Buying Wine at Auctions
March 31, 2020
This is the fourth chapter of my monograph: Stories, experiences, and advice that I hope you will find entertaining, compelling, and useful. You can find me on Instagram @winebarter. I encourage you to go back and read my earlier installments if you haven't already.
First, what to buy? This is both easy and not so easy. The simple answer is that wine auctions provide access to the wines you want but cannot find elsewhere. Perhaps a case of 1989 Chateau Palmer in OWC, or maybe you are looking for Coche Dury, or some of Manfred Krankl’s Sine Qua Non, or large formats in birth vintages, etc. Back in 1998 I bought an 18liter bottle of 1994 Anderson’s Conn Valley Cabernet Reserve at a Sotheby’s wine auction. That’s two full cases of wine in one bottle! These large formats all have names. 18L is a Melchior. I bought this wine because it’s from my daughter’s birthyear and I planned all along to serve it at her wedding. And we did last fall (2019). It was perfect! You can see photos on my IG page @winebarter. When buying at auction, remember the (wine) world is your oyster. Here you can find the pearls you are looking for. Be strategic in deciding which wines you seek.
But you should also be tactical. If you want to buy a particular wine at an auction there may be several lots of the same wine at different times during the auction. Typically, wine lots at auctions are grouped by source, ie., all of a particular collector’s wines are grouped together. Then, on to the next. If multiple sources are selling the same wine, these lots will be offered at different times during the auction. You should sort them and know their lot numbers. This way you will not be tempted to overpay for a particular lot if there is another opportunity 100 lots away. Also, note that often lots near the end of an auction come cheaper. The auction houses place many one-off lots from various sources at the end of an auction as well as mixed lots that were not sourced from a large collector. These may provide deals in some cases. Two weeks ago, I was bidding at a Hart Davis Hart (HDH) auction wanting to buy 2016 SQN Dirt Vernacular (Grenache). There were 740 lots in this auction. Lot#538 I paid $1400 for 6 bottles at the top end of the presale estimate. 90 minutes later near the end of the auction lot#715 was sold for $1100. I bought that one too. Had I waited I would not have had to average my price down. Just know that this has been a pattern.
Pit falls and things to avoid. There are signs of which you should be aware: Buy full cases in OWC, don’t buy cases with one bottle missing (the Collector didn’t like it.) Be suspicious of multiple importers because even if the case is full it has been reconstructed. Be suspicious when catalogue descriptions have scores listed from sources other than the standard(s). The typical standard was Wine Advocate (RP or WA) for Bordeaux and California, and Allen Meadows’s The Burghound (AM or BH) for Burgundy, but Vinous Media’s ratings have started to be listed more often (ST or AG). Read the provenance and the condition descriptions. Don’t bid on wines with fills below “top shoulder” or more than 2.5cm of ullage. Their storage should be questioned but note that older wines would naturally have lost more to the Angels’ share. Low fills for young wines or protruding or raised corks should not be tolerated as that is evidence of heat damage.
Provenance and Cellaring wine yourself. This is extremely important for buying at auction because nearly all of the time the collector selling the wine is anonymous. This makes the reputation of the auction house you deal with very important. But in some cases, a particular collectors’ wines are featured in an auction. Back in 2010, Hart Davis Hart (HDH) auctioned the Fox Cellar. Single seller wine auctions often command a premium over an anonymous seller because of its known provenance or reputation. More recently Sotheby’s held a dedicated auction of Rare Domaine de la Romanée-Conti from the Personal Cellar of Robert Drouhin in New York (October 2018). The catalog noted that these wines were acquired by Mr. Drouhin and his father Maurice directly from DRC. It’s important to recognize that most were obtained during the time when Maison Drouhin was the exclusive distributor for DRC in France and Belgium, so these wines were pristine and with very rare provenance. Collectors snapped them up paying very high prices. Here are just a couple of examples of the prices realized: lot#1 - 3 bottles of 1959 DRC Echezeaux pre-sale estimate $6000-$9000, realized price $29,760; lot#22 - 3 bottles of 1959 DRC Richebourg pre-sale estimate $9000-$15000, realized price $62,000.
To see how provenance affects prices, ask yourself which you would prefer: a random bottle of 1990 DRC RC from an anonymous source, one directly from the cellar of DRC’s importer Wilson Daniels, or from the cellar of a famous collector. How much would you pay for each? First of all, there are many fakes (intentional) that you would be avoiding by buying reputably. Second, storage conditions matter. Wine should be stored in stable, humid, cool, dark conditions. A proper wine cellar provides this storage environment. And the older a wine is, the more important the provenance. If you were to buy a 2015 DRC La Tache the source/provenance will not be as important as a wine after 20 or 30 years of age. Storage problems just compound for longer periods of time.
Do you realize that you are creating provenance for the wines in your cellar? First, keep receipts. These are necessary to track the provenance prior to your ownership. Even if you bought at release or En-Primeur (as a future) this is important information to know. If you love drinking older wines, then building a proper wine cellar is crucial for the care of your wines. Ideal conditions for wine storage include a stable place (no shaking or movement.) There is no reason to riddle your wine bottles, à la champagne, prior to disgorgement. LOL. Your cellar should be a dark, cool place (55 degrees F is considered ideal, but young collectors often reduce their temperature goal to 50 degrees or slightly lower to reduce the pace of the wines’ evolution, while older collectors like me increase the goal temperature to about 59 degrees.) The cellar’s humidity should be stable (70% is considered ideal.) This is important because variable humidity expands and shrinks the cork enclosure which can expose the wine inside to oxygen. Variable humidity is easily seen in the wine stains on the side of the cork of an opened bottle, and prior to pulling the cork the fill of the bottle is an indication, with the ullage indicating what was lost to the Angels’ share.
