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Buying/Selling Members Reserves

Brilliant - Thanks so much for sharing.

Just to confirm that 73 and 53 were post commissions and charges?

Would you say that they were a fair representation of the economics across the full 9 cases?

Thanks!

Yes, post 12% commission (I think). I’ve no idea about the stuff years ago, this was in the last month. Like I said, this is not life-changing, but it is possible. It would be great if TWS made it easier to dispose of small quantities of unwanted wine, but in case anyone is in any doubt I don’t want to see a TWS version of BBX.

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Some of it is tastes, but predominantly it is experience, accessibility, and understanding. I started buying Bordeaux as an 18yo, it was easy for a novice to get to grips with in a small way. Enthusiasm triumphed over common sense and so here we are. My experience is now much greater, and my horizons much broader. I enjoy robust big wines in the right setting, but I much prefer lighter styles. I still love a great Bordeaux, but I drink wine mostly with food, and my diet in 2021 (and more importantly that of my family), does not fit with cases and cases of claret.

EDIT. In support of the above argument I’m typing this from a restaurant in Beaune, having spent today cycling through the vines to Puligny followed by a tasting menu at Leflaive. Early evening in a wine shop cum bar in the village, after which the legendary Benoit, several sheets to the wind and a new dear friend, drove me back to Beaune. I don’t think this would have been my experience in Pauillac!

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@Wansteadbirder Thanks once again for sharing your experiences.

I think this actually provides a great working example when this proposed system could and could not work! The quantum obviously changes if you were talking about cases of 12 or 6.

If I look at you example 1, I make it that you profited in this situation to the tune of 456 (12 bottle case) or 228 (6). That’s a substantial gap and to the point you made earlier in the thread; I doubt most would leave that on the table.

The second scenario is actually the more interesting to me. You’ve “made” 156 (12) or 78 (6) by my reckoning. Which ultimately is a lower reward for the same effort than scenario 1.

To deliver that 156/78 you needed to go to the effort of transferring etc. and there was some variability in what your final sale price was.

It would be wrong of me to speak for others but two things jump out if this was me:

  1. There is a price for the time and hassle associated with the transaction/process you went through.

  2. Arguably, there are situations where I ultimately would come to the same conclusion (to sell) but would make the decision sooner if there was a hassle free option, even if that left some money on the table.

Perhaps I’m completely weird, but there’s a part of me that is comfortable leaving some cash on the table, and effectively doing another member a favour (again with limits around how much any member could trade per year).

… “my tastes have changed or whatever, I could go to a load of hassle and get a bit more back… but that’s a decent enough price, I’m not losing anything… and it’s going to a good home”

Again trying to think of how to develop an outcome rather than flaws, I wonder what value you or other members would of accepted for a one button sale?

Let’s look at the outcomes:

Option 1 (I am only and purposely only using the second example you gave as I agree, I doubt most would leave 200-500 quid on the table)

a) Auction: Cost 240/480 (6/12 bottle case). Sold for 318/636. Profit 78/156.

b) My proposed TWS method:

  • Cost: In 2007 = 156/312
  • Inflation adjustment* at 2.7%pa (as per @MarkC ) = 13 years = 1.41x adjustment = 220/441
  • Storage cost = 14/bottle = 84/168 case.

Total sale price = 304.57 for 6 bottles or 609.13 for case of 12 bottles.

On the face of it, I’d of been happy to sell through the TWS method for 609 vs the 636 you received from the auction. 27 quid for some simplicity and giving another member a 5% discount. I could sleep at night and explain that away to Mrs B.

*inflation adjustment - you’d have it built in for the actual year specific numbers. (e.g. 1.3% in 2013, 1.6% in 2014 etc.). Additionally you could maybe debate should that calc start from the date the EP order is placed or from when it goes into reserves. A 2-year lag would knock ~5.5% of the price you receive in the above calc. Something I could live with in that example.

**Just for kicks, in the first example you provided the proposed formula would of kicked out a sale price of 323/645 vs the 438/876 you received. Still leaving a meaningful amount on the table.

Thanks again for sharing your experiences and enjoy the trip!

Interested to hear your thoughts and those of other members.

