New Kids On The Block?
California Cult Wines Shine At Auction
By Peter D. Meltzer
From the moment of their arrival on the auction scene, California's cult wines have generated astonishment, heated debate and equally spirited bidding. Although skeptics initially discounted the upstarts from Napa, many collectors were impressed by high ratings from wine authorities and intrigued by the investment potential inherent in escalating prices. Also seduced by the exclusivity factor, buyers hastened to cellar hard-to-come-by labels such as Colgin, Bryant Family and Screaming Eagle without ever having tasted a drop.
Bruce Kaiser, wine director of Butterfields in San Francisco, says he realized that cult wines had entered the big leagues in June 1997, when London wine agents representing Asian collectors began placing serious inquiries. They followed with strong absentee bids. "A case of Dalla Valle Maya 1992 sold for [what was then] an incredible $2,185, double its high estimate," Kaiser recalls. "For the first time, bidders were prepared to pay the equal of grand cru hammer prices in order to secure Napa's scarcest bottlings."
They are indeed scarce. In the last three months of 1999, only 1,700 bottles of cult wines (in all vintages and formats) were auctioned nationwide. Single-bottle lots are common for wines such as Screaming Eagle, which has an annual production of just 500 cases.
In September 1997, at Davis & Co. in Chicago, a single bottle of Screaming Eagle Cabernet Sauvignon 1992 fetched $715 -- about the same price that a bottle of the highly sought-after Pomerol wine Château Le Pin 1989 was commanding. The market for California cult wines had exploded, and as many as 25 bidders at a time were vying for the hot new labels.
In June 1998, at Zachys-Christie's inaugural "California Only" auction in Los Angeles, the cults established breathtaking prices, many of which have never been equaled. A dozen bottles of Colgin Cabernet Sauvignon Napa Valley Herb Lamb Vineyard 1994 were snapped up for a record $16,100 (in the fourth quarter of 1999, the wine's Wine Spectator Auction Index average was $5,196 per case). Fritz Hatton, who at the time was head of Christie's North American wine department, said, "Why should top California wines sell for only $1,000 a case when top Bordeaux goes for $6,000?"
Over the past year (and especially at the end of 1999, when "millennium fever" spurred an outpouring of consignments), the cults' performance fluctuated. In 1999's third and fourth quarters, they experienced a decline, with a marked disparity between successful high and low bids.
Though cult prices don't have an extensive track record, their performance so far is not entirely out of line with some of their more established brethren in the auction world. In the last two quarters of 1999, the cults weren't the only wines to suffer volatility at auction -- in particular, prices of 1995 Bordeaux also varied widely.
However, in their first test of the new millennium, at Butterfields' Jan. 22 auction in San Francisco, cult wines fared exceptionally well. Despite an inordinately large number of consignments (more than 80 diverse offerings), which theoretically could have depressed prices, the average lot outperformed the fourth-quarter 1999 Wine Spectator Auction Index by a margin of 15 percent.
"Demand was stronger than usual, with bids coming from all over the country and even the Far East," Kaiser says. Three bottles of Screaming Eagle Cabernet Sauvignon 1996 soared 42 percent above the index to fetch $4,025, and two bottles of Harlan Estate 1994 commanded $1,150, up 34 percent. Also, six bottles of Bryant Family Cabernet Sauvignon 1994 were snapped up for $2,875, up 22 percent.
Some auctioneers are still waiting to see if cult demand is not just a passing fancy. Nikos Antonakeas, director of Morrell & Co.'s auction division, feels that the initial excitement over cult labels has abated. "There's always a sector of the wine drinking population that has to have the latest release, regardless -- or because of -- its price. Now that the first wave of collectors already owns the [cult] labels, we'll see how the dust settles."
For others, the prices the cults have commanded are a reflection of legitimate market demand. "We're not talking about a fad for crystal bottles or quirky labels," says Edward Brooks, former head of Christie's North American wine department. "The cults that presently enjoy a following at auction are legitimately good and very rare. Minute quantities justify the exalted hammer prices."
Brooks adds that the client base for cults is a lot more diverse than one might think: "It includes foreign buyers and certainly trade buyers who have garnered acclaim for purchasing these wines. There are moneyed private individuals who have made terrific returns on their investments, and [buying cults] is one of the ways they have chosen to celebrate. Also, there are seasoned collectors who believe that cult wines belong in their cellars the same way that Pétrus does."