Tools for determining the right price. Buying at auctions was difficult in the days before the internet. There was simply a lot of information to process without the tools currently available. I have been buying wine at auction since the mid-1990s. Back then I would prepare by scrutinizing auction catalogs and taking notes in the margins. While in the auction room I would have reference books strewn around me. So, buying at auctions was harder back in the day and required more prep work.
An anachronism: Back then there was an advantage to being in the room relative to absentee bidding or the nascent (read: slow speed) online bidding because there was an ebb and flow to an auction, specifically the speed of the Auctioneer’s gavel. Sometimes the auctioneer would close the auction with his gavel very quickly. This would go on for 20 lots and then it would slow down again. Typically, a single lot would take 45 seconds, but sometimes the cadence would speed up to 20 seconds per lot, a very short period of time. This was often when the auction house didn’t have a deep book of pre-bids for the current lots. During those times you just had to just raise your paddle and you would get a good price. I remember buying a case in OWC of 2006 Echézeaux from Emmanuel Rouget, Henri Jayer’s nephew, for $200 a bottle at an Acker Merrall wine auction. It was immediately worth 50% more and now costs $600+. But these opportunities are all but gone. Auction houses are mostly online now, and the ones that do take place with a live audience think intentionally about online bidders.
Today’s bidders whether in the room or online use their laptops for information. The website wineauctionprices.com (WAP) is a great resource. It enables you to search quickly for auction price results of a particular wine so you can see “good deals” in real time. And even when you are not strictly bidding at auctions, the analytics tools on WAP including Value My Collection, as well as the various available filters for main searches is a great resource for any wine collector.
When comparing prices, you must compare apples-to-apples. Note that most auctions charge a “buyer’s premium” of roughly 20%. So, the realized price you pay is 20% more than the hammer price. If you buy a case of wine for $1000 hammer price, you are actually paying $1200, $100 per bottle. You can use wineauctionprices.com to look at historical auction prices, or winesearcher.com to see current retail prices.
The wine auction market is large and liquid. In 2019 worldwide wine-auction sales totaled $521MM, up from $479.1MM in 2018, and $381.7MM in 2017. The largest players are: Acker Merrall & Condit, Zachy’s, Sotheby’s, Hart Davis Hart, Christie’s, and Winebid.com (internet only).
The United States remains the largest market for Global Wine Auction sales, followed by Asia, and Europe as a distant third. But Hong Kong has topped New York for the largest Wine Auction market by location. London was the historical birthplace of the wine auction, the first of which took place in London in 1673. Wine auctions only became legal in New York in 1994 and it took just a few short years for NY to eclipse London as the epicenter of wine auctions.
Navigating the Auction catalog.
As you are flipping the pages of an auction catalog, you will first find a short explanation of the source of the next few or several lots; what types of wines, what kind of source, and in what kind of conditions the wines were stored in. For each lot there will be a list of the contents, i.e., which wine(s), number of bottles, size or format, a critic’s description, the condition, the fill, the label, the capsule, and an estimated price range for guidance. Then another lot, and then another source, and so on.
At the end of the catalog is the Index of Wines. This lists the wines to be sold by type, vintage, producer, and lot number for ease of finding all of the similar wine lots. The types are Red Bordeaux, Sweet Bordeaux, then Red Burgundy, White Burgundy, Red Rhône, White Rhône, Loire wines if any, Alsace, Champagne, then moving out of France to Italian Reds, Spanish Reds, German wines, California Cabernet and Cab based blends, California Chardonnay, Syrah, CA Other Red, CA Other Whites, Australian Red, Port, Madeira, Sherry, Spirits. There will be a Format Index by type and lot number, followed by an OWC Index, and finally the rules, conventions, keys, and terms by which the auction is governed. An important thing to note and remember is that all lots are sold “as is” with the full caveat emptor that these words convey.
History of Wine Auctions.
It is difficult to talk about the history of wine auctions without mentioning Michael Broadbent. Broadbent passed away March 17, 2020. RIP. He was a giant in the wine world. Born in 1927, he changed careers in 1952 to pursue a profession in wine. By 1960 he earned the qualification Master of Wine. In 1966 he joined London auction house Christie’s to start their wine auction business.
Up until this point in time nearly all wine auctions were in England because the English had been wine collectors longer and more enthusiastically than anyone else in the world, including the French. While it is certainly true that the great chateaux of Bordeaux had deep caches of their own wines in their cellars, the really extraordinary collections of old and rare wines were mostly found in England and Scotland. Michael Broadbent was the visionary and catalyst for bringing these wines to market through auctions. Prior to this, most wine auctions in London were for the trade only and dealt mostly with recent vintages that were being sold after a temporary financial setback or “other economic reasons.” There was little opportunity for private collectors to auction their wines at non-distressed prices until Michael Broadbent came along.
Prompted by the booming interest in wine as an investment, London auctions took off- first with Christie's in 1966, then Sotheby's began holding wine auctions in 1970. But at the beginning, Heublein’s wine auctions were the most important. And Broadbent was Heublein's wine auctioneer beginning with their first sale which was held in Chicago in 1969, even as he also was directing the Christie's wine activities. Soon after Michael Broadbent ended his relationship with Heublein in 1982, the traditional auction houses became pre-eminent in the secondary market. Broadbent continued to be the senior director of Christie's wine department until 1992, and he remained a senior consultant with the firm until 2009.
To close this chapter, wine auctions are particularly important and fertile ground for wine collectors and should not be missed. It’s also fun. Through auctions you can source wines not available elsewhere which is important to expanding your experiences and broadening your palate. Try new wines. Compare wines. While this is possible with the Coravin by yourself, in my opinion tasting with others will bring your highest enjoyment and largest rewards.