I knew I was hooked when I found myself sitting in the brightly lit room of a private club glued to my chair. There wasn’t much to see. Just the back of heads, about 100 of them, one man on a podium and around the room’s periphery women on phones or in front of computers. I’d arrived early evening, it was nearly ten at night, my bladder was screaming but I couldn’t move. I’d caught wine auction fever.
My addiction began at a charity auction for the Toronto Symphony Orchestra. However it could have started at any of a multitude of charity or commercial auctions that take place annually throughout North America and Europe. That particular night I’d already bagged lot #136 of eleven burgundies including 1995 Vougeot and two Gevry Chambertin from Jadot for $550, well below the appraisal price of $1,182. I’d also snapped up lot 142 of six Leflaive Chassagne Montrachet for half their value. Wines at auction are sold in numbered lots. Lots in an auction can move at the pace of 80 to 100 per hour. That’s why I couldn’t leave. My persistence paid off as the hammer came down in my favour a few more times that night. My original intension was to capture a magazine story. In the process I was lured into the hunt.
Charity auctions are an important and ready way to raise dough for the cash strapped arts and medical services. The most famous charity wine auction and likely the one that started it all, is that of the Hospices de Beaune in France. The Hospices charity was set up in the 15th century to assist the poor and sick of the area. Since 1859, every third Sunday in November they have auctioned off barrels of the latest vintage from dozens of hectares of Grands Crus and Premiers Cru Burgundy vineyards. Last year when Christie’s auction house took over the running of this celebrated auction, they modernized and now offer sales of bottles are well as barrels.
Wine auctions started historically as a way to sell young wine in barrel. In Ancient Rome and in the Middle Ages wine was shipped by barrel to a trading post where it would be auctioned off. Centuries later when bottled wine became the norm, wine gained status as a commodity that could be labeled, aged and collected. Hence a market for older wines grew based on vintage, producer and reputation. In this century wine collecting has become so popular that by the late 1960’s the world’s two leading auction houses established specialized wine departments. Christie’s and Sotheby’s, both headquartered in England have also now set up branches in North America.
Auctions are the best way to acquire rare wines and older vintages. They’re also a fine way to turn a wine stash into cash. As an observant new addict I’ve learned a few things I’ll pass on. But first the basics of wine auctions: An auction date is announced. Wines get donated or consigned. An appraiser gives them a value. An auctioneer sells them. Bidders buy. Now let’s get to the spicy details.
The Auctions
Heublein held the first commercial New World wine auction in the United States in 1969 in Chicago. The charity wine auction boom in American has been led by the now famous, Napa Valley Wine Auction which raises millions annually for local health care.
Today both charity auctions and commercial ones abound. The fall’s commercial auction scene begins in September with flurry of major wine auctions. Houses such as Acker Merrall & Condit, Morrell & Company, Zachys, Sotheby’s, Chicago’s Hart Davis Hart, Christie’s and Edward Roberts International all offer fine old reds and other gems under the hammer.
You can find out about commercial auctions by getting on the mailing list of the auction houses for their catalogues or by checking their websites. Charity auctions are trickier. At charity wine auctions the friends and acquaintances of the cause itself tend to make up the majority. These are the socialites, the elite of the city who are on the invite lists and have the wealth to bid generously. Who you know matters. If you want to be on these lists cultivate the right friends and be prepared to spend.
The Cellars and Sellers
In a charity auction people donate their wine. Many do it for the good deed alone. The less philanthropic do it for the tax receipt. The less scrupulous do it to “wine flip”. They buy wines at a low price and donate them to auction for a guaranteed high appraisal price. Sometimes the auction hammer price is so below the appraisal, they buy back their own donation. The deduction and the drink secured they’re on to the next charity. In some jurisdictions those schemers are now toast as laws are brought in, some even retroactive, to put severe restrictions on such charitable donation “tax shelter” arrangements.
Death, debt and divorce are feeding grounds for commercial auctions. People who consign their wine to be sold by an auction house include former spouses of the wealthy, restaurateurs in need of cash, widows who inherit cellars but have no taste for wine or even collectors who have lost interest in their hobby. Some sell just so they can buy other wines or because the value of the wine has increased beyond their desire to drink up the liquid asset. The unprincipled could sell off wines past their prime or suffering from faulty storage conditions (i.e. wines from a Caribbean-hot warehouse with no air conditioning, rescued from a fire destroyed restaurant or frozen on the waterfront awaiting transport).
