Fine Wine End-to-End w/ Don St. Pierre and Adam Lapierre MW

As the only fine wine end-to-end solution in the US, Vinfolio has recently launched its wine investment service, leveraging its deep expertise in the fine wine arena. Don St. Pierre, Executive Chairman, and Adam Lapierre MW, President, tell us about Vinfolio's history, how the marketplace, storage solution, and VinCellar work together, as well as get into their recent foray into wine investment. A must-listen for those intrigued with wine investment and for fine wine lovers in general. 

Detailed Show Notes: 

• Don St. Pierre's background
  • 1996 - founded ASC Fine Wines w/ his father, a wine importer in China 
  • 2010 - sold ASC to Suntory, stayed with the company until 2014
  • 2015 - got connected with Vinfolio and bought 33% of business with a friend
• Adam Lapierre's background
  • Mainly on the supply side (worked at a winery in the Finger Lakes, at an importer)
  • Became an MW in 2013 and moved to the buying side, working for Lidl, a major retailer of wine
  • Joined Vinfolio in 2018, became President in 2020
• Vinfolio's history
  • Started by Steve Backman, a software entrepreneur, and wine collector, in 2004 - he wanted to create a cellar management tool and marketplace to store and sell wine
  • Built VinCellar - cellar management tool, started at a similar time to Cellar Tracker (Eric Levine), the difference is Steve wanted a more end-to-end solution for collectors vs. a more utility tool for Cellar Tracker
  • Built VinFolio - marketplace and warehouse storage business
  • 2009 - Vinfolio went bankrupt in Global Financial Crisis, clients came in and took over the business 
  • Vinfolio is an end-to-end solution for wine collectors - buying, storing, and selling wine, focusing on the niche of fine wine coupled with technology
  • Similar business model to some UK businesses (e.g., Berry Bros & Rudd, Farr Vintners)
  • Most people hear about Vinfolio through retail/e-commerce today, but that may shift as VinCellar is re-built and re-launched
• Vinfolio Marketplace
  • A fixed price auction model
  • Uses proprietary tools that determine recommended market price for collectors to sell at
  • Storage clients use VinCellar to put wines for sale, or others can use the full-service option w/ the cellar acquisition team (every bottle on the marketplace has been inspected with it being rare for wines to be sent back)
  • Wine sourcing
    • Collector Marketplace (⅓ of wine sales) - from individual collectors
    • Producer Marketplace (⅔ of wine sales) - from a global network of merchants (e.g., negociants), direct from producers, and US importers/distributors (~15-20% of sourcing)
    • Try to clearly differentiate between the sourcing types
  • Advantages of the Vinfolio marketplace
    • For Buyers - the breadth of wine at their fingertips, more clarity around the asking price vs. other auctions
    • For Sellers - realized prices often higher than live auctions (except for very rare wines)
• Wine Storage
  • A vital part of the business is to create ready supply for the marketplace
  • It makes VinCellar an essential part of the business
  • Convenience for clients to get delivery
  • A premium service
    • Pricing ~$5/case/month
    • Inventory is cataloged and received at the bottle level
    • Clients can take delivery or sell wines at the bottle level
• Wine Investment Service
  • It started because Vinfolio got unsolicited inquiries around wine as an asset class for investment
  • Retail marketplace helps Vinfolio understand where market demand is
  • Investment customers are mainly new customers vs. traditional clients that are more passionate wine collectors
  • Vinfolio investment process
    • Min investment size = $25,000 - in order to have a diversified portfolio
    • Purchase in original wood cases (OWC) mostly
    • Understand client's interests
    • Focus mainly on blue-chip / investment grade wines, the foundation of every portfolio is Bordeaux
    • "Stock picking" - look at buying opportunities and allocate portfolio across current and mature vintages
    • Put wines in storage - mainly in the UK under bond (as it's easier to sell)
  • Key benefits of Vinfolio wine investment
    • Buying side - acquire below market (charge landed cost (which includes shipping from the UK) + 6% commission, which is usually 10-20% below US retailer pricing)
    • Selling side - uses fixed auction model, 12% commission for the sale (lower than standard commission rates)
  • Storage fees consistent with w/ Vinfolio storage fees
  • Investors get access to special wines, similar to private clients
  • Vinfolio has an informal list of producers with high demand, leveraging experience of the day to day business
  • Uses Vin-dex - Vinfolio proprietary pricing algorithm - provides a daily market price for wines
    • Has 10 years of historical auction data
    • Wine-Searcher pricing - takes in ~5,000 web calls/day
    • Historic Vinfolio sale prices
  • Also a member of Liv-ex
  • The investment service launched a couple of months ago (as of Oct 2021) - ~$0.75M assets under management vs. ~$250M total under in Vinfolio storage
  • Investment differentiators
    • Transparency of process, particularly rationale for wine selections
    • Investment strategy - diversification with multiple cases of wine
    • Experience in the fine wine market
• Big initiatives for Vinfolio
  • VinCellar overhaul - orienting data around investment as well
  • E-commerce platform re-launch - transitioning to a new platform with more refined, personalized user experiences
  • Hiring more quality people to service clients
  • Carrying more inventory to have more wine available

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