A Guide to Buying Wine at Auction
This article is for the wine novice and wine enthusiast. It is based on what I personally know about this subject – almost all learned by first-hand experience.
Let’s start by dividing wines into two groups: Collector Wines (wines that go for more than $150) and Drinking Wines (wines that go for under $150). I’m not saying that there are no collectible wines that cost less than $150 – I just need to delineate them into two groups.
Buying Collector Wines at Auction (and Charity Auctions)
This is the category which gets all of the press. After every big auction, the prices seem to ratchet up to another level for a number of reasons: 1) Some long-time collectors have sold pristine/perfect bottles and buyers are willing to pay more for such provenance. 2) Some think these bottles are excellent investments and these “investors” are driving up prices. 3) Business executives are buying these bottles to impress clients (as either gifts or for a dinner). 4) Worldwide demand, particularly from Asia, is growing.
Collector Wines are mostly sold by the largest auction houses: Sothebys, Christie’s, Acker Merril & Conduit, Bonhams & Butterfield’s, Chicago Wine Co., etc., etc. They each tend to hold an auction every two months. The auction houses sell* a catalog for about $35 (which can also be downloaded for free), which is released about two weeks before the sale date. The auctions often start on a Saturday morning. (*Previous auction buyers often receive future catalogs gratis in the mail.)
Collector Wines are also the ones that large auction houses make a lot of money on. I’ve been told that they lose money on all of the lesser lots.
Lot size varies, generally from 1 to 12 bottles.
Mixed lots are both good and bad. Good in that they tend to go for lower prices than the lot is worth. Bad in that they tend to have wines you don’t want with ones that you do.
Of special note, when there are consecutive duplicate lots, often the winner may purchase the duplicate lots for the same price (check the auction house rules). I think the theory behind this is that it might drive up the price of the first lot; experience shows sometimes yes, sometimes no.
Collector Wines often go for really wacky prices at Charity Auctions. Some even get resold again and again at Charity Auctions; the gift that keeps on giving. The fewer the number of wine-savvy people at the event, the greater the possibility of getting something you might want for a reasonable price; but it’s oh-so-random. Note: At the most prestigious of these charity events prices can often become absurd – wines going for 5-50 times their actual value.
Buying Drinking Wines at Auction
This is the category which interests me the most. Depending upon the auction, you can find both, old and recently released wines, at cheaper-than-retail (well, usually the opening price is well below retail). With general wine prices increasing for certain appellations, like Napa, the older wines are a bargain. What’s crazy (in a great way) is that you can find wines which are 8-20 years old selling for less than the current release of a comparable quality. (The older wines may even be superior in quality.) Further, you’re getting aged wines! Who-hoo! Of course, there is more risk, as for most lots, you don’t really know how the wines were transported from the winery to the cellar, etc.
But do you want a case of that?
Many lots are twelve bottles in size. This can be frustrating, as you might want 3 or 6 bottles rather than a whole case. (Particularly if you haven’t tasted a bottle from that lot; who knows what it’s really like?) But perhaps you have a few friends who will occasionally go in with you on such lots?
Where did the wine come from? Provenance or the history of the wine should always be considered before bidding. Some lots may state the provenance: e.g., Property of a Gentleman in California (removed from a temperature controlled storage facility). Other lots may not state where the lot came from leaving you to decide from examining the bottles, or making inquiries, as to the prior storage conditions. When buying older wine, it is very difficult to determine the full provenance. This is a risk. Occasionally, wine that has come from a noted collector or collection is auctioned. (And, of course, fraud is a problem with Collector wines.)
Why Is This Wine For Sale?
You also need to consider why is this wine being sold. Perhaps the consignor (the person selling the wine) opened a bottle, didn't like it (perhaps it's past prime or damaged) and sends the rest he has to auction (and that maybe a warning if, for instance, 11 or 23 bottles are offered). Perhaps it's an estate sale of a longtime collector. Perhaps it's a just a situation where tastes have changed - a wine lover used to love Zinfandel and now loves Burgundy and so is selling off the Zin.
The auction houses hold these two hours to five days before the auction. Most of the wines poured for the tasting are on the auction block. The cost of these tastings is usually a tremendous bargain – try to go!
There are often 25-30 or more wines to taste and you should get there at the start and taste every wine. These tastings are invaluable, because the wines you’re tasting are not new releases; you can attempt to judge where each wine is in its wine life. Declining, in the prime, or still young? Has the wine integrated its elements or do its acids or tannins dominate? Has it held its fruit? Make a second pass to retaste your favorites and note changes due to opening time.
The one thing that irks me is that some old, fragile wines are decanted at these tastings, rendering them completely oxidized and next-to-undrinkable. (They do this to remove sediment.) If only they “Audouzed” these wines instead (opened them via slow oxygenization), some/many would be just fine.
Bidding Methods for the Big Auction Houses
It is possible to fax or email your bids. However, after doing this once, I learned to never to do it again; the three most expensive lots I bid on, I won at my exact high bid. I calculated the odds would be 1:216 of this happening.
With that in mind, either plan to attend the auction or choose phone bidding. You should also register in advance of the auction, don't try to do this at the last minute. Understand that bidding goes very fast during the auction. Perhaps writing down what your maximum bid is before the lot comes up would help a bit?
Actual Prices Paid for Items You Win
Each auction house charges a different “buyer’s premium”. (A couple of online houses charge the seller, not the buyer. Everyone else charges both parties.) You practically need to create a chart that shows your bid plus premium = actual cost. Bonhams & Butterfields, for example, charges 17% buyer’s premium – so a $400 winning bid means $456 (plus sales tax if picked up or shipped to a Californian address) (plus shipping, if you’re not picking it up). There might be storage fees, as well, if you don’t pick up your winning lots within a specified time frame. Some auction houses offer free storage during the Summer months, for example, but each house has it’s own policies. What I’m saying is, be sure you understand the total cost of your purchases before you bid.
Buying Drinking Wines from Online Auction Houses
I’m particularly talking about WineBid, WineCommune and Brentwood Wine Company. There are two big advantages of buying wine in an online auction; you can buy (inexpensive) single bottles and there’s a huge selection of non-Collector wine. There are Collector wines offered as well, but this is not the primary place that they are bought and sold. The downside is that you can't physically inspect the bottles until you own them. (The condition of bottles I've purchased from Winebid has been exemplary.)
Major Wine Auction Houses
• Acker Merrall & Condit (NY)
• Bonhams & Butterfields (SF/LA, London)
• The Chicago Wine Company (Chicago)
• Christie's New York (NY, London)
• Edward Roberts International (Chi./SF)
• Hart Davis Hart Wine Co. (Chicago)
• Morrell Wine Auctions (NY)
• Sotheby's (NY, London)
• Zachys Wine Auctions(NY/LA)
Internet Auction Houses
• Winebid.com (Napa)
• Wine Commune (Oakland)
•Brentwood Wine Company (Oregon)