Liv-ex: AI will ‘filter out the noise’ to provide more relevant fine wine data

AI has the potential to ‘filter out the noise’ in the fine wine market and make it work better for individuals, according to a recent Liv-ex  event.

Speaking at the event last week (25 February) – the first for its members – Liv-ex co-founder and CEO James Miles said that while the first 25 years at Liv-ex has been about making data visible, the next five will be about making it relevant.

“We’ve had 25 years of granular transactional data,” he said. “And whereas the last 25 years has been about making the market visible, the next five years is about making it work for you.”

The organisation is planning to rebuild its platform from scratch to incorporate AI – “We’re going to reimagine how we serve you in an AI world,” he said, adding that “If the internet flooded the world with information, then artificial intelligence gives everybody superhuman powers to process, interpret and act on it.”

New platform

The new platform will be aimed at showing the best buying or selling opportunities alongside market intelligence in a more personal way.

“What that might mean in practice is that you, or possibly your AI agent, wakes up, logs in and analyses all the changes in the market overnight, identifying insights and opportunities that are uniquely relevant to you [or] changes in supply and demand that might impact the future,” he said. Not only is the value of your stocks highlighted so you can optimize margins, but things such as pricing up cellars that used to take hours “can be done in seconds”, while market intelligence to support today’s DRC offer such as supporting critic notes, scores, Liv-ex data and charts can be generated “on the fly”.

AI, he argued would speed up both processes and administration.

The change is “a massive opportunity”, Tom Burchfield, head of market intelligence at Liv-ex, said, as it would allow fine wine merchants, collectors and investors to “filter out the noise”. In part,  AI-native companies entering the market had given Liv-ex a “real incentive to slightly disrupt our own business model” and prompt it to “look hard at what we’re doing and potentially change how we operate”.

Unweildy growth

Burchfield argued that it was less a case that fine wine was “finally” putting data at the centre, arguing that this had been going on increasingly for the last 20 plus years, but that the sheer size and scale of the data has become “unwieldy”.

He summarised the growth as diamond-shaped, starting in the pre-internet with only very narrow data that was neither contextualised or dynamic (“data without context is actually of pretty limited value,” he added).  However, since the advent of the internet around 25 years ago, data has grown, while the market itself has also broadened and fragmented (Bordeaux previously accounted for around 80% of the secondary market but now makes up only 35%).  With the explosion of searchable prices, traceable trades, and platform aggregated behaviour, customers have become more savvy, with data  now “core to how they now operate in today’s market, and that’s only going to continue in future,” he said.

However one needs to ask how you can structure all of that data. “How do you know which data to trust, and how do you understand which data your customers value and for transparency,” he said.  “It is actually about synthesizing all that data down to make it relevant to the individual. It’s going to be about collecting all of that data at scale and filtering out the noise. Ultimately, it is about personalization and serving it at the right moment.”

The end goal, is ” when you log on to Liv-ex, we should be able to show you best buying or selling opportunity, the best piece of market intel that’s going to help you in whatever it is you are trying to do.”

Off-ex returns

It is also bringing back Off-ex to enable members to share their off-exchange transactional data with Liv-ex. Burchfield explained that this can be cleaned, structured and contextualized to give a personalised and more complete overview of the market and where individuals  sit in it. Burchfield acknowledged there was a reluctance for people to share their own off-exchange market data, but noted that not using it risked “inhibiting the potential value that you could get from it”. Ultimately the goal is to make data more useful and relevant, thereby helping traders make informed decisions, he said. “We take your very narrow data, your own private transactional data, and add all of the context, so you get an overview of the market.”

 

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