Auction Pricing Question

This is by no means an absolute, but I was curious why some wines made between 2000-2011 are less expensive at auction then more current vintages? Is the winemaking better? Are the grapes better? For examples, being a Napa Cab guy, I’ve bought a 2009 and 2010 Fantesca for $85 each. Current vintages are $200+. I’ve also purchased 2010 Diamond Creek for $130 and they are over $225. Clearly not scientific by any means, but one would think that an aged wine would be more desirable. For those of us that follow lots at auctions I just thought it was interesting

people have short memories. As wine prices rise, many of us backfill great older vintages at lower prices. Can’t explain it otherwise.

Paul - It’s a strange and beneficial anomaly.

In theory, it could be due to the uncertain provenance (how was it stored?). But that really doesn’t explain the large differentials. Instead, it seems to be due to short memories, as Alan said, or ignorance about past vintages and the longevity of serious wines.

The wine cost less to buy 10-15-20 years ago so it can be sold for cheaper than current pricing. Newer releases are going to be sold at or above the current purchase price unless you’re selling for a loss and that really doesn’t make sense. In the grand scheme of things it makes back filling cheaper than buying new releases.

+1

The price of any wine at auction shows it’s true price. Retail, it only takes 1 buyer to set the market. At auction, it takes 2.

To speak more directly to California, there is definitely a softening of the market. The continuation of increased release pricing is causing this, and I believe that it is driving clients to other categories. I think Bordeaux is benefiting quite a bit.

But that doesn’t explain why buyers aren’t bidding the prices above current release prices, which they should if aging improves a wine. Plus, there’s less of the old vintages kicking around. For some reason, there’s less demand for older wines so, even though the supply is lower, the prices are lower, too.

If you are a savvy buyer, why would you bid the price of an older, lower priced bottle above the price of current retail? You would walk away from that specific bottle and move on to the next one. I would say the cult wines are going to get their prices pushed up to or above current release pricing but most bottles should not. There could also be the fear that an aged bottle might not have been stored perfectly so there is some risk associated with buying at auction.

Aside from a handful of select wines and select vintages, almost no California wine is trading over it’s current release price. The only one that consistently trades over the release price is Screamer. You would be shocked how many are regularly trading under release price.

This happens a lot. Release prices reflect the hopes, dreams and desires of the producers, or perhaps local market realities in terms of cost structure, or perceived standards. Auction prices reflect market value. For wines traded heavily, that market value probably reflects the more efficient, accurate belief by buyers of the bottle’s value.

You picked some Napa Cab examples, and for no wine/region have costs and perception driven prices up as much relative to market perception. Many many new wines are being released in the $150-$250 range. I’m really amazed by this. E.g. just this week I got an offer from Tench for their first Cabernet release (2017) at $195. Will buyers pay? Wines that aren’t sold will eventually find their way into the auction market, and I’m certain that they will sell at a far lower price. This is the reality of Napa Cab. Great pickings in auctions if you have patience! This does occur in other regions’ wines but there is much more variation.

Very true. I back filled many vintages of high end Napa wine last year well under current release price and ready to drink now. I can only imagine the burden the unsold inventory of high end wine has on those wineries.

You’re assuming the aged bottle should be/is worth less, because it cost less originally. The original cost doesn’t have no bearing on the current market value of a non-perishable collectible. Would you say that a 1920 Rolls Royce should be valued based on what it cost in 1920?

Even discounting a bit for the risk of poor storage, shouldn’t a 20-year-old Bordeaux or Napa cab from a good producer in a good vintage be worth more than a current release? Particularly, given that there is much less of it than there is of current vintages. That’s the intriguing question raised by the OP.

The car would definitely be worth more depending on its condition. The bottle of wine may have increased in value but to increase as high as the current release price makes the buy less attractive when you include auction house fees + shipping. I would say this is dependent on the winery, the score and of course the vintage and condition of bottle. Those selling at auction are also going to check historical data for their bottles to see what the market value is for those bottles. If you list the bottle too highly priced it won’t sell.

