Demand for ‘inflation-proof assets’ sees fine wine trading revenue jump nearly 40%

Global fine wine trading company Bordeaux Index has toasted a leap in revenue in the first six months of the year, which saw turnover up 37%, as investors seek refuge from soaring inflation.

This strong first half, which saw revenues reach £80m ($97 million) puts the London based company on track for to beat its record revenue of 2021’s of £126 million (US$174m), itself a rise of 47% on the previous year.

LiveTrade, Bordeaux Index’s online trading platform, was the major contributor to growth, the company notes, with trading by value increasing by  around 55%.

Some of the major drivers included sales of Champagne and Italian wines on the platform, which were up 80% and 60% by value respectively, along with an increasing number of new high net worth collectors on the platform, for whom top wines and whiskies are a growing focus both for consumption and investment.

It come as investors take refuge from economic uncertainty in tangible, alternative assets, the company said, with a “sharp uptick” in interest in wine and whisky as “hard assets”. It noted that traditional asset values had declined over the same period, with the S&P500 falling -22%, the FTSE 100 down -3%,  Gold up only +1% and Bitcoin down  -60%.

This contrasted with fine wine market prices were rising 10% in the first half of 2022, driven by super-rare “blue-chip” Burgundy (up +26%, with some individual wines +50%, and the Scotch whisky market prices also rising 12%, with Macallan showing particularly strong momentum from 2021.

Bordeaux Index’s founder Gary Boom told the FT that interest in wine and whisky as asset classes had “never been higher”, with people “scrambling” for investments that could outpace inflation.

Matthew O’Connell, chief executive of LiveTrade added there were more luxury consumers than ever who are looking to buy and invest.

“We’ve seen a huge increase in interest in investing in wine because people are buying into the fact that wine has proven over time to be very inflation proof,” he previously told db. 

“People are looking for assets that really have a track record of strong returns in difficult times, all the more so if they also have low correlation with other assets and proven protection against inflation,” he told db last month. “The wine market is a very positive story right now – and we expect that to continue.”

He also pointed out to the FT that supply was “finite” and “the wine keeps getting better over time”.

Last year saw Bordeaux Index’s LiveTrade platform customer base grow by around a third, it said, with around 50,000 transactions a year of around 600 vintages.

Demand for Burgundy and Champagne has been particularly strong across the first half of 2022,  Bordeaux Index told the drinks business recently, even though there was a slight cooling of the ‘intense activity’ that was seen in the first three months of the year.

Prices of Burgundy on the secondary market rose +26% in the first half of the year, with Champagne seeing strong growth of 11%. Italy and the Rhone also performed well – up 8% on last year, however growth of Bordeaux was more muted, at around only 5%, something which was perhaps not aided by this year’s somewhat lacklustre en primeur campaign.

The company’s top ten most traded wines on the LiveTrade platform included Bordeaux first growths Haut Brion in the top spot, Lafite Rothschild, Cos d’Estournel, Petrus, Mouton Rothschild, and Margaux, along with Champagnes Cristal,  Dom Perignon, and Taittinger Comtes de Champagne, along with Sassacaia in fourth place.

The is preparing to launch a new, expanded version of the platform later this year, which will see users from across the wine market be able to trade a full spectrum of fine wines rather than the core set which LiveTrade has focused on until now.

The company has also opened a new office in Miami to capitalise on the attractive market dynamics in the south east of the US, it said.

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