Under the hammer: the world of wine auctions

In its latest issue, the English magazine "The World of Fine Wine" published a graph on the sales development of ten wine auction houses in the first quarter of 2023 compared to the identical quarter of the previous year. The auctioneer with the highest turnover - Acker Wines - is on the chart with plus/minus zero, five houses show a negative sign - partly up to minus 34 percent, four a positive one - partly with increases of up to 82 percent. Extrapolating the absolute numbers, there is a slight inflow into the market of the ten listed auction houses of about $300,000 for a total volume of about $85 million.

The cautious interpretation of these figures is that the auction market is sending contradictory signals that it has probably tracked the general upward price movement since the start of the Ukraine war only to a small extent. But how do the auction houses themselves see the situation? Do they experience the market as positive, robust, unpredictable, tense or critical? Falstaff asked a dozen of them.

"Maybe a little bit of everything," replies Charles Antin, Global Head of Auction Sales at New York-based house Zachy's. "We're no longer in the rocket that we've been in for the last 24 months with the tripling and quadrupling of prices for some wines. But just now at our auction on July 27, we again achieved world record prices for the rarest wines, for example for "Ramonet Montrachet" (37,500 US dollars for twelve bottles of vintage 2008, US).

Stefan Sedlmeyr of Munich Wine Company differentiates a bit more: "The market is positive in the private customer sector with growth. It is tight in the EU trade sector - and currently unpredictable in the Asia sector." Among the other auctioneers interviewed by Falstaff, three called the market "positive", including Jens Krau of Koppe & Partner in Bremen, who gives an interesting explanation: "From our point of view, the market is positive at the moment, as we are receiving more consignments. We had a significant increase in sales in the first half of '23." Two other respondents chose the answer "robust," one "tight." One auction house - Sotheby's - said it did not want to answer this question.

Construction sites

One of the most important changes in the auction market is that the best customers of the last two decades are not only based in the UK or the USA, but increasingly in Asia. Some market observers fear that Covid could represent a watershed in this respect, as business life in China and Hong Kong was subject to significantly greater restrictions during the pandemic than in Europe or the US. The question of whether Chinese buyers will return to the auction market in a big way is assessed differently by different players: "Hong Kong has shaped the market in recent years, but the former buyers are hardly making an appearance at the moment," reports Zurich auctioneer Franz Wermuth, for example. It is certainly true, Wermuth continues, that this year's primeur tastings in Bordeaux, for example, were attended by a similar number of Chinese guests as in the best years before Covid, but purchases are still only made on a small scale. After the end of Covid restrictions, travel is a priority, he said.

In contrast, John Kapon of auction house Acker reports that activities in China and Hong Kong are with the start of the new year there (i.e. at the end of February). Marc Fischer of Steinfels Auktionen in Zurich also says with a view to the auction on June 9 and 10: "Demand from Asia is still very strong." In contrast, he says, the trade from the UK is currently bidding only very cautiously. Now one can speculate whether at the Zurich auction site in particular... the strong Swiss franc is causal for the reticence of the British or whether it is a Brexit consequence.

When asked explicitly whether there was a Brexit effect on their activities in the UK, the auction houses operating in England all answered in the negative. For Christie's, one of the top dogs in London, Tim Triptree, Master of Wine (MW) and International Director Wine, is on record as saying that Brexit has had no significant effect on their London sales figures. Brexit has only affected the consumption of cheap wines, for the fine and rare wine market it is not an issue, estimates John Kapon from the auction house Acker, which does not conduct any auctions in the UK, but has many consignors as well as buyers in the UK. Logistical problems in the cross-border transport of wines between the UK and EU countries do exist, however, according to Charles Antin of Zachy's. And both economic areas are important for his company, he said.

In 2021, Sotheby's was rumoured to relocate part of its wine activities from London to France - without explicitly establishing a connection to the separation of the United Kingdom from the EU. At the same time, it was announced that Sotheby's will take over the prestigious charity auction of the Hospices de Beaune from the hands of Christie's. De facto, Beaune now seems to emerge as a focal point of Sotheby's French activities, even outside the Hospices auction; online auctions are currently taking place at intervals of six to eight weeks, which are apparently controlled from the Beaune site, and in which Burgundy is naturally prominently represented. In March, for example, nine bottles of 1985 Chambolle-Musigny Premier Cru Les Amoureuses from Georges Roumier went over the table for 68,750 euros at one such auction.

Burgundy bubble?

