Reviews

Auction records: dizzying heights
(fine)wines №4 spring 2008

The global auction market for fine and rare wines is active as never before.

Prices reach dizzying heights, and the latest price records seem to stay no longer than a few months. Such success is not an artificially blown soap bubble ready to burst anytime but a reflection of the classical market situation when demand exceeds offer which inevitably leads to higher monetary value of goods. In addition, auction pricing mechanisms — according to a recent comment by the head of a large auction house — depends not only on demand, but also on the buyers’ ambitions. This often brings unpredictable results.

Fine wines have long become an indicator that their owners belong to a certain social class, but their significance as a compulsory status symbol especially increased in the past 5-10 years. The number of wealthy people who can afford to buy the best of the best has grown, and their geography has expanded. The United States have posed great competition to Europe in this respect. The appearance of new large private capital in Asia, Russia and Latin America further increases demand for luxury products including wine. Besides, the world’s finest wines are no longer just a product of consumption. They have turned into a reliable investment tool and have attracted interest of an additional category of buyers. Also, fine wines belong to a very limited category of perishable auction goods whose stocks deplete with consumption. This increases the value of older wines, though the market is becoming more demanding in terms of provenance of such wines.

Despite the seeming abundance of wine brands, main auction sales in the past two years were concentrated within a small group of well known names. They include, above all, wines from Bordeaux, Burgundy, Champagne and the Rhone Valley. More specifically, Latour, Margaux, Lafite Rothschild, Mouton Rothschild, Haut Brion, Cheval Blanc and Petrus from Bordeaux, Domaine de la Romanee Conti wines from Burgundy, Cristal champagne by Louis Roederer and Hermitage La Chapelle by Jaboulet from the Rhone Valley attract the biggest sales in the auction rooms today. According to the Sotheby’s report, 59% of the total US sales in 2007 came from eight producers — five Bordeaux First Growths plus Petrus, Cheval Blanc and Domaine de la Romanee Conti. People at Sotheby’s add that the mentioned Bordeaux wines provided half of all lots sold by value, with further 9% of lots by value coming from Domaine de la Romanee Conti.

In 2007 nearly all leading auction houses announced new records — be it prices for certain wines and lots or general sales results. Christie’s, last year’s leader of the global wine sales, held the biggest European auction in the past 10 years. It took place in Geneva, and the main sale was achieved through offering a private Swiss cellar of 12,000 bottles. The sale grossed over $6,8 mln., nearly half of which came from the sale of 1,500 bottles of Petrus. The wine monopolized the list of the top ten lots (with vintages of 1982, 1990 and 2000). The most expensive lot was a case of Petrus 1982 sold for $57,000.

Along with Geneva, new record sales for Christie’s were achieved in Amsterdam and Los Angeles. Los Angeles was also witness to the biggest Christie’s auction in this city in the past 10 years. The private cellar of the famous Norwegian collector Christen Sveaas was sold there last year. The 784-lot collection realized $6,8 mln. The biggest Christie’s lot in 2007 — 30 cases of Chateau Mouton-Rothschild 1986 — was sold at the auction for $288,000. Another record was 12 bottles of Jaboulet Hermitage La Chapelle 1961 for $252,000 that exceeded the September price for the identical lot in London ($247,700) which Christie’s announced as a new world auction record for a case of Rhone wine and for any wine case sold in Europe.

Another important event for Christie’s last year was the first auction of spirits in New York City since Prohibition. The top lot was a bottle of Macallan 1926 sold for $54,000 which became the most expensive bottle of whisky in Christie’s auction history.

Five most successful sales by Sotheby’s in 2007 were held in New York. The highest total sale of $5,16 mln. was achieved at the Finest and Rarest Wines auction in May. Three cases of Chateau Petrus 1982 were hammered off for $60,000 each and signified a double increase in price for this vintage of Petrus in merely six months. October sale An Evening of Exceptional Wines was remembered by a number of superlots, the average price of which equaled nearly $27,000. A case of Romanee-Conti 1990 was sold there for $262,900 making a new record for this legendary Burgundy wine.

