INTERVIEW: Gary Boom, MD, Bordeaux Index

Gary Boom, managing director of fine wine merchant Bordeaux Index, is not a man to tolerate aggravation. While most allow repeated irritations to build up until their tempers’ flair, and still do nothing, Boom sees solutions where there are problems, improvements where there are disappointments and, crucially, acts on his instincts.

In fact, his business, begun in 1997, was born of discontent. A director of broking company Intercapital, and a fine wine enthusiast, Boom was fed up with poor treatment from his wine suppliers. “Given the amount of money I was spending the service was shoddy – you’d be buying a case of Mouton ‘82 and if you weren’t around it would be dumped round the back of the house.

Can you imagine buying a new Cartier watch and Cartier saying, ‘If you’re not in we’ll pop it through letter box’, and then expect you to call them?”

So what did he do? It’s simple. Boom set up his own fine wine merchant. “I thought there was a role for someone in this market who looks after their customer base better, educates them better and doesn’t charge as much.”

Bordeaux Index was the result, and 12 years on, the business “buys and sells more quality Bordeaux than anyone else in the UK, if not in Europe”, according to Boom. He also believes his company sells more prestige cuvée Champagne, and certainly more Krug and Dom Pérignon than his British competitors. In terms of numbers, Bordeaux Index sells £300,000 worth of wine each day – with offices in London and, a more recent addition, Hong Kong.

“We set up a Hong Kong office two years ago and it is enormously successful. Around 25% of our turnover has always come from the area, but it’s probably more like 50% these days.”

London calling

Nevertheless, London, for Boom, is still at the centre of the fine wine trade. “It has always been the secondary market for fine wine,” he says. “Like the gold price – we don’t mine a hell of a lot of gold in this country and yet we still set the price.”

Explaining this trading focus, Boom continues, “The British are tremendously innovative in the way that they do business. And they are good merchants – they don’t have to make it to feel comfortable trading it. For example, look at the Baltic Exchange – the world’s sea freight is run out of London. If you want to hire a ship from Athens to Hong Kong you come to London to do it.”

However, for those that rely on an income from the UK alone, times are tough. “If you don’t have an office in Hong Kong and you are not export based you are struggling right now – and that goes for 95% of the wine companies in Britain,” reports Boom. “The UK market is pretty dead.” On the other hand, when it comes to exports, “bailing out merchants like ourselves in terms of turnover is the value of the sterling – it is so low against other currencies”.

In short, for Boom, Bordeaux Index is “selling the same number of bottles of wine and the same wines but the turnover is off between 20% and 30% purely because the price of these wines is off 20-30%.”

A further frustration for Boom, now he has set up his own merchant, is the absence of transparency in the fine wine market. He uses an example, once again featuring a case of Mouton ’82.

“Let’s say there are 100 people out there all trying to sell Mouton ’82. And let’s say we list it at £7,500 and someone else lists it at £7,200 and another at £9,000. The only price you can value that case at is if someone actually puts a buying price. But, there are 375 fine wine merchants in this country and not a single one has got a buying price. Go and look at their lists – there is a selling price but not a buying one.”

Boom intends to rectify this situation. “I’m taking the top 75 wines that are traded and putting a buying price and a selling price – the world’s first two-way trading screen for fine wine.”

As for fine wine indices that do already exist in the market, Boom worries that there is rarely “a proper bid and offer spread” for one to take a realistic mid-market price. He also points out that auction prices are “out of kilter. It just takes two guys in the same room to want the same thing to completely distort the market”.

Prices aside, is it hard to find these leading labels? “Forget that nonsense,” Boom is quick to state about top wines being extremely hard to buy. “Anyone can get hold a lot of these wines.

The question is accessing them in the right condition or being fastidious enough to make sure you access them in the right condition. And having fairly deep pockets helps.”
Bordeaux is, as the company name suggests, Boom’s primary interest and source of turnover. “75% to 85% of our volume is Bordeaux and that is the same with all merchants who deal in fine wine.

The other 25% is Champagne and Burgundy.” The simple reason for this is that Bordeaux is home to high-volume fine wine production. “La Tâche is 1,200 cases but Lafite is 20,000,” Boom points out. “We are not running an antique booksellers. We are trying to move volume. We need large quantities at fairly high prices and you have that in Bordeaux.”

And interestingly, Boom sells more Bordeaux to Bordeaux than he buys from the wine region – a reflection of the fact that the prices are cheaper in London, and availability is greater.

Eastern focus

When it comes to core customers, Boom is in no doubt that the market for fine wine “is in the East”.

“These guys have not got big wine cellars and they are starting collecting. It is a bit like in the 1980s when I reckon 70% of the world’s great wines migrated over to America because the Americans really started collecting wine as well as being force fed by Parker.”

Furthermore, Boom’s Asian customers are “starting from scratch. If you call up a typical UK customer they already have wine in bond, and might want to fill in some gaps in their collection, but call up our Eastern customers and they might say, ‘oh, so this is good. What have you got? I’ll have all of it.’

“It’s a bit like a kid with no toys as opposed to the kid with loads of toys who wants to find the one toy he doesn’t have.”

A further fine wine anomaly fueled by the East is that of brand Lafite. Price increases on this particular first growth have been “100% driven by China/Hong Kong. The other day we were selling Carruades de Lafite 2004 at a higher price than Haut-Brion ‘04, which is just bonkers.”

Does that mean the brand image now has more power than Parker? “That is the most amazing shift,” begins Boom. “They [collectors in China/Hong Kong] don’t really care about the Parker score, which is quite refreshing.

A good example is Lafite ‘82 and ‘86. They are both 100 points [Robert Parker] but the ‘82 trades at £22,000 and the ‘86 at ‘£8,000. They are not interested in the ‘86, they just don’t like the wine. Which is like the old days. If you don’t like it, don’t buy it.”

For the future, Boom is continuing to develop his customer base in the East, particularly China, but with a close eye on mature markets such as the US. “America would be the next place I would open an office – in New York – but probably in about two years time, when the US finally comes out of recession.”

He’s also certain the industry will retain its appeal for those who are passionate about fine wine, as well as those who are hoping for a return on investment. “It is a labour of love,” Boom says of the trade, “and the people I know do it because they love the product. There is still an air of romance to the whole thing, thank God.”

Patrick Schmitt