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U.S. Wine Auction Prices Down Slightly in Third Quarter 2011

Sales largely unaffected by drops in the stock market indices

Peter D. Meltzer
Posted: October 17, 2011

The Wine Spectator Auction Index, which tracks wine sales at auctions in the United States, fell from 357.72 points in the second quarter of 2011 to 341.27 in the third quarter, a relatively small decrease of 4.6 percent. This is the second quarter in a row that has registered a single-digit percent drop.

Perhaps the most striking thing about the quarter’s overall performance, however, was that several auctions were conducted against a backdrop of volatility in world financial markets and were largely unaffected. The Dow Jones ended the third quarter down 12 percent and the Nasdaq lost 13 percent, with a few large drops coinciding with large auctions.

For example, the Dow Jones ended the week of Sept. 19 down 6.4 percent, yet Zachys auctions held on Sept. 22 and 23 posted a 97 percent-sold rate. Auctioneer Fritz Hatton said, “There is so much money chasing after fine and rare wine that even a 391-point drop in the Dow didn’t deter collectors from bidding competitively.”

Despite the fact that the Dow had fallen 303.7 points the day before the Sept. 10 Sotheby’s sale, the auction was 98 percent sold, totaling $4.2 million against a presale high estimate of $3.9 million. Jamie Ritchie, president of Sotheby’s wine, said, “We do believe that the current volatile conditions in the financial markets affect whether clients bid and how aggressively they bid. However, we have noticed that day-to-day fluctuations tend not to have very much impact, unless it is a tumultuous drop in a period of relative calm.” Acker Merrall & Condit, whose auction took place the same day as Sotheby’s, was 97 percent sold.

The third quarter results are dominated by the 12 wine auctions held in September, as only three sales were conducted in July and none in August. Top U.S. earners were Hart Davis Hart with $5.3 million, followed by Zachys at $4.3 million and Sotheby’s at $4.2 million.

In the United States, 5,387 lots went on the block, for an aggregate value of $19,482,063. That equates to an average price per lot of $3,616.50, compared to $3,487.28 in the same period in 2010.

The story was reversed in Hong Kong, where the dollar-per-lot average fell from last year. In the third quarter of 2011, Hong Kong sales amounted to $35,187,203, dwarfing the U.S. total, as has become the trend. Nevertheless, the average price per lot in Hong Kong was $7,965, down from $9,327.66 in the third quarter of 2010—the first time this metric has fallen since Hong Kong has started holding wine auctions.

Despite a limited number of auctions in the third quarter, several exceptional prices were achieved, primarily in Hong Kong. Christie’s set a record high for the most expensive lot of wine sold at auction this year. A 25-case vertical of Château Lafite Rothschild spanning the vintages from 1981 to 2005 fetched US$539,280 on Sept. 3. At Acker’s Hong Kong sale on Sept. 16 and 17, a case of DRC Romanée-Conti 1990 fetched US$297,179 (65 percent above the second-quarter index average.)

Although the mania for Château Lafite continues in Asia, the 1989, 1990 and 2000 vintages actually declined by an average of 16, 13 and 14 percent, respectively, in the United States in the third quarter.

When looking at wine sales in the United States by region, Bordeaux incurred nearly an 8 percent drop in the third quarter with the mythic 1982 vintage plummeting 15 percent (in part because of a precipitous 53 percent decline in the value of a bottle of Le Pin sold at Sotheby’s). The 2000 vintage fell 9 percent while others stayed essentially flat. California cult wines did not see much time on the block, but Harlan 1999 averaged $484 per bottle, a 36 percent increase. Portugal also lacked action, but registered a nearly 9 percent increase with Taylor Vintage Port 1963, 1977 and 1997 gaining 63 percent, 24 percent and 25 percent, respectively.

Good buys for the third quarter included E. Guigal Côte-Rôtie La Mouline 1985, which averaged $756 per bottle (down 43 percent from its second quarter index average), Armand Rousseau Chambertin 1993, which averaged $1,315 per bottle (down 46 percent), and Harlan Estate Napa Valley 1992, which averaged $800 per magnum (down 47 percent).

So far, the wine auction market doesn’t appear to be moving in tandem with the stock market or even the economy. Yet in light of the global financial markets’ dismal performance in the third quarter, the biggest drop since October 2008, it remains to be seen how fall and winter wine sales will fare.

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