This is an interesting discussion and if I had to start collecting wine from scratch again, I would definitely start with back filling and not buy the current releases like I have been conditioned to do.

Jeff, agreed on back filling. What I try to do now is focus my new release buying for wines that I think will become harder to find (e.g. most Burgundy, Barolo) and skip new releases for things that are plentiful in the backfill/auction market (California Cabs, Bordeaux).

Which auction sites do you use?



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In all seriousness, there are two interesting business & marketing aspects here:

  1. I don’t know whether the French consciously sought out the concept of Terroir, or stumbled upon it accidentally, but so long as the Chinese can’t figure out how to recreate French Terroir in outer Mongolia, that concept of Terroir is a marketing goldmine.

  2. At the end of the sales season for the high-end women’s luxury leather handbag makers, the famous brands will buy back any unsold inventory from the retailers and DESTROY it all, so as to maintain the illusion of scarcity. Whereas in the wine world, my understanding is that the luxury wines are bottled without labels [or simply held in stainless steel tanks until a middleman comes around with a decent bid for the product], so that those wines can be resold as “shiners” [or “stencils”] if a winery’s own marketing campaign fails to move the product.

With all the environmental insanity in California now, I suppose trying to destroy the wine would be dadgum near impossible. You could maybe sell it off to be turned into a denatured solvent [although I can’t imagine there are still any chemical companies creating solvents within California anymore], but the easier option would be to fake an accident at your winery, and dump it all into the local water runoff system, and take the payout from the insurance company.

I wonder if we’re getting close enough to “Peak Bourbon” now that that’s why we keep seeing all these industrial accidents in the general vicinity of the Kentucky River?

First off, [rofl.gif]

Second, it’s how many potential clients exist for each. French wine is marketed and sold globally, and has been for a very, very long time.

California wine though has only recently tried to expand it’s global footprint, and has had a very, very hard time getting traction in Europe. It’s very pocketed success in Asia too. So unless California can create more global hoopla, it will always lag behind. I really think it has nothing to do with quality, just the size of the audience.

But there are also fundamental mathematical constraints here [or, more precisely, the ABSENCE of fundamental mathematical constraints]: Napa [and Sonoma and Paso Robles] are proving that they can turn out a dadgum nearly infinite supply of high-fruit-ester high-anthocyanin high-residual-sugar high-alcohol Cabernet, but almost no labels have been able to establish a sense of uniqueness within that infinite supply.

On the Chardonnay side of things, Joe Davis & Sam Balderas seemed to be making a lot of progress in establishing the importance of the Sleepy Hollow vineyard, but then Gallo moved in and completely ruined the concept of that brand.

On the Cabernet side of things, there has been an enormous amount of attention paid [by lawyers] to the To-Kalon vineyard, but is there actually an identifiable To-Kalon Cabernet* signature which distinguishes that fruit from any other valley-floor fruit in Napa?

When burgundian obsessives taste blind, they can [with reasonable certainty] exclaim, “Oh, that’s obviously Charmes-Chambertin!” [rather than Le Chambertin].

But can anyone do such thing within the confines of Napa itself?

For that matter, can anyone even reliably distinguish Paso Robles from Napa from Sonoma [when tasted blind]?

I don’t know the answer to those questions - maybe they can make the distinctions - but I doubt that I could.

*My layman’s guess is that your best chance for a recognizable To-Kalon fruit signature would come from the I-Block Sauvignon Blanc [vis-a-vis other Sauvignon Blancs from Napa].

Pretty much all of them.The smaller ones have more random bargains (Heritage, Spectrum). The bigger ones have fancier names and more volume in general (HDH, Zachy’s, Acker). K&L and Winebid are very good and have continuous auctions. There are many more. Most of them have crummy interfaces that make searching a challenge.

Off topic, but this happens far less often than people think.