News

Reprinted from Bloomberg News

March 13, 2008

Wine Auctioneers Offer $125 Tastings, Eye Asia to Sustain Boom

Review by Elin McCoy

U.S. wine auctions are charging ahead this season with buzzworthy sales despite the global economy’s gloomy outlook.

They’re counting on recession-proof top Burgundies and first-growth Bordeaux to keep prices climbing, and they’re targeting far-flung venues to expand the buyer base. To add excitement, they’re bringing out more single-cellar sales from famous collectors and special preview tastings.

Tomorrow at 5 p.m. in New York, right before Christie's holds its first evening sale of the year, the house is pouring 12 vintages of first growths, including 1982 Lafite, for a paltry $125.

The trend to target new venues started last month. Scarsdale, New York-based Zachys opened in Las Vegas on Feb. 8 with the first-ever commercial wine auction in Nevada, then wowed San Francisco on the 29th with the company's first all-Burgundy auction.

Now there's a rush to Hong Kong, with Bonhams holding its first wine auction there on April 24. The sale by the London and California-based house will focus on big-ticket items prized in Asia -- blue-chip Bordeaux and California cabernets such as Dominus, Opus One and Screaming Eagle.

New York's Acker Merrall & Condit, last year's market leader, will woo collectors in Hong Kong on May 31 with 1,000 lots of stellar vino including an Imperiale (eight regular bottles) of 1982 Chateau Lafite and a case of 1998 Chateau Petrus magnums. The sale is estimated to top $5 million. And did I mention the fancy hard-cover bilingual catalog in shiny gold and red, a lucky color in China?

Hong Kong Tax Cut

Both houses were pursuing the Hong Kong option long before import duties on wine and beer were abolished last month.

"It's the logical place for a first step into Asia," says Acker's auction director, John Kapon. "I'm going out to plant a flag. There are four or five other cities with populations of 20-plus million, like Seoul, who are getting into wine."

Will others follow? Zachys says "it's on the table" and Christie's, which last held a wine auction in Hong Kong in 2001, is "watching carefully."

This weekend's New York auctions -- and sales later this spring -- contain plenty of what makes people keep bidding big bucks: the best names, prize lots and single-owner collections.

"In uncertain economic times, there's a flight to quality, which means the first growths and Domaine de la Romanee-Conti in a handful of great vintages," says Richard Brierley, head of North American sales for Christie's.

12 Years of Petrus

The small "highlights from a superlative modern cellar" that he auctions off tomorrow night are mostly first-growth Bordeaux from 1982 through 2000, plus 12 vintages of Petrus and 9 of rare Le Pin. It's a case study for the Christie's bigger all-first-growth sale on April 26.

For provenance, you can't beat the 77 lots from the extraordinary Ben and Mayon Ichinose collection being hammered down today at Zachys. What makes these old Domaine de la Romanee-Conti and Roumier Burgundies so special is the way they were stored.

"I kept them at 49 degrees, not the usual 55," Ben Ichinose told me in a phone interview. "They age more slowly, but when they get to the intended peak, they exceed it."

Zachys's piece de resistance later this spring is the "London gentleman's" cellar of barrister Graham Lyons. Rarities like 1858 Lafite in double magnum and California cabs from the 1940s were stored in a dark, damp, cold cellar under the Strand in London.

Most collectors are men or couples, so the Sotheby's sale this weekend of almost 5,000 bottles from V. Cheryl Womack is pretty unusual. A businesswoman in Kansas City, Missouri, she got interested in the stock market and wine at the same time. The first-growth futures she's bought have done better than her stocks, she says.

Online Auctions

Live auctions like these grab all the buzz, yet last year online leader WineBid.com quietly tallied up sales of $26.5 million with their weekly auctions. Being able to buy 24/7 and snap up just one bottle of something pricey is the appeal, says Chief Executive Officer Jerome Zech. This week's highlight: a magnum of 1992 Screaming Eagle, high estimate, $20,000.

"The auction market is surviving because the dollar is falling," says Ben Nelson of Chicago's Hart Davis Hart. "It's bringing in more foreign buyers." As current vintages come in at the new exchange rate, these older wines look like relative bargains.

Auction directors are spinning them as a more stable investment than stocks. As Kapon quipped, "No auction companies are writing off $11 billion in losses, that's for sure."