db meets: Matthew O’Connell of Bordeaux Index
Matthew O’Connell, head of investment at Bordeaux Index, on why investors are turning back to Bordeaux and his top trading tips for 2021.
What makes LiveTrade different from other fine wine-trading platforms?
LiveTrade’s mission from the start has been to make sure that people can sell their wine as easily as they can buy wine. Every merchant is very happy to sell you wine, but a lot fewer are happy to buy your wine back. We want people to be able to buy and sell fine wine with confidence. We have a core collection of over 500 wines on our platform that always have a bid on them and are always offered for sale. The split between buying and selling on our platform is pretty balanced, and LiveTrade is far and away the most active trading platform out there for Bordeaux. It’s also open to everyone, from private clients and wholesalers to the on-trade, and there are no membership fees for using it.
Why should people use LiveTrade rather than other trading platforms?
Because we can guarantee that there will always be a bidder for the wines our traders put up for sale. On some trading platforms it can take months to find a buyer for your wines. If you want to trade first growth Bordeaux then LiveTrade is the most active platform on the market by a country mile. A lot of our clients see a wine portfolio as a valuable asset, but they want to know that there is the option to sell out of it at any time if they want to.
How long has LiveTrade been around?
The concept started a decade ago. Bordeaux Index’s founder, Gary Boom, has a financial background, and his vision for LiveTrade was to add liquidity to the wine market. Over the past decade the user experience of LiveTrade has become a lot more interactive. Over the past year we’ve seen a 60% increase in new trading account sign-ups.
Why is fine wine a solid investment?
Fine wine benefits from a proven track record of performance, and outperforms other key financial assets, including gold, oil, equities and bonds. For the past 30 years its compound annual growth rate has been around 10%. Wine also has very strong capital-preservation characteristics. Equities tend to go down when times are tough but wine never dips dramatically.
Which areas should investors be looking to this year for a solid return?
Bordeaux is very attractive at the moment, and has a lot of momentum in the market, despite the fact that a lot of the noise last year was about other regions. In Bordeaux, there are investment opportunities in the first growths, super seconds and top Right Bank properties, but the real activity at is centred around the first growths, with an increasing number of people thinking that these wines look underpriced. Some of the older vintages are starting to see significant upticks in price because there is a lot of demand and less supply, so the prices are moving quickly.
How do you think the fine wine market will evolve this year?
We’re bullish about the market this year. In addition to the interest in Bordeaux, buying patterns in Burgundy are also very strong. We’ve had three years without significant gains in the market, so I think we’re posed for a significant breakout this year. Momentum is gathering for a really positive year.
What are your investment tips for 2021?
In Bordeaux, the 1996, 1998 and 2000 vintages are looking very attractive, and there’s also some value in the 2015s. Outside of the first growths, investors should be looking at estates such as Pichon Lalonde, Figeac and Palmer, to name just three. The 2009 and 2010 vintages are also being actively traded – it’s hard to overstate the interest in activity in Bordeaux trading at the moment.
Is demand for Burgundy still strong?
When it comes to Burgundy, the interest is centred on the blue-chip names like DRC and Rousseau. From 2016 to 2018 it was a story of a rising tide lifting all ships, and there was a step change in the prices of premier crus from all producers. Right now there is a lot of confidence behind the blue chip names and more price sensitivity as you move down to second- tier premier crus and grand crus.