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Wine Auctions Exceed $66 Million in Second Quarter of 2008

Market for fine wine still appears strong, though rate of growth has slowed with faltering economy

Peter D. Meltzer

Posted: Tuesday, July 29, 2008

More than $66 million worth of fine and rare wine went on the auction block in the second quarter of 2008, a 23 percent increase over the amount sold in the same period last year. Wine Spectator's auction price database tracked more than 11,000 collectible wines that were sold both in the first and second quarters of 2008 and, despite widening woes on Wall Street, the average value of that complete set actually rose a modest 2 percent over the first quarter of 2008. In contrast, the Dow Jones Industrial Average fell more than 7 percent during the second quarter.

The wine-auction market's rate of expansion has slowed from its double-digit growth in past quarters. The average value was dragged down by the mediocre performance of the 1961 Bordeaux vintage (down 5 percent from the fourth quarter of 2007), which has been a volatile category due to the varying conditions of the wines. The huge volume of wine that went on the block during the second quarter also contributed to market stagnation. Some major collectors, concerned about the mounting financial malaise, sat on the sidelines.

However, the average percent-sold rate, a barometer of the health of the wine-auction market, remained strong at 93 percent in the second quarter of 2008. About the only sign of weakness was the fact that a few sale totals fell below the presale low estimate, and for some of those, aggressive estimates or lots with less than stellar provenance may have been a factor.

"Prices are holding up from what we're seeing," said Jamie Ritchie, head of the North American wine department for Sotheby's. "And so far, the climate has not changed, except for the fact that more winning bids are coming from Asia and Russia."

New vintages of collectible wines have been released at extremely high prices, and that has helped "continue to make vintage wines at auction where the smart money should go," noted John Kapon, director of Acker Merrall & Condit's wine department.

Acker Merrall finished first among the seven American auction houses, with $20.7 million in sales during the second quarter, followed by Zachys at $14.2 million and Hart Davis Hart at $11 million. Aulden Cellars-Sotheby's realized $9 million and NYWinesChristie's brought in $8.6 million.

Despite the ailing U.S. economy, aggressive bids in the five- and six-digit figures were not uncommon. At Aulden Cellars-Sotheby's, a case of the celebrated DRC Romanée-Conti 1985 sold for $157,300 (up 46 percent from its average price in Wine Spectator's auction price database), and a dozen bottles of Château Pétrus 1961 brought $102,850 (up 31 percent). At Zachys, three bottles of DRC Romanée-Conti 2005 commanded $45,410 for the wine's first appearance at auction. At Hart Davis Hart, five magnums of Château Latour 1961 sold for $43,020 (up 81 percent).

Other highlights of the second quarter included Peter Michael Chardonnay Sonoma County Point Rouge 2003, which averaged $555 per bottle (up 185 percent), Château Pichon-Longueville-Lalande 1961 at $598 per bottle (up 183 percent) and Comte Georges de Vogüé Musigny Cuvée Vieilles Vignes 1959 at $3,922 per bottle (up 158 percent). Château Rayas Châteauneuf-du-Pape Réservé 1990 averaged $3,824 per magnum (up 78 percent).

Despite such elevated prices, there were buying opportunities. For example, M. Chapoutier Hermitage La Sizeranne 1989 fell 73 percent, to average $65 per bottle. Bruno Giacosa Barolo Falletto Riserva 1996 also dropped by 73 percent, to average $108 per bottle. Domaine des Comtes Lafon Montrachet 2003 was a relative bargain at $605 per bottle, down 59 percent.

One development that could have a major impact on world auction markets was the Hong Kong government's decision to eliminate all taxes on wine early this year, a boon for collectors and investors alike. Realizing Asia's potential, two American auction firms were quick to venture into the Far East. In April, Bonham and Butterfields conducted a $1.2 million auction in Hong Kong, followed by Acker Merrall, which sold a whopping $8.2 million worth of wine there in May. Acker, Zachys and Christie's have already announced plans for fall sales in Hong Kong, and other firms are assessing the situation.

Kapon quipped, "It may eventually take some sizzle out of New York's steak."

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A detailed analysis of the Wine Spectator Auction Index for the first half of 2008 will appear in an upcoming issue of Wine Spectator magazine. The index, started in the fourth quarter of 1995, is a composite of average prices for selected benchmark wines sold at commercial auctions. Read more details about the wines tracked in the index.

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