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U.S. Auction Prices Drop in the Second Quarter

Wine Spectator Auction Index is down 3.6 percent, but Hong Kong prices soar

Peter D. Meltzer
Posted: July 13, 2011

The Wine Spectator Auction Index, which tracks fine wine sales in the United States, fell from 371.03 to 357.72 points in the second quarter of 2011, a relatively small decline of 3.6 percent. Although it was the index’s first drop in value since the second half of 2009, the likely cause was that more collectible wine is being consigned to Hong Kong rather than any inherent weakness in the fine wine market.

In what has become an enduring trend, Hong Kong wine auctions continued to take in an increasing amount of money; the second quarter of 2011 increased 28 percent over the previous quarter and 80 percent over the second quarter of 2010. Total second quarter 2011 sales in Hong Kong soared to US$70.2 million with a hefty average price per lot of US$8,225.

In the United States, 13,104 lots went on the block in the second quarter of 2011, for an aggregate of $41.2 million. That equates to an average price of $3,146 per lot, down from the first quarter’s average of $3,819 (when 8,421 lots fetched $32.1 million). In contrast, the second quarter of 2010 totaled $37.9 million for those 13,104 lots, with an average price per lot of $2,663, indicating that despite the current quarter’s slump, demand for collectible wine is still on the rise. Percent sold rates were virtually unchanged, hovering in a healthy mid-to-high 90s range.

The second quarter traditionally marks the end of the first half of the auction season. Despite the modest slow-down on the domestic auction front, auction directors waxed enthusiastic over their performance from January through June thanks to the boost from Hong Kong, where most are now operating. John Kapon, CEO of Acker Merall & Condit, reported $54.8 million in sales to date, up 10 percent from the same period in 2010. Sotheby’s Jamie Ritchie said his firm had its best first half ever, with worldwide sales of $49 million. Christie’s trailed immediately behind with $48.4 million in sales, and Julia Gilbert, Zachys auction director, also said the past season was the firm’s best ever, with $43 million in sales. Even though Hart Davis Hart does not conduct sales in Hong Kong, its total sales in the first half of 2011 were $23 million, up 45 percent from 2010.

Jamie Ritchie said that, this year, Sotheby’s saw strong demand throughout Asia, whereas sales in 2010 were dominated by buyers from mainland China. “Asian buyers continue to expand their purchasing habits, and we are seeing more of them participate in our U.S. and U.K. sales. The New York sales are also witnessing increased bidding from both Brazilian and Mexican buyers, who represent an increasingly important part of the market.”

Still, despite interest from buyers, most categories of wines fell in value in the second quarter, in the U.S., at least. Of all the vintages of Bordeaux listed in the second-quarter 2011 auction index, most were fairly flat or registered small losses. The 2000 vintage was up 0.4 percent and 1995 gained 0.9 percent, whereas 1982 was down 5 percent. As a category, premium California listings were down 10 percent. Portugal declined 26 percent and Italian estate bottlings fell 12 percent.

That’s not to suggest the second quarter was lacking in exciting auction action, especially on international fronts. On May 17 at a Christie’s Geneva auction, a private American buyer bid $123,889 for a single bottle of DRC Romanée-Conti 1945, a world record for Pinot Noir. At a Christie’s auction in Hong Kong on May 27, an Asian buyer snapped up six magnums of Château Latour 1961 for $231,300—more than double the presale high estimate. On June 3, in Mariehamn, Åland (an island off Finland), Acker Merrall & Condit established a new world auction record for a single bottle of Champagne, selling an ancient Veuve Clicquot salvaged from a 19th century shipwreck for $43,630. It went to a restaurateur in Singapore, after heated bidding with a determined New Yorker.

Looking ahead to the fall auctions, many collectors are speculating how the exhaustive—and exorbitant—campaign for Bordeaux 2010 futures will impact sales during the season. According to Acker’s John Kapon, “Consumers should realize that prices for older wines will continue to increase accordingly, as a new price reality sets in for the newest of releases.”

Assistant tasting coordinator Margaret Raber contributed to this report.

Notable Second-Quarter 2011 Sales

• Château de Beaucastel Châteauneuf-du-Pape Hommage à Jacques Perrin Grande Cuvée 2000: $610 per bottle, up 137 percent
• Armand Rousseau Chambertin 1993: $2,448 per bottle, up 88 percent
• Opus One Napa Valley 1994: $233 per bottle, up 32 percent
• Château Ducru-Beaucaillou St. Julien: 1989 $151 per bottle, up 26 percent
• Dominus Estate Napa Valley 1997: $104 per bottle, down 40 percent
• Robert Mondavi Cabernet Sauvignon Napa Valley Reserve 1994: $127 per bottle, down 48 percent

Chateau Lafleur
Bordeaux, France —  September 16, 2011 9:51am ET
It will be interesting to see what happens in Hong Kong with the Sotheby's auction.

Sunday 2 Oct 2011 "The Ulitmate 9"

Lafite, Mouton, Latour, Margaux, Haut Brion, Ausone, Cheval Blanc, Pétrus, Yquem

Serena Sutcliffe MW from Sotheby's has said, "Bordeaux Winebank inventory is a perfect illustration of the word ‘pristine’. One could almost call it ‘virgin stock’! Certainly it fulfills every requirement with regard to condition and traceability, giving total reassurance to all our clients worldwide."

The Big difference with this and other auctions selling the same wines: This will be the first time these bottles have ever, ever left Bordeaux.

This and other research shows that HK does have a seemingly insatiable thirst for Bordeaux's best. The prices change when Provenance is guaranteed.

Interested readers may want to learn more on Sotheby's site: http://bit.ly/nlhgvJ

Gregory Charles

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