One of the most visible champions of cult wines is Barrie Larvin, the flamboyant wine director of the Rio hotel and casino in Las Vegas. Among his many treasures are four 18-liter bottles of Colgin Cabernet Sauvignon from 1992 through 1995, for which he bid an astounding $112,500 at Zachys-Christie's in December 1998, a purchase that he admits was meant to garner attention for the hotel. "The publicity -- 17 mentions on CNN alone -- was worth it," Larvin says. "What's more, the large-format bottles promote the sale of my 'baby' [standard 750ml] Colgins."
With over 350 standard bottles of Colgin in inventory (not to mention another stash of 9-liter bottles, plus five double magnums of Araujo from 1991 through 1995), the Rio possesses one of the most impressive collections of cult wines in the world. A regular on the auction circuit, Larvin has made a concerted (and well-publicized) effort to snap up multiple case lots of cult wines in order to assemble a significant collection. He admits that he has occasionally overpaid to enlarge his cache, but, he says, customer response has been tremendous.
The individual buyer formulating a coherent cult wine strategy should consider when the bottles were purchased and whether they were bought for drinking or for resale at a later date. Anyone lucky enough to have acquired a cult collection at retail or through mailing lists has already realized substantial gains and may want to cash in the proceeds. Most auction specialists advocate holding a portion of 1994s and 1995s for future drinking and consigning the remainder.
Because of the cults' relatively short track record at auction, it is difficult to predict their long-term performance. And it remains to be seen whether the current favorites will be able to produce wines of consistent quality vintage after vintage. Brooks says he definitely sees cult wines on the auction block in the decades to come, but he adds that the roster may fill with new names. Five years ago, who heard of Screaming Eagle or Colgin?
|The Quest For Cults: Auction Records|
|$112,500||Colgin 1992-1995||4 18 Liter Bottles||Zachys-Christie's (New York)||Dec. 1998|
|$21,850||Araujo Cabernet Sauvignon 1991-1995||5 Double Magnums||Zachys-Christie's (Los Angeles)||June 1999|
|$10,350||Bryant Family 1994||12 Bottles||Zachys-Christie's (Los Angeles)||June 1998|
|$9,775||Dalla Valle Maya 1994||1 Imperial||Zachys-Christie's (Los Angeles)||November 1994|
|$8,050||Harlan Estate 1990-1995||6 Magnums||Zachys-Christie's (Los Angeles)||June 1998|
|$4,888||Screaming Eagle 1992||1 Magnum||Sotheby's (Chicago)||October 1999|
|$2,185||Grace Family 1995||1 Magnum||Sotheby's (Chicago)||March 1999|
|$1,320||Marcassin Chardonnay Lorenzo Vineyard 1995||3 Bottles||Sotheby's (Chicago)||December 1998|
|$1,035||Shafer Hillside Select 1991||1 Imperial||Zachys-Christies (New York)||November 1999|
|All prices include the 15 percent buyer's premium.|
|Cult Wine Auction Index|
|Wine||Average Price||Change||Average Price||Change||High||Low|
|'99 4th Qtr.||'99 3rd Qtr.||%||'99 4th Qtr.||'97 4th Qtr.||%||'99 4th Qtr.|
|Araujo Cabernet Sauvignon 1994||$337||$594||-43%||$337||$257||+31%||$537 Y||$288 B|
|Bryant Family 1994||$393||$407||-3%||$393||$284||+38%||$498 Y||$345 B|
|Colgin 1994||$433||$486||-11%||$433||$400||+8%||$537 O||$316 O|
|Dalla Valle Maya 1994||$416||$518||-20%||$416||N/A||N/A||$460 Y||$326 O|
|Grace Family 1994||$426||N/A||N/A||$426||$460||-7%||$537 O||$364 Z|
|Harlan Estate 1994||$428||$556||-23%||$428||N/A||N/A||$647 L||$326 O|
|Screaming Eagle 1994||$1,117||$1,943||-43%||$1,117||$604||+85%||$1,246 O||$958 L|
|Shafer Hillside Select 1994||$219||$227||-4%||$219||$173||+27%||$230 L||$211 Z|
|Marcassin Chardonnay Gauer Vineyard Upper Barn 1995||$226||N/A||N/A||$226||$179||+26%||$230 Z||$216 O|
|Auction prices are per-bottle averages of sales from all auction houses, comparing the fourth quarter of 1999 to the third quarter of 1999 and the fourth quarter of 1999 to the fourth quarter of 1997. Butterfields [B] in San Francisco; Sotheby's [O] in Chicago; Sherry-Lehmann with Sotheby's [L] and Zachys-Christie's [Z] in New York; Zachys-Christie's [Y] in Los Angeles. Prices include buyer's premium.|