The fine art of cellar management

Today’s wine collectors require an insightful and flexible portfolio management tool that enables them to build, refine and understand the value of their collections with a host of practical and easy-to-use features – which is exactly where Bordeaux Index’s My Portfolio feature comes in. Richard Woodard reports.  Fine wine remains a passion play for many collectors, who derive huge pleasure from building up a cellar full of vinous gems – whether their long-term ambitions are geared towards consumption, investment or a mixture of the two. In the old days, handwritten cellar books were painstakingly compiled and updated, and cellars were often a physical part of the home environment, where collectors could inspect and handle their precious acquisitions. Modern life has changed much of that. Serious collectors may have ‘drinking’ wines in their homes, but the bulk of their purchases are kept remotely and in pristine condition, in purpose-built storage facilities. In this environment, they require a bespoke cellar management solution that enables them not only to monitor their collection and its market value, but also to refine it by trading wines in or out. “Bordeaux Index has always felt strongly about allowing people to understand all the benefits of wine as an object of passion for consumption, but without sacrificing the understanding that this is generally an increasingly expensive asset and, for people with wine collections, a significant part of their wealth can be in wine, or whisky,” says Matthew O’Connell, CEO of Bordeaux Index’s LiveTrade platform. “The ability to understand that valuation, and to act on that value in terms of trading – to buy more wine or to sell existing wine – has really been core to our approach.” The result of this philosophy is My Portfolio, a cellar management tool that Bordeaux Index says is best-in-class thanks to its intuitive and user-friendly interface, and constantly updated valuation data. Account holders can use My Portfolio to view their entire wine collection, whether stored with Bordeaux Index or elsewhere, at any bonded warehouse across Europe. Wines stored with Bordeaux Index will appear automatically on the My Portfolio interface, while others have to be uploaded. “If people send us their collections stored elsewhere, we can create a virtual portfolio which they can trade as if they were with us,” explains O’Connell. Bordeaux Index client wines are kept in the Colerne Reserve, a state-of-the-art storage facility operated by Octavian. “This is a different quality level and that’s very important – having pristine storage is a be-all and end-all for us,” says O’Connell. “There are also no logistics to handle if wines are stored with us. As a result, what we’re finding is that people are looking to consolidate everything in our storage even if they initially start trading from externally.” Wherever your wines are stored, My Portfolio enables users to instantly view the value and performance of their wines – and whiskies – while displaying recent relevant activity and actionable bids on Bordeaux Index’s recently expanded and enhanced LiveTrade trading platform. Crucially, it also clearly shows the net proceeds that customers will receive when selling their wines. “We value all wines on a net basis,” explains O’Connell. “That’s something that the wine industry has been bad at in the past – showing net prices, including any commissions, fees and so on.” When My Portfolio was relaunched alongside the expansion of LiveTrade, Bordeaux Index took the opportunity to completely reboot its valuation algorithm, ensuring that pricing is now as precise and up-to-date as possible. “We take more data points, and we look more carefully at the ageing of those data points,” says O’Connell. “There’s a huge amount of market analysis to extract that information, and that makes a big difference to our valuations. I don’t think anyone takes as many data points, or analyses those data points in such a detailed way, as we do with My Portfolio.” As well as facilitating seamless and transparent trading – there’s no need to leave the My Portfolio interface in order to buy and sell wines – the tool also allows collectors to view historic pricing and access critics’ notes at the click of a mouse or the tap of a screen. They can also sort and filter their wines and whiskies any way they wish – for instance by region, producer or percentage return – and the results can easily be exported as an Excel document. Meanwhile, a number of ‘quick actions’ enable My Portfolio users to swiftly arrange delivery, classify their portfolios, organise storage and, of course, buy and sell through LiveTrade. “We’re very interested that people understand the opportunities around the wines in their portfolios,” says O’Connell. “That includes understanding what bids are there, and what people can act on, as well as understanding where that wine has traded in the last month or so and, for different wines, what their potential profit or loss is, versus the level bought at. “Ultimately, My Portfolio is a launchpad for making decisions around your wine collection. For instance, you might see the data points and want to buy more at the moment – a lot of people are thinking that currently, particularly for Champagne and Burgundy.” Assessing the precise value of any given wine remains by its very nature an inexact science, but O’Connell believes that the rigour and precision inherent in My Portfolio makes valuations as accurate as possible, which in turn enables users to maximise their profits – and pleasure – when they trade. “Wine is, if you’ll pardon the pun, quite a liquid market ultimately, but nevertheless no-one can say that they can, with a system, perfectly value a wine,” he says. “You can take as many data points as you like, but ultimately you won’t get it quite perfect all the time. But we think our system gets as close to that as possible with an automated system – and we’re always refining it.”