Amid the backdrop of European economic troubles, a sputtering 2011 Bordeaux futures campaign and a high-profile wine counterfeiting case, prices for fine wine at U.S. auctions fell in the second quarter of 2012. The Wine Spectator Auction Index—which tracks the prices of fine wine sold in U.S. auctions—registered a decline of 4.97 percent, dropping from 332.05 points in the second quarter of 2012 to 315.54. But this quarter also marked the first time in almost two years that global tables have turned in favor of U.S. auctions, as sales volumes from Hong Kong auctions fell significantly.
Since their inception in 2008, wine auctions in Hong Kong have seen incredible growth, overtaking the U.S. as the largest market for wine auctions for the first time in the first quarter of 2010. After a quick lull in the third quarter of that year, Hong Kong emerged as the largest market for wine auctions and has dominated since. But total sales in Hong Kong have been halved since last year, dropping from more than $62.7 million in the second quarter of 2011 to just under $35 million in the same period of 2012. Meanwhile, U.S. wine auction totals rose from $41.2 million in the second quarter of 2011 to $45.3 million in the same time period this year
Could this mean the end of Hong Kong’s reign? Not necessarily. In terms of the average price per lot, Hong Kong still outpaces the United States by a huge margin. More than 17,000 lots of fine wine went on the block in the United States in the second quarter of 2012, for an average price per lot of $2,636. During the same period, just 5,634 lots were sold in Hong Kong, for an average price of $6,477—more than double the U.S. tally. Hong Kong continues to work more efficiently, selling fewer lots for more money.
Many wine categories declined in the United States, including Bordeaux sales by 4.4 percent. “Mature (pre-1995) Bordeaux sold much better than younger Bordeaux,” commented Jamie Ritchie, president of Sotheby’s Wine. The 1995 vintage was hardest hit, dropping 10 percent—largely due to Château Mouton-Rothschild, which fell 26 percent to average $394 per bottle, and to Château Pétrus, which gave up 21 percent to average $1,666. In contrast, the 1990 vintage gained 6.7 percent, thanks to the strong performance of Château Cheval-Blanc, which rose 60 percent to average $1,393 per bottle.
Acker Merrall & Condit CEO John Kapon observed that the high prices of the 2011 Bordeaux futures have made collectors look to older vintages for value and have only helped the auction market.
Blue-chip California wines fell 11.7 percent. The major laggards were Robert Mondavi Cabernet Sauvignon Napa Valley Reserve 1994 (down 20 percent to average $122 a bottle) and Phelps Insignia Napa Valley 1999 (which averaged $97 per bottle, down 38 percent). California cult wines—which are tracked separately from the Auction Index—were flat, rising a mere 0.38 percent.
Other categories that dropped in the U.S. during the second quarter include Rhône reds by 2 percent, Italian estate bottlings from Piedmont and Tuscany by 6 percent, and Vintage Port, also by 6 percent.
Burgundy bucked the downward trend, rising 4 percent. The top gainer was Domaine de la Romanée-Conti Echézeaux 1990, up 65 percent at $1,486 per bottle.
Surveying the Hong Kong auction market, Charles Curtis, Christie’s head of wine for Asia, noted that white Burgundy and white Bordeaux have recently made substantial gains and Italian wine also seems very strong in Asia, saying, “I don’t feel the surface of demand in Asia has even been scratched.”
The biggest emerging trend, both in Hong Kong and domestically, may be the resurgence of the middle market, feels Heritage Auctions’ wine director Frank Martell. “It’s what I call consumption-grade (priced at $75 to $180 per bottle) as opposed to investment-grade wines and includes a lot of California blue chips as well as super-second and third-growth Bordeaux."
Because of recent concerns about fakes that have infiltrated the wine-auction market, consignments bearing pristine provenance became more desirable than ever during the second quarter. At the Sotheby’s New York auction of Châteaus Cheval-Blanc and d’Yquem in April, every lot on offer came directly from the estates’ respective cellars. The sale total surpassed the presale high estimate by $1 million. A single bottle of Cheval-Blanc’s iconic 1947 vintage drew heated bidding, commanding $30,625 against a high estimate of $15,000 (617 percent above its Wine Spectator Auction Index average). A bottle of Yquem 1892 estimated at $4,000 to $6,000 sold for a staggering $55,125 (up 1,722 percent).
Top 3 Auction House Totals in the U.S. (in millions)
Acker Merrall & Condit $12.1
Hart Davis Hart $7.9
Top 3 Auction House Totals in Hong Kong (in millions)
Acker Merrall & Condit $9.1