and cellars have a direct impact on the quality of the wine. And even wines that were once given high scores can see a decrease in quality over time because our reference on what is high quality has changed. The market and the customers do not always understand this.
Is there one vintage you feel that you, or others, underrated?
I originally underrated the 2001 vintage. But I have appreciated it since then!
In terms of buying a back vintage, where should collectors put their money? Where is the value and quality?
I would suggest magnums (or even bigger bottles) of the 2001.
If you could pick one producer that has impressed you in recent years, who would it be?
Denis Durantou at L’Eglise Clinet.
Which of the Firsts do you think is doing the best job?
In my opinion there are two: Château Margaux and Château Latour.
Outside of Bordeaux, what other wines are exciting you?
Many other wines excite me: red Burgundy (particularly those of Vosne-Romanée), Rieslings from Germany and the Alsace region, all sweet wines that have come from noble rot, vins de paille and white wines from Jura, and new wines from Lebanon.
En Primeur and trading
At what stage in a vintage’s life do you think you can tell its quality? Is En Primeur tasted too early?
You can recognize the potential quality of a vintage (with around 95% accuracy), in December/January following the harvest, after malolactic fermentation has taken place. The En Primeur tastings are not too early. If there were En Primeur sales in December I would encourage people to take the risk of buying wines then, and at a cheaper price, rather than in May.
How representative are tasting samples?
Nobody can be 100% sure. This is the reason why one should taste more than once. As a “long time” professional I do not blindly trust the tastings; I recognize who deals and what is really being done.
Have you managed to taste any of the 2012 wines yet? If so, what do you make of them?
Bordeaux has produced a very heterogeneous vintage. The grapes matured slowly, and if September and October had been sunny the tannins would have been riper. The conditions we had are ones of which the merlot grape takes advantage. Growing the grapes on early, warmer soils would also have helped.
On paper, the two criteria above would put Pomerol wines in first place; but there were exceptions due to directions taken by the properties. Where the yield was low – allowing the grape to successfully mature over a short period of time – there were more chances for the vintage to come out well. Some cabernet francs on the right bank were of very good quality too. But things vary between properties. The press does not currently seem very enthusiastic about the vintage and this may influence consumers.
In Bordeaux there is talk of prices potentially decreasing – this may result in some good bargains for people who want to drink their wines rather than buy it for investment.
What is your view on the current pricing of En Primeur?
Price does not always indicate quality. Some wines are too expensive and others could cost more. In the Guide Quarin des Vins de Bordeaux I point out the outsiders, i.e. wines that go above and beyond what’s expected. Read my comparative tastings between ‘outsiders’ and famous classified growths: outsiders win!
What future do you think En Primeur has?
The status of the primeurs has recently changed. First Growths have stopped referring to the En Primeur price of the previous vintage to calculate the new price, and instead refer to the price of the last vintage distributed, minus 20%. Consumers are victims of the economical “war” between the chateaux and the Place de Bordeaux. The chateaux give higher prices to avoid negociants getting bigger margins. A case in point was the ex-chateaux price of Haut Brion 2005, which was about €100 less than other chateaux. The negoce still re-sold the wine at the same price as the other First Growths, i.e. with more than €100 supplementary margin per bottle.
Futures are of interest when the En Primeur price is lower than the price after the wine has been bottled.
What do you think of the “Place” and the way it operates as a distribution channel for Bordeaux wines?
Merchants have promoted Bordeaux wines, particularly those from the Medoc, all over the world. The Place establishes a wine’s reputation, which makes the price increase. Merchants glorify the wines they’re selling and ignore those chateaux that do not give them their wines to sell or do not allow them to earn any money. As an “amateur” I very much regret that the merchants have so much influence on what is said about wine. They welcome the international press and critics and take them to the properties whose wines they’re selling. As a result, the properties that have tried to sell their wine on their own have had to return to the Place. And only then do they get mentioned and rated by the press.
What role does London play and how is the London trade viewed in Bordeaux?
I think Bordeaux needs the English merchants. They are – and have always been – connected to the whole world.
How healthy is the Bordeaux market at the moment and what does the future hold?
It seems that the wines that have been requested most often over the last few months are those that cost around 35 Euros per bottle. They sell well. There are fewer transactions for those that are more expensive. Everyone complains about price; perhaps the bubble will explode?
Wine writing and criticism
What differentiates you from other critics? What is your philosophy and what makes JMQ unique?
I think I am the only critic who has written on a tasting method called “palate over nose”. My purpose was to inform: to enable people to recognize if a young wine will grow to be bad, good or exceptional. I was presented with the Nadine de Rothschild Wine Book Award for this. In addition to a score on the potential of each wine, I give a so-called “pleasure-score”. This enables people to know which wines can be drunk now, if they don’t want to wait for ten years.
I am also the only critic that lives in the region that I am writing about. Living in Bordeaux places me in a strategic position to hear both official and non-official comments. It is the best way to not be naïve. Over 12 years I have tasted the greatest Bordeaux Wines not only at the chateaux but also in private cellars. I am quite proud to have been the first one to write about discrepancies between bottles, which were later confirmed by investigations and identified by scientists too.
I also developed the concept of ‘outsiders’. The aim of this was to draw attention to winegrowers who are unknown but more involved in their work than most, and who produce great wines for wine lovers.
Finally, I am also the only critic who publishes graphs and charts that show how the quality of each growth has evolved since 1994.
Your website is your main communication tool. What is the story behind its establishment?
I gave up the paper edition in 2009 and switched to the website then. The internet is the best way to find and share information now. My Guide is also available for the iPhone and iPad.
Which other critics do you particularly respect?
I respect them all as long as they are independent.
How is Robert Parker viewed in Bordeaux - by both the trade and the other press/commentators?
Some shed bitter tears while others laugh.
How do you remain “independent” when you are so close to the source? Is living in Bordeaux sometimes a hindrance as well as a help?
Being independent is an attitude of mind. It has nothing to do with living close to the source or far from it. Would any critic before me have dared to write the way that I did on Cos d Estournel, or on Ducru Beaucaillou? Who else would have filmed the hail at Cos d’Estournel in 2011, or filmed Pavie’s vineyard in 2003?
Being so close to the source is a great pleasure for a wine lover and a specialist. From my point of view it’s a necessity.
Please visit the Liv-ex blog on Monday to read Jean-Marc Quarin’s special tasting report on back vintages of Margaux and Haut Brion.