Mark Bedini founded online wine brokers Fine+Rare in 1997 and has since grown into a £60 million business enabling wine trades all over the world. Here he talks about getting started in the internet era, buying bottles from suspicious Italians and whether the Chinese will continue to drive the market
FINE+RARE BEGAN WITH two things. One was acute dissatisfaction with where I was, for a number of reasons, and the other was recognising that technology could make life as a broker easier. In those days, I remember laying out pieces of paper on the floor and drawing a matrix across it, supplier and wine. This is the mid-Eighties, a hundred years ago. We then started to use spreadsheets on the old 486 computers to speed that process up.
Eventually in the mid-Nineties we began to think about creating a database that would deliver you a cheapest price first listing. At the time those I was working with weren’t interested in that as a serious option. The two things coincided and I left to form Fine+Rare. We set up as a business-to-business, explicitly to use technology to make us efficient. The competitive advantage, I already felt that would be provided by the use of technology. Three of us started it.
Business then multiplied and at the end of the Nineties, we recognised that we had quite a lot of private clients on the database who we weren’t marketing to. We started looking at them as an asset, how can we market to them. Their demand was to get the wine at the right price – they looked after their own shipping and insurance.
In terms of big breaks, we had an interesting opportunity. A collection in Italy was referred to us through a contact – there was a family of brothers. One of them developed a passion for wine and had a cellar, a collection of all the first growths, Pétrus, Yquem, Cheval Blanc, Romanée-Conti, La Tâche, and the other DRC wines, single bottle collections across significant vintages. In addition to that, he also had unknown Italian wines, which when we came to valuing the portfolio we ignored.
I was destined with my Irish partner to go out and inspect the wines. Because it was a cash deal, we actually had to carry cash in a money belt. I was setting off from Norfolk by train to London to join by Irish colleague in Italy by plane; I got as far as Ipswich when over the intercom my name was called out and I had to go back home because my wife was giving birth a little bit early to our second son.
My French partner went out with the Irish partner and they discovered that they had to walk the gauntlet of men in black carrying handguns into the cellar. They were told, ‘Here’s the wine, where’s the cash?’ I was getting calls during the day while they were going through the inventory. There were fifteen pallets of wine, best part of a third of a million quid that we were handing over. To cut a long story short, they ended up taking a view, it was all in good nick.
They loaded the truck up and at some point there was a heated discussion about whether the truck could leave before the money was handed over. There were men with guns on the premises. While the Irishman distracted the other side, my partner Bud Cuchet sidled up to the driver and said, ‘Just leave!’ Because of the nature of the deal, whatever the story at their end, they were keen to convert the wine into cash. It didn’t cross our minds that it could have been the Mafia!
The tail in the story is that we learned a lot about Italian wine in doing that deal and as a follow-on we were able to establish ourselves as being quite specialist in an area that nobody else had an inkling about.
THE INTERNET HAS been a vital part of our success. It was about at the same time, the tail-end of 1995. This thing called the internet – a website – was something we’d heard about. Email had sparked our interest when we were still at Corney & Barrow. Websites weren’t really common currency. I’m not sure how we did it but I spent the best part of a week trying to put a list of wines onto the web. You couldn’t control the font or anything in those days. We just put a list up and the next morning we had a £3,500 order. It was amazing.
We were probably the first European wine merchant to be on the web, not that it meant very much in those days. The main way of sourcing wine from us is through the web. We currently have customers in 65 countries; it was 52 last year.
About half our business is due to Hong Kong, Macau, China, Taiwan, Singapore. Previously business in Hong Kong was pretty minimal, it wasn’t really on the radar with any significance. Hong Kong itself has become a pretty sophisticated marketplace, but previously it had a pretty high tax regime which was reduced to zero from 40 per cent a couple of years ago. That was an attempt for Hong Kong to become the gateway for wines into China. A lot of it is being bought by individuals or traders for China; they have the wine shipped to Hong Kong.
I think Asian demand has started to change. The wealthy like to differentiate themselves between each other. You start by joining the club – everyone buys Lafite, whatever ‘The’ label is – and the people who pioneer that taste, that style, then want to differentiate themselves from the rest, so they start to look for whatever it is next that turns them on. They, the tastemakers, then buy outside that. Taste flares out.
CONSUMPTION IS KEY to keeping prices up and the difficulty at the moment is still that China is very much a gift-giving culture, but they also ‘use’ wine for hospitality, so it gets consumed as well – it’s just hard to judge how much.
Cynically one can remark that even if it isn’t consumed, once it’s been shipped to Hong Kong or China – the USA too – it’s probably barred from coming back onto the international market other than at a discount because of the heat. If you’re buying wine that’s been sourced in Europe, that’s considered premium stock; if you’re buying wine from the rest of the world, you’ve got to be a little bit careful.
What defines our range? Our only filter is a spend level – £200 or more before VAT – and that’s fine with us. We’re agnostic about the wines people buy or sell through us. We’re brokers – we have algorithms running across our supply data system that calculates a market price and that’s the transaction price against which we will sell or buy wine. Within that parameter we’ll sell any type of wine, not because we’re disinterested but because it means it’s driven by customer choice.
There’s a much greater acceptance today for a much broader range of wines fitting into the collectible category. In terms of investment, always stick with the same ‘bluechips’ – my own view is to deal exclusively with Margaux, Mouton, Lafite and Latour because this is where greatest liquidity lies, but other top wines like Haut Brion, Cheval Blanc, Petrus, Ausone, Le Pin, Yquem can give the investment a more interesting diversity maybe at the expense of some liquidity.
The main change today from when I started is that back then you’d get people buying multiple cases of the same wine; today they like to buy half-cases or even three-bottle cases (as long as they’re originally boxed) and move on and have a collection across a wide variety that includes New World wines as well as more traditional Old World wines. It’s more to do with variety than depth.
WHAT HAVE I learned as a businessman? I was talking to somebody else who’s an entrepreneur and we recognised that in both instances were found it difficult to do as told by others. We weren’t particularly good employees in truth, and ultimately therefore you exclude yourself from working with others – you want to know why you’re being told to do something, what the benefits are going to be.
In the end you get a bit fed up about not being to do the things you feel strongly about. If the situation is right, you can pick that trail up and go and live the dream, so to speak, of making your own decisions and being your own boss.
What I’ve learned about myself in that stamina is amazingly important. It’s all very well having a vision and a deep sense of self-belief – believing that your ideas are well-founded and that they will work – you can see clearly why they’ll work – the stamina to undertake that… I’m not a blue-sky thinker and one of the things for me has been to realise that it’s taken a long time to build Fine+Rare into a half-decent business, I’ve built the business up from the bottom, very inexpertly, I’ve tried things out, I’ve pieced things together, I’ve edited and changed and moved bits of the puzzle around. I’m not a fast worker. It’s the inexpert bit that holds you back.
We’ve learned that common sense prevails – you don’t want to make rash bold decisions. We’re putting plans together for our five-year strategy – we’re reviewing our brand, out technology. The digital world is like dot-com come again in some ways, but we’ve learned a lot.