Liquidating Assets: How today’s collectors want to sell fine wine

The collector in a changing world

The world of fine wine collecting is diverse and evolving. In recent years, fine wine businesses have embraced new digital technology, including APIs, bots, algorithms, and powerful stock management systems, to serve their customers in new ways. In some cases, this has opened the door for brand new business models to emerge.

At the same time, an ever-expanding range of fine wines – wines with the potential to age and appreciate in value – are finding a place on the secondary market. A broad range of wines from classic regions such as Bordeaux and Burgundy are now being collected and traded alongside wines from all around the world.

As the market has grown and diversified, so too have its participants. As part of this study, Liv-ex heard from hundreds of fine wine collectors from across the globe. They ranged from new collectors in emerging markets, to long-term collectors in major fine wine hubs. While many declared a deep interest in fine wine – and drinking it! – others are engaged in the market simply for investment purposes.

Liv-ex is the global marketplace that exclusively serves the wine trade, catering solely for professional wine businesses. However, in the context of a rapidly evolving wine market, it is valuable to understand the end consumer. This, we hope, will help Liv-ex to best serve the needs of the trade – and the trade to serve the expectations of today’s collectors.

This study therefore seeks to understand what today’s fine wine collector wants, and what they are currently getting from the trade. It focuses specifically on moments when a collector seeks to sell wine. This is an important element of wine collecting and investment; one that is arguably underrepresented in most studies into fine wine. It also asked collectors for their impression of the market analysis, information, and support that they receive from the trade to inform their decision making.

Liv-ex surveyed 232 people from 36 countries representing fine wine collectors worldwide.

The vast majority of them collect partly or entirely for investment purposes and have sizeable cellars. They typically possess over 2,500 bottles worth around £300,000.

To add depth and context to the data, an independent consultant interviewed ten of the respondents via Zoom.

Although each respondent is unique in their approach to collecting, this study did identify several shared needs. It is clear that today’s fine wine collector is looking for greater transparency, liquidity and control in managing their collection.

Routes back to market

Where collectors sell and why

When it comes to selling fine wine collectors have various options. Online platforms, sometimes run by merchants, connect collectors with each other to facilitate buying and selling. Auction houses offer lots to the highest bidder, while brokers and merchants can find buyers among networks of collectors, restaurants, and other retailers – including via Liv-ex.

Interestingly, 75% of the collectors surveyed use only one type of sales channel – either merchants, brokers, auction houses or online platforms. Although we didn’t ask how many different merchants or brokers they each use, it became clear from the comments and interviews that many remain loyal to just one or two if the service level is satisfactory.

Three themes emerged when we began to dig into the reasons for their choices. The two that came up most frequently were convenience levels, and having a good relationship with the vendor. The third was the vendor’s ability to find a market for the wine, and achieve the best price.

Convenient sales routes

Many collectors simply sell wine via the merchant or broker that stores wine for them. This includes those who use online platforms linked to traditional retailers. Many made comments such as,

‘They store my wine, so it’s easier to sell via them also’.

One interviewee from London described the hassle involved in moving stock from one merchant to another, calling it ‘a massive faff’. They described a recent experience where an in-bond transfer had been ordered several weeks ago, but the stock had still not landed and there was little visibility on its progress.

Trust and relationships

Relationships and trust are also important. One commended their merchant for ‘excellent communication and understanding of [their] wines’. Another praised their merchant for their;

‘excellent knowledge and service’.

On the other hand, some reported a lack of trust in their current merchant, and are actively seeking other methods of selling to ensure that they receive a fair price.

Finding a market

A third theme was that the choice of merchant, platform or auction house is based on its ability to achieve the best price for the wine.

In a handful of cases, collectors linked this to a merchant or platform’s access to market. A London-based collector that we interviewed found it very important that their merchant had access to a pool of buyers in Asia. A second described how one online platform has become a major player, enabling them to sell wine at 10-15% above Market Price, thanks to its deep pool of buyers.