Almost all auction houses surveyed by Falstaff note that the price increase for the most sought-after Burgundies, which has been exponential in some cases in recent years, has consolidated again. "In the case of high-quality Burgundies from renowned producers, the supply is meeting with a small number of buyers," Jens Krau of Koppe, for example, has observed. Opinions differ as to whether this should be seen as the bursting of a bubble. Marc Fischer from Steinfels states: "Burgundy had a bubble that has now burst. Partly, the demand for the most expensive wines has almost come to a standstill." In the case of lots that were not sold in an auction and ended up in the post-sale, Fischer continues, these were almost exclusively expensive Burgundy.

The figures of the online auction house iDealwine indicate a similar trend: on the platform, which operates from Paris and has recently started offering a service in German, there were among the most expensive 20 bottles of the first half of 2023, reports Cyrille Jomand, CEO of the company, eleven Burgundies - in 2022, by contrast, all 50 of the most expensive bottles came from Burgundy.

Tim Triptree, on the other hand, points out that the volumes of top Burgundies are too small, rather than that one needing to fear a bubble. After more than 40 years of professional experience, Franz Wermuth also lets the perspective of the Burgundy lover flow in when he says: "The problem with Burgundy is that the label drinkers make the prices. And even Rousseau has only three barrels of some wines, so anything can happen with prices." So unease about prices yes - but fear of loss of value rather no?

Thomas Rosendahl Andersen has a similar view; Head of Department Wine at Danish auctioneer Bruun Rasmussen: "Top companies from Burgundy still get high prices." According to Rosendahl Andersen, he is also enthusiastic about the fact that new names with exciting wines keep emerging from Burgundy. Charles Antin of Zachy's also doesn't see any dark clouds in the Burgundy sky: "There was a bubble for a few producers whose wines simply rose in value too quickly. But the bubble didn't burst; it came back down to earth on its own. And I don't think there will ever be a bubble for wines from DRC, Roumier, Rousseau, Coche or Ramonet."

However bullish some auction houses may be, figures from London wine exchange Liv-ex urge caution: after peaking in October 2022, the "Burgundy 150 Index" has embarked on a stable downward trend. Also, currently the most demanded wines, in terms of number of bids, are no longer from Burgundy and Bordeaux as in 2022, but from Bordeaux, Tuscany and Champagne.

Call prices

Most auction houses reported in our survey that between 90 and 100 percent of the lots offered in their auctions would sell. Looking at the auction results in detail, however, one has the impression that at the moment between 20 to 40 percent of the bids do not find a buyer, at least not at the auction. How many wines change hands in the post-sale is a black box. Some houses even accept underbids in the post-sale - that is, prices that are lower than the auction's starting price.

Starting prices are in any case a subject of constant wrangling between consignors and auctioneers: while consignors want to be guaranteed the highest possible minimum price, auctioneers plead for a moderate starting price to draw interest to the lot. Marc Fischer of Steinfels is rigorous: "Too high call prices lead to less demand. Therefore, we do not accept consignments with too high call prices." "The discussion about call prices has always existed," says Thomas Rosendahl Andersen, "but of course the high hammer prices of recent years have raised the expectations of consignors." He estimates that exclamation prices are currently ten to 20 percent higher on average than in the past, and in individual cases significantly higher. Figures from iDealwine - where call-out prices are linked to last hammer prices - show that in 2022, compared to 2021, Burgundy was 58.6 percent higher, Champagne 42.4 percent higher, Bordeaux 21.2 percent higher, Italian wines 15 percent higher. In 2022/23, auction prices rose by roughly the same amount.

"At the moment, we often have to discuss the call prices more," Stefan Sedlmeyr of the Munich Wine Company also reports, "not least because more and more consignors are investors, sometimes with completely wrongly purchased wines as investment objects." Those who want to invest in wine, Sedlmeyr continues, should obtain information from auction houses as experts in the secondary market, not only among producers and wine merchants. "The majority of investment wine cellars, whether institutional, commercial or private, are put together incorrectly."

Too much wine in the cellar?

Serena Sutcliffe, who headed the Wine Department at Sotheby's until 2015, used to tell us in her active days that the typical phone call always began with the same words, "Serena, I think I have too much wine." This was then followed by a major posting. However, this type of collector usually uses his proceeds to buy new wines again. Not even the most diligent collector has so much wine in the cellar that he would not weaken at a special bottle.

"Many cellar sales also arise due to deaths, financial emergencies or because of a health renunciation of alcohol," knows Karin Gabriel of the Swiss "Wine Exchange". Charles Antin of Zachy's, in turn, gives a laconic answer to the question of whether cellars are currently too full: "Some people have too much wine and they sell, some people have too little and they buy."