Buyers beware for both types of auction. While auctioneers inspect the cellars of some sellers, they rarely take back the liquid assets after a sale is made. Buyers must do their research, watch bottle ullage levels and even try to learn about the cellar of the seller. Wine auction catalogues are the key source for ullage levels (usually specified with words like “bottom neck” along with illustrations). They’ll also give details like the condition of the label and whether the wine comes from a cellar of pedigree. However at one commercial auction, two bottles of 1820 port I bought had sketchy details in the catalogue. When I picked them up, I found they lacked labels and were in completely different styles of bottles. The only identification was the word Harvey and the date stamped in old wax covering their corks. Said a companion who agreed to split the purchase with me, “We overpaid.”
The Appraisers
Wine appraisals are about as scientific as the practice of medicine. That’s to say in principal the practitioners do the best they can based on current knowledge and research. The value of an item is no more certain than the exact course of a cancer. Pure charlatans aside, some quite frankly are better at their job than others. Wine agent and appraiser Rob Jull is considered to be among the best in Canada. Revenue Canada will crosscheck wine appraisals with him. His methodology is based on replacement cost determined by international price with tax and transport added on. His main source of data comes from auction houses in the US and the UK.
There is corruption in the appraisal business for charity wines according to Jull. “I’m looking at some appraisals that are absurd,” he said. “I saw one bottle appraised at $500 that I put at $165.” Even the honest appraisers can be coerced by donors into over generous assessments. Jull often fends off calls from people who try to pressure him into appraising their wine at higher than market. While he claims to never be intimidated into this, “They can be convincing. They are lawyers, doctors, powerful, brainy people. Some appraisers eventually fall under their spell.”
Commercial auction houses have their learned staff do the appraisals. There’s a lot less shenanigans in the business side but still I’ve found many appraisals to be, shall I say “optimistic”. After all the higher the hammer prices the more money the auction house makes from commissions. They charge the consigner of wine a fee that’s generally about ten to 20 per cent of the hammer price. They also collect a commission from the buyer of 15 to 20 per cent.
The Auctioneers
Auctioneers learn how to gently goad the impulse buyers. A good one can raise the price by 20 to 30 per cent….at least. It’s like they’ve taken a Dale Carnegie course in people psychology one auctioneer told me. “You’re out sir. He’s in. Now you’re back in.” “Are you going to let him get away with that?” The patter of skilled masters at their work.
Testosterone lead bidding can raise the price of lots well beyond their worth. At charity auctions, the bidders, most often well lubricated before hand with generously poured wine, tend to lose self control as the evening goes on. It’s part of the fun to watch two presumably intelligent bidders get caught in a classic ping pong of ever higher prices until the hammer comes down at a vastly inflated sum. The same wine in earlier or later lots may barely draw an interest. I’ve seen commercial auctions boast in press releases about their skills at extracting fortunes. One for example reported “eight bottles of Amarone sold for $2,600, three hundred per cent over their high estimate of $900”. I’ve got caught myself and I should be savvy by now. At one fund-raiser for a hospital I ended up paying double retail price for six bottles of port because the desire to win the bid overran my common sense. I barely managed to save my pride by picking up 12 bottle of the very same port in a subsequent lot for only fifty dollars more.
The Bidders
Bidders are the other essential element of an auction. Once they fill in the forms with credit card details or other guarantees that they will pay, they get a paddle with a number and they are in the game. When they want to bid they raise the paddle. At every auction there are dealers, professionals, hobbyists and the merely curious.
That said, auctions have been called a blood sport for the rich, and rightly so. A third generation auctioneer told me there were many wild stories in the auction world. “You wouldn’t believe the drama that goes on behind the scenes,” he said, pointing out several tell-all books in his office written by retired auctioneers. No active auctioneer would go on record about his wealthy clientele. One of the great appeals of auctions is traditionally they have been a cash business. The money can go in both directions either to pay the consigner or from the buyer to the auction house. There are people who need a way to turn cash into money. This same auctioneer told me “If you buy a Rolls for $200,000 cash it looks weird. But at an auction it’s legit. The old timers do this regularly.”
The first treasurer of a charity auction confided to me that she has never forgotten the man who handed her about $10,000 in cash for his purchases of the night. Totally unprepared for such an occurrence, she had to rent a safety deposit box in the hotel as the banks were closed. The official in charge of the first commercial wine auction in Ontario had a similar experience, “We had one guy who paid his $60,000 in cash at the auction at the table. It was pretty weird,” he told me. Of course many auction goers attend because they love the auction scene, the collecting and maybe even the drinking. Then there’s the reward of hearing, “Nice work. It’s a bargain,” said by an auctioneer. The buyer who got this praise had acquired a bottle of 1978 Romanée Conti that hammered down at $3,400. Its auction book appraised value was $13,728.
