The growing trend of peer-to-peer online trading, exemplified by the Uber ride-sharing app, has spread to online wine trading.
Computer and mobile technology has already enabled service-sector businesses – such as lenders, hotels and taxi drivers – to undercut established operators by connecting people who wish to use such services directly to those who provide them.
Now a number of online platforms that enable investors to buy and sell wine to each other have sprung up that aim to compete with traditional brokerages and wine merchants.
Cavex, Wine Owners and, more recently, WineBourse are among a new group of online wine broking services that have set up to compete with more established platforms such as Berrys’ Broking Exchange (BBX), run by Berry Bros & Rudd, a fine wine company in London.
These entrants say their services are different as they do not buy and sell wine themselves, but instead provide an online forum to enable people to research and build their own collections and trade between themselves.
While established brokers set the values of wine sales, some online platforms allow customers to set their own selling prices. “There is a huge trend of people increasingly taking control and wanting to do things themselves,” says Nick Martin, who launched Wine Owners in 2013, which lets sellers choose sales values. “But they need the tools and market transparency.”
Wine Owners’ board includes Anthony Thomson, the founder and former chairman of Metro Bank, the first new high street retail bank to open in a century, in 2010. Mr Thomson is now chief executive of Atom Bank, which recently won regulatory approval to launch later this year as the UK’s first app-focused bank.
The company is preparing in the next couple of weeks to launch a mobile app that Mr Martin says will allow customers to graphically compare prices of wines over certain time periods and geographies, and compile average scores from critics. Premium services on the app – which include lower trading commissions for those who use it – will cost up to £20 per month.
“We created the platform because we felt there was potentially a better way to help people into wine, to build collections out, keep tabs on what they have where and what it is worth,” he says.
Cavex also set up about two years ago and in that time has grown annual turnover from £2m to £5m, according to its chief executive Stephen Maunder. He says the platform provides a cheaper way for wine investors to trade. Buyers who pay a monthly subscription for the app receive cheaper trading commissions than those on offer to non-subscribers.
“With a headline commission rate of 3 per cent, it is a cheaper route to market than the more established ways, such as the auction houses. We also have no minimum trade value,” he says.
He says his company is also attempting to speed up the trading process. “One of our main aims is to cut the transaction time down as much as we can. Once a trade is fully completed we pay the seller the next day,” says Mr Maunder.
However, Miles Davis, a partner at Wine Asset Managers, a fund that invests purely in fine wine and has an exclusive deal to buy and store wine with Berry Bros, warns that, despite hopes that better technology will improve the wine trading market, settlement periods are still slow and the process is “not as slick as other industries”.
One of the oldest online wine broking exchanges – although it was established only five years ago – is Berry Bros’ BBX, which enables customers to buy and sell wines that are privately stored in the company’s UK bonded warehouse.
Since its launch in August 2010, Berry Bros says it has facilitated 50,000 trades with a value of £66.5m. It claims that the requirement that wine is stored in its warehouses means it can guarantee the condition and authenticity of the wine – something newer rivals do not offer.
BBX is more expensive for sellers – it charges 10 per cent commission, compared with 3 per cent at Cavex, 2.5-6.5 per cent at Wine Owners, and 1-3 per cent at WineBourse, according to recent data from the World of Fine Wine magazine. However, it does not charge buyers, which the others do. Also, BBX has more than 4,000 listings, compared with 1,975 at Cavex and 775 at Wine Owners.
Mr Davis says that, as well as trying to take advantage of technology, the wave of online trading platforms has spurred by a buoyant wine at the start of the decade.
However, since 2011 prices have retreated, meaning these operators have entered the market during a quiet period.
“Sadly, all these [newcomers] came along at once,” says Mr Davis. “There was a huge bull market [in wine] but by the time they launched that had gone.”
Investor interest in fine wine spiked following the financial crisis, prompting a sharp increase in prices between 2008 and 2011, he says. Since then prices have corrected, although Mr Davis says they are starting to pick up.
Others say that wine has advantages for investors that some other asset classes do not. “The government can’t print more wine if everything goes wrong,” says Charlie Bennett, ecommerce director at Berry Bros.