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It should be from the purchase date as that’s when the opportunity cost for your money starts. In this case, I agree that the difference is such that it’s not worth the hassle to do otherwise - besides, there is probably a risk that you don’t achieve that price at auction, or have to wait a bit to do so. Call that the risk premium.
Easy to create a table of RPI factors which could be automatically applied.

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Would this not damage TWS’ business? Individual members doing ‘Museum Releases’? To be honest if this does not enhance TWS returns, what is the point?

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Museum release vs secondary market facility: Capacity is the main difference I assume

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Yeah, true. I would be really happy if this was a thing by the way, but unsure if worth the effort from a TWS perspective.

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I was thinking of it as a source of 1) old stock or 2) extra revenue via commissions

That assumes:

  1. seller bears storage costs throughout the process
  2. sale back or on at cost price
  3. no funky adjustments which benefit the seller

There’s a one-off cost to build a platform but after that running costs are covered by commissions

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Whilst I’m happy with the idea in principle of some sort of peer-to-peer selling arrangement (however that finally looks) I must admit to feeling a little uncomfortable with the idea of RPI or CPI, or even some simple inflationary measure, being attached to this.

Savings rates are, and have been for some time, pretty much zero, so it feels like a - guaranteed - investment vehicle to say your wine will gain X over a set number of years. TWS is a not-for-profit, so any arrangement has to fit into that - effectively purchase+ associated costs seems to me the only way the Society could operate such a model.

People are free at the moment to withdraw their wines and sell elsewhere. That wouldn’t change, so the spirit of it is surely simply to stay in keeping with TWS?

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Only if the wine value had indeed increased by greater than RPI. In my original comment I think I said only if this was more than market value. If a wine price hasn’t moved then that’s what they get. So not guaranteed as I see it, rather capped at general price inflation or less if market value was less.

I was also commenting on the basis that selling on wines on the external market was potentially against rules…though accepting that it’s difficult to enforce and there has to be intent of resale.

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That was why in my proposal TWS get first dibs on anything.

TBH it would be pretty easy for TWS to analyze this given they have all the propitiatory data.

You limit it to to something like 24 bottles a year/member and it’s just a small bolt on service that adds to the sense of community, adds flexibility to reserve management and is just accretive to the overall product.

There are ~170k members, I’m guessing a fraction of those have reserves. (E.g up 25k on 2019). For instance if all of those sold 2 cases you’d be looking at 340k cases. I total the society sold ~1m cases (+40% on 2019). I reckon you’re realistically looking at closer to 5% of members selling so more like 17k cases of <2% of volumes.

TWS makes about a 20% gross margin. What is interesting about a proposed trading system is that its risk free for TWS and capital light (e.g they take no price or inventory risk, they have no working capital caught up in this). Arguably, there is a small benefit on a risk-weighted basis to adding into the revenue mix at <2% of sales. You just need to play around with the model from a TWS benefit.

Worst case they could throw a number of the purchase they make through “mystery cases” which seem to fly out the door.

I think most here feel that there is a shortage of aged wines - so this adds to the offering (along with flexibility on reserve management and perhaps getting to buy (as the secondary buyer) at a discount to market.

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EP is good for TWS as it’s capital light and cash generative, though lower margin. It’s not riskless as they carry the risk of over buying an allocation (not seen much of that recently though). Broking customers’ reserves wines like this has no real WS capital commitment attached either, and as you note, pricing/stock risk still stays with the member.

It would work for wines where there is limited secondary market maybe, and the secondary market price has not ‘outperformed’ massively. Which would probably capture a fair number of wines.

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So e.g. (looking at my reserves) a Villefonte Series M would be fine, but not a Domaine Gonon St Jo?

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I’ll take any Gonon you want to sell at cost price plus inflation of course…

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Oddly enough I’m not planning on selling that one! (or the Villefonte for that matter, but still).

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Hi, @Taffy-on-Tour don’t know if you ever found the ‘16 mt Redon, but today I got a mailing from Justerini’s for ‘Le Plateau from Ch Mt Redon 2016’. Looks like a premium, small production Cuvee - a different wine, but may be of interest.

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