Others are cautious of using channels with limited access to buyers. Some mentioned that online marketplaces might offer lower sales fees, but do not have the liquidity to sell the wine quickly or at the best price.

This appears to represent an opportunity for vendors who are connected to a large global pool of buyers – and let their customers know about it. One respondent specifically mentioned that their merchant could offer their wine to a large pool of buyers via Liv-ex.

Selling speed

Is wine moving fast enough?

Sometimes fine wine sells quickly – in a matter of days or week. Sometimes it can take 6 months, or longer. When asked about the time it takes to sell their wine (from instruction to payment), respondents reported the following;

This partly depends on the type of wine being sold. Top Bordeaux from great vintages has a large and active market and can resell quicky, for example, while more niche wines are likely to wait around longer before finding a buyer. Collectors report that it typically takes 1-3 months to sell wine. In general, they are happy with this: two thirds say that they are satisfied.

We need more access to the markets’.

Most collectors are content with this, but a sizable proportion are not. Some blame limited access to market for slow sales. One comment reads: ‘We need more access to the markets, particularly yours. The market has the chance to be far more open and accessible, supported with independent data and advice.’

Setting the price

Collectors are divided on whether they are getting the best price when they sell wine. While many are satisfied, 44% express concern they are not always achieving the highest possible price.

Part of the challenge is that some merchants don’t allow collectors to set sale prices, or they offer limited flexibility. An interviewee from Hong Kong, who sells with multiple merchants, outlined their experience: ‘Some merchants provide advice and allow me to set my own price. Others have agents that set a price. They need turnover, so often it is the lowest on Wine Searcher. This is not a good experience.’

This has led some collectors to move to platforms that allow them to set, and adjust, prices. One interviewee from London stopped selling with a merchant who offered limited control on price setting. This person now sells via an online platform, commenting, ‘I can set my selling price – it’s very quick and easy – and I’ve sold a lot of wine at 10-15% above Market Price’.

‘I can set my selling price – it’s very quick and easy.’

This collector is not alone in their experience. The majority of collectors don’t believe that they can sell their wine when they want, at the price they want. An overwhelming 80% seek greater control over the price and speed of their sales.

Commission

Less is more

A recurring theme in both the survey comments, and the interviews, was the topic of selling fees. Merchants and brokers in the UK and Europe tend to charge around 10% for sales, while fees at auction houses can be significantly higher, though some pass all fees onto the buyer. Online platforms tend to charge between 4-10% of sales.

In general, collectors feel this is too high. Only 37% agree that it is fair.

There is some variation in sentiment between collectors who use different types of sales channels. Collectors who sell via a merchant are more likely to find the fees fair than those who sell via auction, where fees tend to be higher, or via online platforms where the customer service is lighter touch.

The interviews and comments put this into context, revealing that some collectors who receive a high level of service from their merchants are happy to pay up to 10.

‘They help me at every step of the way.’

One, from Italy, had no complaints about the 10% sales fee that the merchant charges: ‘They help me at every step of the way, and manage all the selling procedures. Two years ago [when I started collecting], they explained everything to me very clearly, and now they make it easy to sell.’

Others are less convinced. One describes the standard UK 10% fee as ‘cloud cuckoo land’, and managed to negotiate a merchant down to 8%, but still says that this is too high.

“For 10% I’m just getting a platform.”

Another London collector points out that in other investments, the commission you pay gets you more: ‘If I compare it to investments outside of wine, 10% is quite a high number, and you’d get more service and guidance. For 10% I’m just getting a platform.’

There is also an expectation among some that fees will drop as the market for fine wine grows. The collector from Hong Kong that we interviewed commented: ‘My hope is that as the wine market gets bigger, the selling commission will come down. I hope to pay 5% or below when I want to get out [in 8-10 years]. I hope that as the market gets bigger and technology improves, the cost will come down. It’s just a case of being patient.’

Sharing Insights

Provision of good customer support and building trust is seen as very important, as the feedback throughout this report has shown. It is therefore encouraging that around two thirds of respondents are receiving independent market data and trends from the trade.

