Global Wine Auctions Decline by $25 Million in 2008
Bull market comes to an end; estimates to drop in 2009
Worldwide auctions of fine and rare wines fell in value from $301 million in 2007 to $276 million in 2008, according to figures recently released by the major commercial auction houses. While the 8 percent drop seems fairly modest compared to the plunge of the major stock indexes during the past year, the numbers don't tell the full story. Most of this year's auction growth took place during the first three quarters of 2008, a time when collectible wine still seemed recession-proof. In the aftermath of the financial markets' meltdown this past October, the market fell off sharply, with many collectible wines posting double-digit declines in average prices.
Examples of blue-chip wines selling at a discount abound. For instance, at Hart Davis Hart on Dec. 6, a case of Château Margaux 2000 sold for $7,170, a drop of 55 percent below the third-quarter 2008 Wine Spectator Auction Index average, and at NYWinesChristie's on Dec. 5, a case of Château Léoville Las Cases 2000 sold for $2,040, a decline of 65 percent. By the end of the fourth quarter, more than 89 percent of the wines tracked by the auction index had fallen below their database averages.
The United States, the largest market for collectible wine, realized $164.9 million (excluding Internet auctions), a 20 percent decrease from 2007. New York sales fell 27 percent, to $108.4 million. On the Internet, winebid.com was flat at $26 million. About the only bright spot was the debut of auctions in Hong Kong, which contributed $28 million to the global pot. Otherwise, the year was fairly bleak, with all the major houses except for Hart Davis Hart and Sotheby's London experiencing lower revenues than in 2007.
One of the best ways of measuring the year's downturn is to examine percent-sold rates (the proportion of lots that found actual buyers), a leading indicator of the health of the market. In the first quarter, average percent-sold rates stood strong at 93 percent. By the fourth quarter, the average fell to just 72 percent. NYWinesChristie's held an auction in New York in November that was only 31 percent sold and another in Los Angeles that was 44 percent sold.
Another means of quantifying 2008 sales is to look at the spread between presale estimates and realized prices. In the first quarter, 14 auctions brought in $42 million, exceeding their presale low estimate of $31 million. In February, Hart Davis Hart topped its low estimate by nearly $2 million, while in March, Sotheby's sold $4 million worth of wine against a $2.2 million low estimate. By the fourth quarter, however, the tables had turned. A total of 18 auctions realized only $34 million against a presale low estimate of $43 million. The low point was a NYWinesChristie's auction that brought in only $432,540 against a low estimate of $2.48 million. Provenance and condition were not the issue. Collectors simply sat on their hands.
All categories of wine succumbed. "The wines that went up the most in the past couple of years were the ones that have gone down the most," said Jamie Ritchie, head of Sotheby's North American wine department. Last September at Hart Davis Hart, a case of Château Lafite Rothschild 1982 brought in a record $54,970. In November, a dozen bottles of Lafite '82 sold for $22,705. Acker Merrall & Condit sold a case of Domaine de la Romanée-Conti Romanée-Conti 1990 for $242,308 in Hong Kong last June. In November, another case of DRC Romanée Conti '90 realized $137,359 in Hong Kong—almost half the price.
Auction houses were caught unaware by October's spiral, unable in most instances to alter catalogs that had been prepared months prior. All the firms now report that reserves (the minimum price a lot of wine will sell for) and estimates will be adjusted downward in 2009 by as much as 30 percent.
For the third year in a row, Acker Merrall and Condit led the auction pack with $59.8 million in sales, virtually unchanged from 2007. The firm sold a staggering 32,703 lots of wine in New York, Hong Kong and on the Internet (where volume rose 63 percent). Meanwhile, Chicago's Hart Davis Hart recorded $32.3 million in revenues, up 20 percent over 2007, and boasted a 99.8 percent-sold average, the year's highest. HDH also conducted the year's biggest sale, grossing $11.2 million in September.
Zachys maintained a healthy 94 percent-sold rate and realized sales of $47.7 million, down 9 percent from 2007. Highlights included a jeroboam of Pétrus 1982 that sold for a record $59,500. Worldwide wine sales at Sotheby's totaled $44.6 million, down 9 percent from 2007. In New York, Aulden Cellars-Sotheby's tallied $22.5 million, a drop of 21 percent. One standout was a 136-bottle vertical collection of Château d'Yquem that sold in London in April for more than $724,000.
Christie's worldwide sales amounted to $55.7 million (down 29 percent). London auctions declined 15 percent. Another $10.3 million worth of sales in Europe and $27.7 million in the U.S. buttressed the total. Both results are still down from 2007.
After such a painful quarter, is 2009 a good time to buy? The answer depends on where you think world markets are headed and whether they have yet to hit bottom. "I believe the market is recalibrating itself rather quickly and effectively, and that we will see it settle down over the first few months of 2009," said John Kapon, president of Acker's auction division. Added Ritchie, "Where wines are attractively priced, they'll sell. Where they're not, they won't. In the long term, this may prove a golden opportunity to acquire fine wine."