Treasures from the Private Cellar of Baroness Philippine was among the most glamourous Sotheby’s sale events last year. It was held in New York and featured an extensive collection of Chateau Mouton Rothschild as well as a selection of other Bordeaux wines kept in the private cellar of Baroness Philippine Rothschild. The total sale brought $2,22 mln., and 99% of lots were sold above the high estimate. Numerous records were set during the evening including the most expensive lot of the year which also was the most expensive bottle ever sold by Sotheby’s — a jeroboam (equivalent to six standard bottles) of Chateau Mouton Rothschild 1945 for $310,700.

The largest world auction of 2007 was held by the US auction house Acker Merrall & Condit. The October sale The Man with Golden Cellar gathered $15,6 mln. This is the second largest sale in history after The Cellar which was also staged by Acker Merrall & Condit in October 2006 and brought $24,7 mln. The last year’s collection included nearly 11,500 bottles. President John Capon compared it in significance to a unique collection of Picasso or Warren Buffet works.

The eye-catching lots of the sale were Bordeaux wines — nearly a thousand bottles of the First Growths and about 1,300 bottles from the Right Bank; Burgundy wines — around 1,300 bottles from Domaine de la Romanee Conti, 516 bottles from Henri Jayer (the biggest auction offer at present), also Rousseau, Coche-Dury, Leflaive, Niellon and Ramonet; 879 bottles from the Rhone Valley including Guigal, Bonneau, Rayas and Jaboulet. Spanish and Italian wines, champagne, port and madeira were also auctioned off. The most impressive prices were achieved by a case of Chateau Mouton Rothschild 1945 for $110,000, a six-litre Methuselah of Romanee-Conti 1999 for $105,000, 6 bottles of Roumier Musigny 1993 for $42,000 and some others.

Young Hart Davis Hart from Chicago held only three full annual seasons, but placed itself firmly among the world leaders in auction sales. The most memorable event of the last year was May sale of a significant portion of the cellar of Steve Verlin, founding partner of Veritas restaurant in New York and a known wine connoisseur. All lots were sold (nearly 1,900), and the total realized sum of $7,3 mln. was among the highest for all auction sales in 2007. Three most expensive lots featured large format bottles. Imperial (equivalent to 8 standard bottles) of Chateau Petrus 1990 was sold for $59,750 and set a new world record for this vintage and format. Imperial of Chateau Mouton Rothschild 1947 and 15-litre Nebuchadnezzar Montrachet 1992 from Domaine Ramonet were hammered off for $53,780 each.

Hart Davis Hart claimed that ten new world records were achieved at the sale. Along with the Imperial of Petrus 1990, the following names achieved the highest world prices — Chateau Gruaud-Larose 1961 ($7,700 for 12 bottles), Chateau Latour 1962 ($15,540 for 4,5 litre Jeroboam), Chateau Petrus 1975 ($26,290 for Imperial), Chateau Cheval Blanc 1982 ($33,460 for Imperial), Chateau Lafite 1982 ($23,900 for 6 magnums), Chateau Latour 1982 ($21,510 for 12 bottles), Chateau Latour 1995 ($5,740 for 12 bottles), Chateau Lafite 1996 ($10,760 for 12 bottles) and Chateau Latour 1996 ($8,960 for 12 bottles).

In his analysis of the global auction market, the auction expert and observer of The World of Fine Wine magazine Stuart George remarked, “There were 26 $100,000+ bids at wine auctions in 2006. In 2007, helped by the strength of the pound against the dollar, there were exactly twice as many. Additionally, there were at least another 30 lots that made over $50,000. Research carried out by the Art Market Research Index (HAMR) showed that the value of fine wine sold in auction houses in 2007 had risen by 28 percent over the last 12 months. Wine outperformed Old Masters, which went up by only 7.6 percent”. No further comments are needed.