Liv-ex is an index, managed in the U.K. It tracks mid-range auction prices for an impressively long list of collectible wines (mostly Bordeaux). Trades are even conducted using the index for pricing.
(The graphic to your left is taken from Liv-ex's website; Liv-ex owns all rights in that name, site, and information.) Notice the slope of the line. Overall, it has been trending up pretty seriously, for the past four years.
Trades in wine are conducted, using the Liv-ex pricing. If enough trades occur, then traders can start to write options (puts, calls, collars, etc.) on the wine index, betting on which way it will move. This is no different from crude oil or pork bellies. It commoditizes wine (when, in fact, each wine is different, more so than pork bellies or barrels of oil), but it does serve a useful purpose in hedging risk. (It can also be misused to incur risk, which is not hedging--that is SPECULATION and it can lead to personal bankruptcy.)
Time will tell if a wine index finds greater and greater use in the economy. I once had the idea to create a "wine mutual fund" in which the fund's money would be used to buy and hold fine wines; fund shareholders could buy and share their shares, even as the wines sat still in the warehouse. It is an idea whose time might come, someday. Today, amidst a Lafite bubble, probably isn't the best time to start such a fund.
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