Current vintages are over-priced so they sit around a bit before they sell. Auction prices represent the “sell now” price.
This
Another factor (not saying it’s the biggest one, just a factor) is that the size and composition of the pool of auction buyers is quite different from the pool of current retail buyers.
Maybe a 2016 Duckhorn Three Palms Merlot goes for $90 on the retail shelf while the 2003 vintage of it can be had in an online auction for $65. The average retail shopper who likes Duckhorn merlot might buy the 2003 for $65 if it were sitting on the shelf in the “D” section of the merlots, but he isn’t the guy who knows about, thinks about, or makes the effort to be buying older Duckhorn in online auctions. Meanwhile, you have a small number of Victor Hongs scouring the auction market for good bargains on non-trophy mature bottles.
I agree. I think that’s what Rich was saying too. Some guy with money decides to get into the wine business, hires an expensive consultant, hires out or buys some land that’s either planted with grapes or that he plants with grapes, and he’s already sunk a lot of money into the venture before he’s produced anything. Then he comes to market with wine at $150 or more. It’s the newest wine by Consultant X that tastes just like all the other wine from Consultant X, which is why he was hired in the first place. They put together some marketing about how the wine is made in the vineyard and they’re just doing everything the most eco-friendly way and putting out a pure expression of the vineyard, blah blah blah.
But there’s a limited market for those wines and it’s pretty much a US market, whereas Bordeaux has known for many decades, even centuries. Maybe the new guy sells out of a few initial vintages but maybe not and once you lose momentum for a vintage, the wines sit around. In the wine business, you want to move the new stuff. That’s not because the older stuff is bad, it’s because having stuff sitting around costs money and the longer it’s there, the harder it is to generate demand for it.
So you clear it out at a discount. In other cases the wine’s been purchased but the owner decides that he just doesn’t need that wine any more because his friends are no longer impressed by the name.
I don’t know the economics of any specific winery, but I wonder how much of the pricing is prestige-seeking. Maybe things get priced really high to create some kind of cachet, and to do that you let some things go out the back door at a discount. If you just dropped the price to where you’d sell everything out, you might seem too pedestrian. You want to be Lord and Taylor, not JC Penny. Of course today you probably don’t want to be either . . .
After getting burned on this many times over the past few years, I have come around to the same conclusion; better chance of getting the wine cheaper in the secondary market than directly from the winery at release, for many wines.
Most recent example from this week: Neighbor says “Hey, I got an e-mail offer from [xxxx wine club] about the 2016 Cardinale for $275/bottle. I hear it’s good stuff, should I buy some?” I pull up the e-mail receipt from my auto-allocation that I had just received from Cardinale. Turns out I paid $325/bottle directly from the winery for the same wine. So much for being a loyal customer and buying from the winery. Like you said, skip new release and buy later.
To that point:
2012 Cardinale
CABERNET SAUVIGNON
USA> California> Napa Valley
My Price: $132.00 (my all in)
Community Average Value: $236.95
Auction (Wine Market Journal): $202.85
Then explain why there is a further softening of California wines at auction as a category?
I don’t think it’s as simple as being made out here (not just you, so please don’t think I’m singling you out). If I could make two assertions-
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The pool of Cali buyers at release (whether it be mailing list or retail buy) is shrinking due to rising prices and a very crowded market. Remember when there was only 7 cult wines? Even those early seven have helped create more among themselves with Araujo (Eisele and Accendo), Colgin (Colgin and Schrader), and Harlan (Harlan, Bond, Promontory) all adding to the pool and we haven’t even talked about wines like Realm, MacDonald, and so on. You can say that all of these aren’t cult wines, but their followings and/or ownership say that they have diluted their own markets pretty soundly and are dividing up shrinking dollars.
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I think collectors who can afford to buy high end California wines are moving their dollars else where when they see results like Peter highlighted. Not saying that every collector is looking to profit from the sale of their collection, but when you pay $275, and you only get back $110 (and that’s best case from Peter’s buy with NP included), why keep buying that wine?
Winery Library Release Price: $400
An auction is not the place one goes to find a “deal.” Great if you’re a seller though.
Not sure I follow this logic. I think Peter’s example is clearly a deal if you like that kind of wine.
Harlan estate is a great example. Just checked recent auction results for Harlan 2005 at Acker. This is going for about $750.00 all in for a 750ml. Current prices of 2015 (roughly same quality level) is about double commercially $1200.00 from multiple listings . Not sure about current release price from winery but it is fairly close to commercial price.
So why would you want to pay $450.00 more per unit for a newer vintage? in theory that extra 10 years of age should be worth something but it isn’t. I am not sure who is propping up the price for current releases of Harlan, but clearly there is likely to be no upside in hanging on to this for a decade and expecting it to sell for more.
Must be those Silicon Valley guys snapping these up…or not.
Much higher barrier of entry to purchase at auction versus retail. Requires research, regular following and tracking to find what you want, logistical/shipping issues, usually not available in the quantity you necessarily want, and on and on. And all that is assuming perfect provenance. These all add up to a much smaller buying pool. With retail, they come to you - you click a button and it’s yours. That’s worth a lot to some people, and less to others. (Also, I’m quite certain only a relatively small percentage of wine collectors even follow the auction market and therefore don’t know a lot of it is cheaper. A lot of people spend a lot on wine without doing the extensive research and hunting many of us do here.)
And then there is the fact that a lot of wine is overpriced at release. At bottom it all comes down to that.
In the sense that an auction item involves one seller and potentially many buyers. There’s a “scarcity” element to it, plus the social proof as evidenced by multiple buyers…And especially with the internet, where practically anyone can join as a bidder and contribute to driving the price up. These are some of the factors that make it, generally, not a place to find bargains. That’s not to say one can never find a bargain this way, it’s just not the ideal place to fish.
Where is the ideal place to fish, then?
Couldn’t disagree more.
You do realize many retailers and re-sellers regularly buy at auction?
I’m not sure what context you are working with, and what defines a “bargain” since that is based on each bidders wants and tastes. Are you getting a deal on La Tache of Lafite? No, as those are benchmark wines that are the classics of an auction catalog. Are you getting a deal on 2012 Lokoya? Sounds like it’s possible.
A recent example for myself was buying a 6 pack of 2016 JM Pillot Chassagne Clos St. Marc, and item that is ordinarily around $175-$200 retail, and quite difficult to round up 6, I snagged at an auction for $75 a bottle with BP and tax. A while back I bought a case of 1974 Sterling Cabernet for $40 a bottle all in, and the provenance was killer. I bought 5 bottles of 2007 Chevillon Les St Georges for $70 all in. None of these were within an eyelash of market price at retail, current or of the same vintage the day I bought them. Not one bad bottle among them (only having drunk 1 of the Clos St Marc to date though). For these items, there was possibly only one other bidder, or no other bidders. There are plenty of other items that I regret not bidding on when I saw the results, and how cheap things went.
Not every item sells at top price, just like not every item is a steal. No two auctions are the same. Where to find these deals? Any sale by any house.
The pond [or watering hole] with the great big hungry fish which no one else knows about.
Which, in this metaphor, is…?
If you’re a Wine Hunter, then don’t go blabbing your mouth about where the great big trophy stags* are.
Keep your damned mouth shut, and always fly under the radar.
*On second thought, I suppose they would be does, rather than stags.
Bingo. And how many times have many of us missed on a lot at auction, then seen it listed at 1.5-2x the price on a retailer “cellar” or “fine and rare” blast, where it sells out immediately?