Everything You Need to Know About Wine Auctions
Going once, going twice, sold to the highest bidder! These recognizable words of an auctioneer have preceded the sale of everything from near priceless paintings to patio furniture. In the world of auctions, wine is a heavy contender with every major auction house taking part and millions of dollars being exchanged every year.
These auctions are where the rarest and most valuable Burgundy and Bordeaux might cross hands. This is where wines owned by world leaders and infamous figures of history go to be sold. Wine auctions have become a lynchpin in the history and progression of wine. Far from being the closed-door affairs these once were most wine auctions are now inviting and dynamic experiences that every wine connoisseur should experience.
How does a wine auction work?
The way a wine auction works depends on just what type of wine auction you are going to. Auctions are typically categorized as first hand, second hand, or online. A first-hand wine auction is a live auction typically organized by a winery or some company working within the world of wine. They run these auctions for a variety of reasons including charity, product promotion, or even just to gain a deeper understanding of how people might respond to their products.
Second-hand wine auctions are the domain of professional auction houses like Sotheby’s, and these are the events you might normally picture when you think of an auction. Here you can find the rarest and most collectible bottles of wine, the greatest treasures of the wine world pass through these events. Wine is sold at remarkable discounts and wine is sold at very high mind-bending amounts like over half a million dollars for one bottle.
Online wine auctions function a lot like second-hand wine auctions but without the big-name auction houses involved. Private individuals can buy or sell rare and collectible wines while the online service takes a small cut of the money exchanged at both ends of the deal.
Now, attending a first or second-hand wine auction can be a bit daunting for some. There is a general impression that these events are high caliber, invite-only, closed-door affairs. Maybe that was the case at one point and maybe that still happens in some places but more often than not these auctions are much more informal. Most auctions are free to attend and they are open to the public. When you go you would fit in just fine in casual attire.
Bidding at auctions
If you go to an auction with the intent to bid there are some basics you should know. First, you are going to want to look at the auction catalog which can tell you a lot about the wine which is coming up for sale. This catalog is full of terms like humidity-controlled storage, passive cellars, ullage, and provenance, all of which will be explored in more detail below. After you’ve become acquainted with the catalog and have an idea of what you would like to bid on it is time to go to the auction.
At the event, there might be a presale wine tasting which provides an overview of the wine for sale. This isn’t typically free but can pay huge dividends when it comes to future bidding. This is also an opportunity to try some amazing world-class wines you might not normally have the opportunity to drink. Armed with catalog and presale tasting knowledge you can then join the auction.
As things get going certain ‘lots’ will come up for sale. A ‘lot’ could be a bottle, multiple bottles or even a case of wine. You’ll already be familiar with this though from your catalog prep. The bids will start going up. If the current lot is something you want, you can just put up the paddle you will have been given (this paddle has your bidder number and makes it easier for the auctioneer to see you). Although bidding styles can vary widely it is safe to say that if you want what is being auctioned you just raise the paddle and only put it down once the item is yours or the price exceeds your spending limit.
This process continues for all the items which are up for sale. The end of the bidding process does not mean the end of the auction though. The price you secured the item for during bidding, called the hammer price, is not the final cost and it also does not ensure that you actually get to take the item home. Prior to sale both the consignor and the auction house will have agreed on a ‘reserve’ which is the lowest price for which the lot can actually be sold.
To make matters more complicated the auctioneer will not reveal this ‘reserve’ amount during bidding although he/she will do their best to drive bids far above that value. Still, this all means that you could be the top bidder on a nice bottle of wine at say $1100 and if the reserve is set above that at maybe $1300 then you don’t go home with the wine. Thankfully this means you also don’t have to actually pay the hammer price that you bid for.
Using the same example above, with the bottle of wine at a reserve of $1300, it is also important to note that if you were the top bidder at, let’s say $1500, the final amount you pay to the auction house will be notably higher. This is because you still have to pay the buyer’s premium, which can often range from 18-24%, as well as the sales tax, shipping, and insurance. That $1500 bottle of lovely rare wine actually costs you closer to $2000 at least. How about that?
Which wine auctions are the best and how do I find one?
The best wine auctions are typically considered to be the ones where you can buy the rarest and most collectible wines. These would be second hand and online wine auctions. Second-hand auctions which are organized by big-name auction houses have the best selections available. These auction houses and their contact details are listed here alphabetically:
Acker Merrall & Condit, U.S. (845) 268-6370 / Asia (852) 2525 0538, www.ackerwines.com
BolaffI, (39) 011-019-9101, www.astebolaffi.it/en
Bonhams, (415) 861-7500, ext. 307, www.bonhams.com
Christie’s: New York (212) 636-2680 / Asia (852) 2978 6746 / London: Europe, Middle East, Russia & India (44) 207-839-2664 www.christies.com
Dreweatts & Bloomsbury Auctions, (44) 207 839 8880, www.dreweatts.com
Hart Davis Hart, (312) 482-9996, www.hdhwine.com
Heritage, (800) 872-6467, wine.ha.com
Leland Little, (919) 644-1243, www.lelandlittle.com
Pandolfini, (39) 055-234-0888, www.pandolfini.it/uk
Skinner, (617) 350-5400, www.skinnerinc.com
Sotheby’s: London (44) 207 293 5000 / new york (212) 606 7000 / hong kong (852) 2524 8121, www.sothebys.com
Spectrum, (888) 982-1982, www.spectrumwine.com
Zachys, (914) 448-3026, www.zachys.com/auctions
To find an up and coming wine auction near you you will have to look through the websites of each auction house or call them. These wine auctions usually take place in or near major metropolitan areas like New York or London. Alternatively, you could also visit a nearby vineyard or wine store and ask someone there. They are likely to know about all wine auctions in the area. At the very least you might find a first-hand auction put on by a local winery. These are often done for charity and can be a ton of fun.
