DRC is bumping into the ceiling

[Greg_K]

…yes lots of vol especially when the liquidity is so low. The wines of DRC are some of the most traded on the secondary market and still I wouldn’t be confident drawing a precise view on only a few traded bottles.

Look at the trades:

008820FC-BA71-4F2B-A808-7DDE9F6CF848.jpeg

C1293F91-B609-47E3-AECE-C3F9DCD7AB80.jpeg

What do you make of 7 bottles in 2022? How are you thinking about all of the idiosyncratic aspects of auctions that aren’t captured precisely in the hammer? I wouldn’t draw much other than prices are at highs.

Alex, can you run some multi-linear regression in this model to account for levels of bidder inebriation?

That’s only available to pro subscribers of my sub stack on highly suspect wine analytics.

[Ian_Dorin]

Took a quick gander at the Acker live auction this AM. Vast majority of DRC selling at low estimate, some at minimum reserve. Sounds like a couple of Hong Kong, mainland China bidders scooping up the wines. Has the DRC balloon finally hit the stratosphere in pricing? Clearly sounds like the heady days of short term profiteering are over for now. I hope some of those ubiquitous wine investment funds go the way of crypto for awhile and we see some sanity back in the wine world. Probably just wishful thinking. I expect lots of comments telling me this is just a temporary pause in the market…

What were the conditions and vintages? This could make a huge difference.

If 90 RC set a world record, that wouldn’t shock me. If 94 La Tache hit the low estimate, that would also not shock me.

2 other things to bring up here

1. This is one auction. One auction (especially one in late June, as a lot of people are on the road) does not shift a market.

2. how did you know China bought these lots?

FWIW, the price that folks are getting for 2019 DRC is OBSCENE. Like Obscenely obscene. So the demand and interest for young DRC is there (and I’m talking what retailers are actually realizing for the 2019s). It’ll be really interesting to see when the first 2019s hit auction.

[Ethan_Abraham]

Kapon will often mention where the buyer is bidding from on the live stream.

[Andy_Sc]

Look at DRC RC 2015: Quite quickly went to 25k after release, stayed there for a while, then back down to 17/18k (when covid hit), before rising to almost 50k last year, now back down to 40k. Like with all high-end wines the general direction (up over time) is clear but there will always be a lot of volatility and times/years where prices come down.

…yes lots of vol especially when the liquidity is so low. The wines of DRC are some of the most traded on the secondary market and still I wouldn’t be confident drawing a precise view on only a few traded bottles.

What do you make of 7 bottles in 2022? How are you thinking about all of the idiosyncratic aspects of auctions that aren’t captured precisely in the hammer? I wouldn’t draw much other than prices are at highs.

I was looking at wine-searcher price development. There are much more trades worldwide than what goes in auction.

[Alex_Valdes]

.

[Alex_Valdes]

Look at DRC RC 2015: Quite quickly went to 25k after release, stayed there for a while, then back down to 17/18k (when covid hit), before rising to almost 50k last year, now back down to 40k. Like with all high-end wines the general direction (up over time) is clear but there will always be a lot of volatility and times/years where prices come down.

.

…yes lots of vol especially when the liquidity is so low. The wines of DRC are some of the most traded on the secondary market and still I wouldn’t be confident drawing a precise view on only a few traded bottles.

What do you make of 7 bottles in 2022? How are you thinking about all of the idiosyncratic aspects of auctions that aren’t captured precisely in the hammer? I wouldn’t draw much other than prices are at highs.

I was looking at wine-searcher price development. There are much more trades worldwide than what goes in auction.

Do they publish retail sales? If so where can I find this feed? I know WMJ now offers retail as well but I haven’t upgraded to that product yet

If you’re referring to the chart on the analytics tab, I believe that is average offer not sales.

[Andy_Sc]

Do they publish retail sales? If so where can I find this feed? I know WMJ now offers retail as well but I haven’t upgraded to that product yet

If you’re referring to the chart on the analytics tab, I believe that is average offer not sales.

Yes, Analytics tab. Although it‘s not strictly transactions only, the average price should be a sufficiently good indicator of the levels transactions happen at.

[Alex_Valdes]

Do they publish retail sales? If so where can I find this feed? I know WMJ now offers retail as well but I haven’t upgraded to that product yet

If you’re referring to the chart on the analytics tab, I believe that is average offer not sales.

Yes, Analytics tab. Although it‘s not strictly transactions only, the average price should be a sufficiently good indicator of the levels transactions happen.

I agree with you for higher volume wines with less variable mark up. I don’t think that bears out with something like DRC where 1) most of the transactions occurred at lower prices not shown on WS, 2) there are few remaining offers (often too high to clear which is why they are there), 3) the offer vol is quite high (given how speculative the offers likely are), and 4) the offer types are variable (from pristine banded to bottles with conditions and multiple previous owners).

For example, right now, there are two offers for 2015 DRC RC on WS:
Acker at 28,995
Wine Cellarage at 71,549

Would you put the average price at $49k or so? I wouldn’t.

Auction is far from perfect but it is often the best indication of the market as it is decently pure from a markets perspective (something like LivEx or aggregated broker sales would also be fairly indicative). Retail sales transactions would be nice but is a bit more misleading given different retailers use vastly different mark ups for such wines.

[Dennis_Borczon]

Kapon will often mention where the buyer is bidding from on the live stream.