The Sale
There are reserve bids at commercial auctions. If the wine doesn’t make a certain price, then it’s not sold. The auction houses set the reserve with the seller, but basically there’s always an amount below which the hammer never bangs. In this case the seller loses on several fronts. A handling fee of about five per cent of the reserve price must be paid and the errant wine picked up. No small task if the seller lives in another country. A distant sale isn’t unusual. Those in it for the money go where they think they’ll get the best return. The biggest seller at the second commercial auction in Ontario was a New Yorker who tendered about $400,000 in wines. At this auction I overheard one ‘from away’ consignee lamenting about his vertical of Sassicia that didn’t meet reserve. He was pacing around muttering, “They’ve got to go for it.” He was clearly hoping it would sell later at the post auction. (Wines that don’t make reserve can be later offered after the event by phone or internet to perspective buyers.)
At charity auctions no commissions are charged and all wine must sell regardless of how low. The auctioneer may or may not be professional. For these reasons charity auctions offer more of a chance to find a deal. If no one seems interested the price drops until it’s so low that someone in the room can’t resist whether or not they need, want or can afford. “Oh I spent too much,” is often heard at charity auctions, said much like a person exiting a buffet holding their stomach and groaning.
On the other hand there are fancy American charity auctions where buyers happily bid way beyond estimates because they get a tax receipt for all amounts paid above 20 per cent over the appraisal price. The moneyed crowd that attends the Naples Winter Wine Festival in Florida does this with gusto. Recently for example a case of 1961 Latour sold for a stunning US$180,000 and that’s just one of 68 different lots, most which achieved sales in the five figures. This auction has become a way to donate big, have fun and still leave with wine.
The Pay-up
At commercial auctions taxes are collected. The sum of commissions and taxes can raise a price up 30 to 40 per cent above the hammer price. It can be a shock. Fellow wine writer Tony Aspler exclaimed to me, “I bought one lot at a commercial auction last year for $1,000 and it was $1,541 when I picked it up.” I had my own sticker shock when I bid on a case of Thirty Bench Pinot Noir. I thought I got a bargain at $250 but the final tally of $342.13 took away the boasting factor.
At charity auctions what you bid is what you pay. Charity auctions therefore can offer much better deals to the wine lover. However you must be invited to attend and most often pay money (sometimes lots) to the charity to do so. Commercial auctions are open to the public and are mainly free.
The Addiction
Regarding the behavior of those with auction fever? It’s primal. Logic plays no part in the pursuit. Ritchie’s auction house for example has people who paid for their wine yet neglected to pick up the goods for years. The hunt and capture is the game not the consumption I guess. I have no such problems. I’ve cracked open a good number of my purchases. Unlike art or antiques that take up space unless they’re resold, wine is a liquid asset in more ways than one. When my husband or I drink up the cellar I smile. Empty spaces mean more auctions for me. What a perfect addiction.
Margaret Swaine is a wine, food and travel writer happily addicted to her chosen craft.
Canadian Wine Auctions:
British Columbia
March 2007: The Bacchanalia Gala Dinner and Auction is the crown jewel of the Playhouse International Wine Festival. Featuring a delectable five course dinner paired with wines from around the world, the evening is highlighted by silent and live auctions of rare and valuable wines.
Ontario
October 2006: This year marks the 16th anniversary of the Toronto Symphony Orchestra Fine Wine Auction. It’s one of the most successful fundraising events for the TSO, raising over $4 million in funding since its inception.
October 2006: Vintages Auction (2002 was the inaugural year) held in association with Ritchies Auctioneers features the largest and most extensive commercial auction of fine wines in Canada. http://www.vintages.com
Quebec
The Société des alcools (SAQ) in Quebec is involved in a multitude of wine auctions in the province including The Sports Celebrities Festival’s spring event. http://www.saq.com
Auction Houses
Christie’s: http://www.christies.com
Sotheby’s: www.sothebys.com/en
The Chicago Wine Company: http://www.tcwc.com
Winebid (internet based): http://www.winebid.com
Hart Davis Hart: http://www.hdhwine.com
Acker Merrall & Condit: http://www.ackerwines.com
Morrell & company: http://www.morrellwine.com