Why buy wine at auction? Primarily because the breadth of fine and rare wines on offer far exceeds the typical stock available at retail. In addition, auction prices generally fall below retail levels and occasionally even below wholesale. Sound intriguing? Wine Spectator has compiled a guide to help you navigate the auction world.
Before you attend an auction, determine your objectives. Are you filling in gaps in a pre-existing collection? Are you looking to increase your cellar inventory? Are you buying for investment's sake? If you are starting from scratch, which wine regions do you wish to concentrate on? In the absence of a concrete plan, you may get sidetracked entirely.
Auction houses offer catalogs of their upcoming sales. Read the catalog's condition reports carefully. Wines kept in professional or home temperature- and humidity-controlled storage are preferable to collections housed in natural or "passive" cellars, because the latter are often subject to temperature fluctuations, which can affect wines adversely. In particular, study the ullage levels, as the air space between the cork and the liquid is a barometer of a wine's health. Levels may vary according to a wine's age and the manner in which it was stored. Top or upper-shoulder levels are not uncommon for wines more than 30 years old, but raise a red flag for a 10- to 20-year-old bottle, where levels should still be into or close to the bottle's neck.
Smart collectors carefully cross-reference retail prices, previously realized auction prices and estimates. There are several online wine search engines that facilitate the task. The Wine Spectator Auction Index is a good means of analyzing current auction estimates and results. The print version records high, low and average prices for more than 160 frequently traded labels. The online version, called the Auction Price Database, is available as part of a WineSpectator.com membership and covers approximately 10,000 cellar-worthy listings. It serves as a vital gauge of the "going rates" at auctions.
Understand that auction estimates are only a guideline, not a guarantee. They are usually based on previous hammer prices for the identical wine and serve as an approximation of the final outcome. Almost all wines offered at auction have a reserve: a sum agreed upon between the consignor and the auction house below which the wine cannot be sold. The reserve is usually set somewhere between 80 and 100 percent of the low estimate (though never above it). So don't expect to snare a case drastically below the low estimate. If a lot doesn't meet its reserve, it won't be sold. In auction parlance that means it will be "passed" or "bought in."
Remember to factor in the supplementary charges that will be added to the final cost of your purchase as stated in the catalog. The major auction houses charge a buyer's premium ranging from 19 percent to 22 percent of the winning bid. Sales tax, shipping and insurance charges can add another 15 percent to your bill. Put another way, a $500 purchase may cost upwards of $675 once delivered.
The best way for a first-time auctiongoer to get the hang of the live-auction process is to attend a sale with no intention of actually bidding. All commerical wine auctions are free to attend and tickets are not required, though a charge (ranging from $50 to $75) is often levied for presale wine tastings, which some auction houses host to familiarize potential bidders with highlights from the upcoming sale. Although wine auctions were once coat-and-tie affairs, nowadays the dress code is fairly casual. However, evening sales tend to be more formal. Just take a seat and survey the entire room to get a perspective on what's happening. Watch the bidding on the floor, the phone and the order book and follow the auctioneer's movements. Alternatively, neophytes might want to focus on Internet auctions first; quantities are usually smaller and costs are lower than at live sales, where wines are typically offered by the case.
When bidding, it's a good idea to set a ceiling for your maximum bid and stick to it. Don't fall prey to auction fever. Few collectible wines qualify as unique or one-of-a-kind items that justify frenzied bidding. For the most part, the wines you are after will come around again. A tactic favored by many seasoned collectors, to keep their emotions from getting the better of them on the salesroom floor, is to place absentee bids by fax or e-mail; in this scenario, decide on the maximum amount you are prepared to pay for a lot. If yours proves to be the winning bid, you will be charged no more than one bid-step above the competing bid, no matter how high your limit. In the case of a tie, the lot goes to the first bid submitted.
Draw up a list of potential purchases and devise a buying strategy before entering the salesroom. The pace is usually too quick—sometimes as many as three lots a minute—to make decisions on the fly. Listen carefully to the auctioneer, as he or she may drop hints about the interest level in an item, or when the order book (which tracks absentee bids) is depleted. By attending a sale in person, advanced collectors maximize the possibility of snaring something special that might not have initially caught their eye.
All practiced auctiongoers have their personal bidding style. Some simply raise their paddle at the outset of a lot and lower it only when they have secured the item or when the bidding exceeds their spending limit. One particularly effective tactic for high-priced wines is to enter the fray at the very last minute, when the high bidder thinks he has secured the prize. This tends to be demoralizing to the person who thought the lot was going to be his or hers.
Peter D. Meltzer is Wine Spectator's auction correspondent and author of Keys to the Cellar: Strategies and Secrets of Wine Collecting.
Read the companion piece to this article, Cellars 101: How to Sell Wine at Auction.
ACKER MERRALL & CONDIT, (877) 225-3747, www.ackerwines.com
BONHAMS & BUTTERFIELDS, (415) 861-7500, ext. 307, www.bonhams.com
CHICAGO WINE CO. , (630) 594-2972, www.tcwc.com
CHRISTIE'S (London), +44 (0)20 7752 3140, www.christies.com
EDWARD ROBERTS INTERNATIONAL, (847) 295-8696, www.eriwine.com
HART DAVIS HART, (312) 482-9996, www.hdhwine.com
MORRELL & CO., (212) 307-4200, www.morrellwineauctions.com
NYWINESCHRISTIE'S (New York), (212) 463-8600, www.christies.com
SOTHEBY'S (London), +44 (0) 20 7293 5014, www.sothebys.com
SOTHEBY'S (New York), (212) 606-7050, www.sothebys.com
SPECTRUM (Irvine, Calif.), (888) 982-1982, www.spectrumwine.com
ZACHYS (New York), (914) 448-3026, www.zachys.com/auctions