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Wine Spectator Auction Index Slips in Fourth Quarter of 2011

Blue-chip Bordeaux falls from last autumn’s highs, but sell-through rates indicate a healthy market

Peter D. Meltzer
Posted: January 5, 2012

The Wine Spectator Auction Index, which tracks sales at fine wine auctions in the United States, fell from 341.27 points in the third quarter of 2011 to 333.50 in the fourth quarter, a decrease of 2.28 percent. This was the index’s third quarterly decline for the year, indicating that auction fever has been subsiding somewhat. The index now stands at the same level as it was in the second half of 2010.

Prices for lots have fallen from last year. In the fourth quarter of 2011, 16,000 lots went on the block domestically, for an aggregate value of $47 million. That equates to an average price per lot of $2,964, down from $3,516 in the same period last year. Average percent-sold rates, however, of a healthy 95 percent remained constant, indicating that demand for fine and rare wine remains strong.

Hong Kong wine sales amounted to $59 million in the fourth quarter of 2011, down from $72 million in the fourth quarter of 2010. The average price per lot in 2011 was still a hefty $7,964—more than double the U.S. average—yet well below the $10,796 price per lot Hong Kong achieved in the fourth quarter of 2010.

Jeff Zacharia, president of Zachys auctions, was unperturbed by the shifting numbers. “While we have seen some softening of prices in the fourth quarter, it has been an incredible year for auctions filled with record high prices and record high sales. There is still so much worldwide demand for fine wines that while I do not expect to see the bullish markets of 2010 and early 2011 [to return] anytime soon, I don’t see this softening to be any more than a minor correction.”

One reason for the auction index’s fourth-quarter drop was the decline in price of first-growth Bordeaux, which had previously enjoyed a dramatic growth rate. The iconic Château Lafite Rothschild 1982, which had climbed to a high of $65,550 per dozen at Zachys New York last fall, fell to $41,140 a case in December 2011. Asian collectors, who had been the impetus behind Lafite and its peers’ meteoric rise, began to shift their focus to rare Burgundies instead. They also became more price sensitive in their bidding strategies.

Classified Bordeaux from the 1982 vintage were down 7.2 percent. The 2000 vintage fell 9.7 percent, and 1995 lost 5.3 percent. Other major wine-producing regions also weakened. As a category, premium California blue-chips and cult wines were both down 2 percent. Vintage Port fell 1.5 percent, and Italian estate bottlings dropped 2.6 percent. In contrast, prices for Rhône reds rose 7 percent, spurred in part by the sale of a case of Jaboulet Aîné Hermitage La Chapelle 1961 at Sotheby’s New York on November 11 for a record $102,850.

Overall, premium red Burgundies gained 4 percent in the fourth quarter, and select labels like Domaine Leroy Romanée St.-Vivant 1999 and Armand Rousseau Chambertin-Clos de Bèze 1985 rose 65 and 64 percent respectively to average $1,573 and $1,920 per bottle.

Given Burgundy’s newfound popularity, it’s no surprise that the most expensive lot in the quarter was a 55-bottle offering of DRC containing every vintage of Romanée-Conti from 1952 to 2007. It fetched a whopping $813,333 against an estimate of $200,000 to $300,000 at Acker Merrall & Condit’s December 2011 sale in Hong Kong. Acker Merrall also held the record for highest total of any auction in the quarter: US$14,280,219 realized in Hong Kong last November. Zachys scored the highest domestic sales total, of $5,531,830.

Prices may have softened in the fourth quarter of 2011, but that doesn’t mean the auction market was afloat with bargains. Yet there were some buying opportunities at the high end of the buying spectrum. J.-F. Coche-Dury Meursault Les Perrières 1989 averaged $1,210 per bottle at Zachys, 60 percent below its auction index average. Ramonet Bâtard-Montrachet 1996 averaged $196 per bottle at NewYorkWinesChristies, down 54 percent, and Château L'Église Clinet 1995 averaged $269 per magnum at Hart Davis Hart, down 49 percent.

Given his firm’s favorable performance, Acker’s CEO, John Kapon, was in a good position to sum up the fourth quarter’s activity. He said that history tends to skate past the short-term noise of price declines in the world’s top and most collectible wines, a small list of names. “The market is strengthening by diversifying,” he added, “and more people around the world are discovering fine wine every day.”

Lorenzo Erlic
Canada —  January 5, 2012 7:40pm ET
There is one factor that will always keep Burgundy in a class of its own: Rarity. Great Bordeaux provides a great ride for many while great Burgundy epitomizes the destination reached for the lucky few.

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