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Annual letter to members from James Miles: 2015

By December 15, 2015Member updates

I am writing to thank you for your support throughout the year. As we approach the end of 2015, it seemed a good time to take a look back, highlight some important developments – including some changes to Liv-ex’s terms of business – and outline our plans for the year ahead.

Cliquez ici pour la lettre annuelle de James Miles aux membres en français    
请点击这里阅读《James Miles给会员的年度公开信》中文版。

The fine wine market in 2015

On balance the market has remained difficult in the last year. While exchange turnover is currently up about 9% on the same period last year, it is still 20% lower than the heady days of 2011. This is despite record numbers in terms of transactions, wines and units traded on the exchange. The share of Bordeaux and First Growth trade on Liv-ex is at its lowest level in 11 years. Our First Growth Index, the Liv-ex Fine Wine 50, is currently at 261 against last year’s close of 266, and on track for its fifth down year in a row. This is 40% lower in sterling terms than its peak value in June 2011.

Many wines outside of this narrow spectrum continue to do well. The Liv-ex Burgundy 150 Index hit a new high in October and has risen 17% since the Bordeaux market peaked. Champagne, Italian and Rest of the World indices are also close to record highs and well above June 2011 levels. These trends are reflected on Liv-ex, where non-Bordeaux trade has expanded from less than 5% of the total in 2010 to close to 30% today. As a result, there is a much broader selection of wines on the exchange. In June 2011 there were 1,500 active markets (worth £9m) on the exchange; today there are more than 5,000 (worth closer to £30m).

It is also true that outside of the Firsts, the Bordeaux market is doing rather better than the headline numbers suggest. Several wines in the Right Bank 100, including Pavie and Angelus, enjoy higher prices than in 2011 and in Euro terms the picture is rather less negative than in pounds or dollars. The hope is that after five years, the deflationary impact of this Bordeaux bust may be coming to an end.

The weather data for 2015 implies that the new Bordeaux vintage will likely be excellent in both quality and quantity terms. This poses both opportunities and challenges. For those outside of Bordeaux, En Primeur has become little more than a distraction. Sales of Bordeaux 2014 were better than the disappointing 2013, but still down by perhaps 90% on sales of the 2009 vintage. For Bordeaux, with four vintages in the cellar, the challenge will be how to sell such a “valuable” vintage, when customers have learnt that it pays to wait.

Key developments in 2015: unlimited users, trading alerts and Market Depth

In the last year we have continued to invest in our exchange, data and Vine services. At the end of 2014 we removed usage restrictions within the membership package and introduced a flat fee with unlimited users within each member company. Many of you have already made the most of this change, adding nearly 50% more users to the system in the last year. If you haven’t taken advantage of this and would like to add more users, please let your Account Manager know.

With nearly 27,000 price changes every day, one of the challenges of modern wine trading is making sense of the reams of data that are produced. We have introduced several new trading alerts to help you make the most of the exchange’s opportunities. Our aim remains to make these as relevant and useful to you as possible.

The new “Market Depth” section on an Individual Wine Page enables you to easily compare Liv-ex bids, offers and trades against prices in the wider market. We will also continue to invest in bringing you the best insight possible into what is going on. Following your positive feedback on the Bordeaux 2014 En Primeur Price Book, we have recently hired a Research Analyst to build our capacity to generate ideas and identify themes that support your and your customers’ trading.

Improved settlement: SIB passport, weekly payment periods and Liv-ex Prime

We remain committed to making settlement faster, cheaper and more efficient. As you know, at the end of last year we launched the SIB Passport which allows you to get stock pre-certified to SIB contract standard. Guaranteed by Liv-ex and valid for three years under new Vine insurance terms (providing it remains within Vine), the Passport allows stock to be instantly assigned to a trade for faster payment. Three months’ free storage is included in the cost of the service which will be credited back if the wine is sold on the exchange.

In 2015 we also introduced weekly payment periods to drastically reduce delivery and payment times. Once stocks are checked and invoiced, Liv-ex will pay amounts due on the Friday of the following week. For stocks carrying an SIB passport, this has reduced working capital cycle time (from trade to payment) to less than two weeks.

This year saw the launch of Liv-ex Prime, a convenient and inexpensive way for members who buy or sell overseas to move their wine about. If a trade is matched on Liv-ex, Prime offers to collect from sellers in Belgium, Holland, Germany, Switzerland and the Beaune region every two weeks for €5 per case. We also provide a weekly delivery service to Vine Bordeaux (for free) and Hong Kong (£20 per case) and a monthly service to Hillebrand Beaune (also free). Unlike most logistics services, there is no minimum charge, removing a major barrier to trade and creating efficiencies and thousands of new trading opportunities. This has required a substantial investment in our logistics platform. Vine has handled more than 150,000 stock movements this year and stocks in storage have increased nearly 60% to almost 100,000 units. A remarkable 17% of these cases carry an SIB Passport, making them ready for immediate dispatch.

Coming in 2016

Order Integration

The big exciting development for 2016 is that we will be making it easy for you to integrate electronically with the exchange. Many of you already take data feeds to value stocks and enhance your own or your customers’ understanding of what is going on in the market. We will be extending this initiative to allow you (or your customers via you) to place bids and offers and match trades from your own system or application. Most importantly, this new initiative will also keep the two stock positions in sync. This has the potential to remove both the risk of double selling and the time taken to manage positions across multiple points of sale. We will start testing a beta version of this new electronic trading mechanism in the New Year. If you or your developer would like a copy of the technical documentation, please ask your Account Manager to send you one.

Important changes to Liv-ex’s terms of business

There are two changes to bring to your attention in the coming year. While prices in pound sterling will remain unchanged, we have adjusted our Euro prices to reflect the weakness of the exchange rate. The Liv-ex membership fee, Vine and data services will be calculated using an exchange rate of 1.4.

We are also making some changes to Vine’s insurance policy, which will come into effect on 1st January 2016. First, the life of all SIB Passports are set to be extended from two to three years. Second, cover for “damage to labels, implosion of protruding corks or heating” will only be covered if a) there is an insurable event such as fire, flood or failure of our climate control system and/ or b) the wine in question is carrying a valid SIB Passport. Terms for those who have opted out of Vine’s cover will remain the same, under the (rather inadequate) maximum liability clauses in UKWA/ BIFA terms.


It is hard to believe that it is now 16 years since Justin and I began our Liv-ex adventure. When you start a business called the London International Vintners’ Exchange you are not leaving much room for manoeuvre. It is lucky then that we are still a London-based exchange for wine merchants with members in 35 countries. Our mission remains the same now as it was when we wrote our first business plan in 1999. We are committed to finding ways to make the wine trade more transparent, efficient and safe to help our wine merchant members to grow their businesses. Your input is essential in guiding what we do, so please do not hesitate to get in touch with me or your other contacts at Liv-ex with any questions, ideas and comments. On behalf of everybody at Liv-ex, I would like to thank you again for your support in the last 12 months and, if it is not too early, to wish you a very Happy Christmas and a prosperous New Year.

Kind regards,

James Miles

Managing Director, Liv-ex