Just over half of respondents also agree that the advice they receive is sound and impartial; a nod to the good work that many advisors are doing to support their clients.

The key sources of insight referenced by respondents were their  merchant/broker, Liv-ex, online newsletters, critic publications, Wine Searcher, and Cellar Tracker.

There are, however, some who question the impartiality of insights from some sources. An interviewee from London commented: ‘Wine investment marketing is completely unregulated – it’s like the wild west compared to financial markets. [One merchant] produces analysis, and it always seems to say that now is a great time to buy.’

‘It always seems to say that now is a great time to buy.’

In other instances, collectors report being highly dissatisfied with the service they’ve received. One UK investor, who is relatively new to wine, has been ignored by their merchant after deciding to stop investing in wine. The merchant has failed to produce valuation information, or to help sell the wine – even when the investor needed cash to pay for surgery.

A large majority – 88% – of collectors say that they’d like to receive more independent data and insights on fine wine.

‘If I was investing in something else it wouldn’t be so random and emotional. You want someone who can help you meet your investment goals. If I was to do that right now, it would be by chance rather than by skill’, commented one UK collector.

Collectively, this represents an opportunity for actors who are willing, and capable, of supplying detailed, honest, and impartial data and advice.

Convenience and the role of technology

As it stands, collectors are divided on whether selling wine is easy and convenient.

Many of those who are satisfied with the process heap praise on their merchant, broker, platform or auction house for the support that they receive.

Others wish that logistics of moving wine around for would be easier, primarily in terms of reduced administration and improved communication. One US collector who stores wine at home also pointed to the challenges of shipping to a merchant or auction house from a warm climate. Some also suggest that selling decisions would be easier, with better access to information and market data.

The question in the Liv-ex survey with the most decisive result pertained to app use: 90% of respondents agree that they would like to sell wine online or via an app.

Some collectors are not interested in digitalisation, commenting that they value the personal relationship and advice they receive from their merchant/broker. However, the overwhelming majority express interested in moving online, seeing apps as a convenient way to gain control and insight over their collection.

One young collector from Romania suggests that an app would help to engage new collectors and investors: ‘I’d love to use an app to buy and sell, and it would be easier to get friends involved. Currently they say it’s too complicated.’

Others mentioned that they find apps useful in managing other investments, such as stocks and crypto because they offer a convenient way to monitor performance and buy/sell.

Concluding thoughts

The collectors surveyed as part of this study represent diverse geographies, collection sizes, and experience with wine collecting. Yet despite their differences, there are several common themes in their experiences.

One is general satisfaction with the speed of sales. Even if it typically takes 71 days to liquidate wine from a collection, this is generally perceived as acceptable.

Wine collectors are generally aware of liquidity issues and place high value on access to market. They expect their chosen sales channel to connect them to a large and active network of buyers so that they can achieve the highest possible sale price for their wine.

A second theme, though, is a general dissatisfaction with cost of selling wine: many respondents commented that current commission levels are too high, especially when compared with other investment categories.

However, we found that collectors place high value on long-term relationships with a vendor, convenience, responsive customer support, and honest advice. Those that receive this are more likely to be satisfied with the fees associated with selling.

Related to this, there is a significant opportunity for anyone who is willing and able to provide insights and data related to fine wine investment. However, collectors are not fooled by marketing that poses as advice. To be fully appreciated, analysis must be transparent, independent, and honest.

Another point of frustration – and opportunity – is around price setting. Many businesses in the fine wine space, particularly online platforms, are attracting collectors who seek control over pricing. Merchants who attempt to control the market may struggle with customer satisfaction in the future.

With this, there are indications that collectors expect the fine wine market to evolve in line with these expectations – and many expect this to be facilitated by advances in technology.

Collectors are looking for greater transparency, liquidity, and control. Wine businesses have shown resilience and the ability to adapt to a changing market in recent years. Their ability to continue to move forward will be critical in supporting collectors into the future.