Why buy wine at auction? Primarily because the breadth of fine and rare wines on offer far exceeds the typical stock available at retail. In addition, auction prices generally fall below retail levels and occasionally even below wholesale. Sound intriguing? Wine Spectator has compiled a guide to help you navigate the auction world.
Know What You Want
Before you attend an auction, determine your objectives. Are you filling in gaps in a pre-existing collection? Are you looking to increase your cellar inventory? Are you buying for investment's sake? If you are starting from scratch, which wine regions do you wish to concentrate on? In the absence of a concrete plan, you may get sidetracked entirely.
Study the Catalog
Auction houses offer catalogs of their upcoming sales. Read the catalog's condition reports carefully. Wines kept in professional or home temperature- and humidity-controlled storage are preferable to collections housed in natural or "passive" cellars, because the latter are often subject to temperature fluctuations, which can affect wines adversely. In particular, study the ullage levels, as the air space between the cork and the liquid is a barometer of a wine's health. Levels may vary according to a wine's age and the manner in which it was stored. Top or upper-shoulder levels are not uncommon for wines more than 30 years old, but raise a red flag for a 10- to 20-year-old bottle, where levels should still be into or close to the bottle's neck.
Know What It's Worth
Smart collectors carefully cross-reference retail prices, previously realized auction prices and estimates. The reviews in WineSpectator.com's Wine Ratings Search include latest auction prices for approximately 10,000 cellar-worthy wines, serving as a gauge of the "going rates" at auctions.
Don't Expect a Bargain Much Below the Estimate
Understand that auction estimates are only a guideline, not a guarantee. They are usually based on previous hammer prices for the identical wine and serve as an approximation of the final outcome. Almost all wines offered at auction have a reserve: a sum agreed upon between the consignor and the auction house below which the wine cannot be sold. The reserve is usually set somewhere between 80 and 100 percent of the low estimate (though never above it). So don't expect to snare a case drastically below the low estimate. If a lot doesn't meet its reserve, it won't be sold. In auction parlance that means it will be "passed" or "bought in."
Calculate the Hidden Costs
Remember to factor in the supplementary charges that will be added to the final cost of your purchase as stated in the catalog. The major auction houses charge a buyer's premium ranging from 19.5 percent to 23.5 percent of the winning bid. Sales tax, shipping and insurance charges can add another 15 percent to your bill. Put another way, a $500 purchase may cost upwards of $675 once delivered.
Consider a Dry Run
The best way for a first-time auctiongoer to get the hang of the live-auction process is to attend a sale with no intention of actually bidding. All commercial wine auctions are free to attend and tickets are not required, though a charge (ranging from $50 to $75) is often levied for presale wine tastings, which some auction houses host to familiarize potential bidders with highlights from the upcoming sale. Although wine auctions were once coat-and-tie affairs, nowadays the dress code is fairly casual. However, evening sales tend to be more formal. Just take a seat and survey the entire room to get a perspective on what's happening. Watch the bidding on the floor, the phone and the order book and follow the auctioneer's movements. Alternatively, neophytes might want to focus on Internet auctions first; quantities are usually smaller and costs are lower than at live sales, where wines are typically offered by the case.
Keep Your Emotions in Check
When bidding, it's a good idea to set a ceiling for your maximum bid and stick to it. Don't fall prey to auction fever. Few collectible wines qualify as unique or one-of-a-kind items that justify frenzied bidding. For the most part, the wines you are after will come around again. A tactic favored by many seasoned collectors, to keep their emotions from getting the better of them on the salesroom floor, is to place absentee bids by fax or e-mail; in this scenario, decide on the maximum amount you are prepared to pay for a lot. If yours proves to be the winning bid, you will be charged no more than one bid-step above the competing bid, no matter how high your limit. In the case of a tie, the lot goes to the first bid submitted.
Come Up With a Gameplan
Draw up a list of potential purchases and devise a buying strategy before entering the salesroom. The pace is usually too quick—sometimes as many as three lots a minute—to make decisions on the fly. Listen carefully to the auctioneer, as he or she may drop hints about the interest level in an item, or when the order book (which tracks absentee bids) is depleted. By attending a sale in person, advanced collectors maximize the possibility of snaring something special that might not have initially caught their eye.
How to Bid
All practiced auctiongoers have their personal bidding style. Some simply raise their paddle at the outset of a lot and lower it only when they have secured the item or when the bidding exceeds their spending limit. One particularly effective tactic for high-priced wines is to enter the fray at the very last minute, when the high bidder thinks he has secured the prize. This tends to be demoralizing to the person who thought the lot was going to be his or hers.
VIDEO: AT AN AUCTION
- Single-cellar collections that were purchased as futures or immediately upon release and never moved until consigned almost always command a premium. Most collectors feel the benefits of such pristine provenance are worth the elevated price. If you are contemplating an extremely valuable lot of wine, try to learn everything possible about its provenance.
- Professional wine dealers and restaurateurs typically shun bottles with torn or stained labels, because they are harder to re-sell. Similarly, they often avoid lots that don't come in the original wooden case. For collectors who intend to drink their purchases, such conditions may not matter and can result in a nice price break.
- Mixed lots, containing different vintages of the same wine ("verticals") or different wines of the same vintage ("horizontals") or an assortment of diverse wines, often represent very good value. Sometimes the winning bid falls below the combined value of the wines contained in the lot, because not all bidders take the time to calculate the worth of the lot item by item.
- Unlike at a restaurant, where you can send back a wine that is off, at auction you are basically buying "as-is." Read the fine print in the catalog regarding warranties and liabilities. When possible, attend the presale wine tastings. Usually they occur a couple of days before the auction itself, and are advertised in the catalog. There can be 50-plus wines poured, which may include first-growth Bordeaux, premium Burgundies and blue-chip California wines.
Peter D. Meltzer is Wine Spectator's auction correspondent and author of Keys to the Cellar: Strategies and Secrets of Wine Collecting.
Read the companion piece to this article, Cellars 101: How to Sell Wine at Auction.
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
All international phone numbers should be preceded by 011 when dialed from the United States.