This…seems like there are a couple of big players there, or perhaps it is a consortium buyer for a group. Obviously there is still a LOT of money sloshing around in Asia with a price is no object mentality. I wish I knew the story behind Bizot. Why Bizot? Scratching my head about that one. Despite what looks like a flattening of prices, Kapon still sent out an email talking about how many records were set. To quote, “The very rich really are very different than you and I”

[Vince_T]

Maybe RC is insane, but down the curve their wines have hit a ceiling… 2018 DRC RSV is a cool $3800, which seems like a downright steal when compared to the offer for 2018 Arnoux-Lachaux RSV for $6,800.

[Alex_Valdes]

Maybe RC is insane, but down the curve their wines have hit a ceiling… 2018 DRC RSV is a cool $3800, which seems like a downright steal when compared to the offer for 2018 Arnoux-Lachaux RSV for $6,800.

How many bottles of AL RSV are made? 2018 DRC RSV is 12709

Edit: looking quickly, seems like 3.5 barrels or about 1100 bottles (1/11.5 of the DRC production)

2nd Edit: I am curious if AL will be able to sustain these levels. CLB leveled up multiple times and continues to see strong support. Bizot next and similar strong support for a small number of bottles. We will see whether AL can keep up. There has only been 1 auction trade (at the major houses) of the AL RSV 2018 and it was almost a year ago at 3k. Does the market clear at 6k now? Is that reaching? Does one purchase really reset the MTM?

3rd edit: 27 bottles sold of the 2018 DRC RSV over the last 2 years averaging 3500 and 3300 in 2021 and 2022 respectively.

[Dennis_Borczon]

The label licking continues. Is the A-L RSV actually $3,000.00 better than DRC? Got to hand it to the Burgundians, they perfected the cult wine process. Something they stole from the 1990’s Napa producers. For $6,800.00, you can get 2 bottles of Screaming Eagle at auction!

[Vince_T]

The label licking continues. Is the A-L RSV actually $3,000.00 better than DRC? Got to hand it to the Burgundians, they perfected the cult wine process. Something they stole from the 1990’s Napa producers. For $6,800.00, you can get 2 bottles of Screaming Eagle at auction!

Or one bottle of Screagle Sauv Blanc

[Vince_T]

Maybe RC is insane, but down the curve their wines have hit a ceiling… 2018 DRC RSV is a cool $3800, which seems like a downright steal when compared to the offer for 2018 Arnoux-Lachaux RSV for $6,800.

How many bottles of AL RSV are made? 2018 DRC RSV is 12709

Edit: looking quickly, seems like 3.5 barrels or about 1100 bottles (1/11.5 of the DRC production)

2nd Edit: I am curious if AL will be able to sustain these levels. CLB leveled up multiple times and continues to see strong support. Bizot next and similar strong support for a small number of bottles. We will see whether AL can keep up. There has only been 1 auction trade (at the major houses) of the AL RSV 2018 and it was almost a year ago at 3k. Does the market clear at 6k now? Is that reaching? Does one purchase really reset the MTM?

3rd edit: 27 bottles sold of the 2018 DRC RSV over the last 2 years averaging 3500 and 3300 in 2021 and 2022 respectively.

Good question (in your second edit). K&L is another data point; no AL RSV sold, but 2018 AL CV has sold 5 times this year, with a cooling trend…

$2,600.00 6/3/2022
$2,901.50 5/5/2022
$3,000.00 4/12/2022
$3,350.00 4/5/2022
$3,701.00 3/28/2022

[Alex_Valdes]

Maybe RC is insane, but down the curve their wines have hit a ceiling… 2018 DRC RSV is a cool $3800, which seems like a downright steal when compared to the offer for 2018 Arnoux-Lachaux RSV for $6,800.

How many bottles of AL RSV are made? 2018 DRC RSV is 12709

Edit: looking quickly, seems like 3.5 barrels or about 1100 bottles (1/11.5 of the DRC production)

2nd Edit: I am curious if AL will be able to sustain these levels. CLB leveled up multiple times and continues to see strong support. Bizot next and similar strong support for a small number of bottles. We will see whether AL can keep up. There has only been 1 auction trade (at the major houses) of the AL RSV 2018 and it was almost a year ago at 3k. Does the market clear at 6k now? Is that reaching? Does one purchase really reset the MTM?

3rd edit: 27 bottles sold of the 2018 DRC RSV over the last 2 years averaging 3500 and 3300 in 2021 and 2022 respectively.

Good question (in your second edit). K&L is another data point; no AL RSV sold, but 2018 AL CV has sold 5 times this year, with a cooling trend…

$2,600.00 6/3/2022
$2,901.50 5/5/2022
$3,000.00 4/12/2022
$3,350.00 4/5/2022
$3,701.00 3/28/2022

Thanks. This is helpful.

It shows a glimpse of what price finding looks like in a highly illiquid market.

[Andrew_K]

2018 AL CV has sold 5 times this year, with a cooling trend…

$2,600.00 6/3/2022
$2,901.50 5/5/2022
$3,000.00 4/12/2022
$3,350.00 4/5/2022
$3,701.00 3/28/2022

Damn. I better get my 3 bottles to auction stat!

[MChang]

This reminds me of the hot take corner of the rousseau ws dinner.

[Alex_Valdes]

This reminds me of the hot take corner of the rousseau ws dinner.

If you want a spike in AL pricing all you need to do is throw the right dinner

[MChang]

This reminds me of the hot take corner of the rousseau ws dinner.

If you want a spike in AL pricing all you need to do is throw the right dinner

Or bizot as the case might be

[Greg_K]

This reminds me of the hot take corner of the rousseau ws dinner.

If you want a spike in AL pricing all you need to do is get the right rating

Fixed to be more correct, I think Certainly for Arnoux Lachaux the critical praise is a massive part of the equation.