What are the best online auctions?
Online auctions are a great alternative to going in person. You can access them from anywhere and you can get a better understanding of the auction process. Auction houses like Sotheby’s, Christies, and Zachys, among others, host online wine auctions which are very good. Some services, such as winebid.com, are exclusively online and also provide very good auctions.
How to buy wine at an auction
The first step in buying wine at an auction is knowing the catalog. The catalog will have every lot that is for sale listed, in detail, in the order in which it is going to be sold. With wine, there are key pieces of information that you should look for.
In general, the rule with wine is that the less it has been moved and the better it has been stored the more valuable it is overtime. This is because movement and improper storage make the wine susceptible to factors that destroy its quality and flavor. The biggest factor being oxidation. Oxidation, predominantly spurred by oxygen in the air can ruin a wine.
This means you will want to look for a wine that has been stored in temperature and humidity-controlled storage as opposed to a cellar or other location. Sometimes the cellars are described as “passive”. The catalog will list this information so go for the better storage method when possible.
Storage conditions are actually just one facet of a larger set of criteria you must look at for each bottle. With the oldest, rarest, and most expensive wines it is essential to study the provenance of the wine. Provenance is the ownership history of the wine which includes how the current owner acquired the wine, how the wine has been stored, and whatever other relevant information has been uncovered about the wines past.
This not only reveals information which might indicate if the wine was exposed to too much air but it can also reveal small historical notes of interest which might give the wine more value. Imagine owning a bottle of wine once owned by Thomas Jefferson that even has his initials scratched right on the bottle. Now that is added value.
Don’t forget to check the ullage
That isn’t the whole story though. You will also want to look at something called the ullage level or fill level, which is basically the amount of air space between the cork and the wine in the bottle. The less space there is the better. This basically indicates how much seepage and oxidation has occurred over time. Seepage results from wine slowly seeping out of the cork while oxidation can occur as oxygen slowly seeps in.
The combination of the two can destroy the wine and destroy its value. As you might expect with older wine it is more acceptable to see lower ullage levels but what is normal for a 30+ year wine could be a deal-breaker for something only 15 years old. The whole selection process becomes a balancing act of provenance, ullage levels, and other factors setting a tone for the value of the wine.
If the lot is one you intend to bid on then you will want to reference the auction estimates which are the high and low estimates of the value of the lot. These estimates should be cross-referenced with other sources to determine a good maximum bid. You must also keep in mind the reserve, as the minimum acceptable bid will probably be somewhere at or just below the lowest estimate in the catalog. This means your bid will most likely have to be at least as high as the lowest estimate provided.
Time to place those bids, oenophiles
Once you are very familiar with the catalog and the bids you want to make it is time to actually buy wine at an auction. Whether it is online or in-person, you must place the highest bid on a lot that is for sale if you want to win it. Bids can be placed in person and online but these aren’t the only methods. You can also bid over the phone by calling the auction house and having a representative place bids in person on your behalf.
This is done in real-time and works almost as if you were really there, although it’s probably not as much fun. Another form of bidding is available with absentee bidding. If you can’t attend the auction or bid over the phone you can leave maximum bids on certain lots beforehand and the auctioneer will execute them for you.
If your absentee bid turns out to be the winning bid you won’t necessarily be saddled with a hammer price that equals your maximum bid either. Auction rules regarding absentee bids require the winning bidder to pay the lowest price, just a bid step above the final bid, with respect to reserves and other bids. This makes absentee bidding a pretty safe bet.
Because bidding is an art, after all
Bidding, like many things, can be made into an art and some people work diligently to refine the process and get the best possible lot for the lowest price. One way of doing this is through a bidding strategy. After you have studied the catalog, checked the prices and decided on bidding limits you find yourself in a room full of other people who have done the same and they’re all going for the same things you are. To beat the crowd you have to strategize.
When you enter the room you should sit in the middle so it is easier for the auctioneer to see you. Maybe wear bright colors or something which sets you apart from the crowd. Don’t wear perfume or cologne though as that affects the aroma of the wine. As the bidding begins there are different ways you can place your bids. The easiest and safest is, as mentioned earlier, the method of holding up your paddle for a lot you want until you win it or the price goes over your limit.
This can result in a win but it will likely be a costly win. The more advanced approach is to save your bids until one person thinks they have won the lot unopposed, then you pop up with your paddle and place a bid. This can have a demoralizing effect on the other bidder and secure your spot. Of course, it doesn’t always go so smoothly.
If you feel you are in a bidding position to secure the lot however you can signal for a cut bid by holding up your hand at a right angle. Bidding typically goes up in set increments depending on the price. So, if the bid was set to go up by $200 you could hold up your hand asking for a bid of only $100 more. Rules state you can only do this once per lot though and if someone outbids you then you can’t bid on that lot again. A cut bid is a very strategic and final move.
The most important consideration for advanced bidding is to have a plan. On the floor, emotions can run wild and bidding can get out of hand. You must have maximum bidding limits and set lots you plan to bid on. Otherwise, money can fly. This is why some people bid exclusively via absentee bidding. They’re still in the game but their emotions aren’t.
Final Verdict:
Wine auctions can be fun and dynamic events where you get to sample world-class wines and maybe even, with the right bid, take one home. First hand, second hand, or online all the auctions provide wine lovers a unique opportunity to interact with amazing wines.
For some, the auction world may seem daunting at first but with a little familiarity and practice anyone can join in. Seasoned collectors and newbies alike can bid alongside each other as remarkable lots of wine exchange hands.
Bonus tip: See how one bottle of wine sold at auction for $558,000 and how sales like these might be impacting the wine market as a whole!
