Denver Magazine / July 2009 / Opening Bid

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Opening Bid

Old vines meet new technology as wine auctions head into the 21st century.

“Is that 2005 Bouchard Volnay really worth an extra three bucks?



I already bid $40, but now some jerk named winobuddy371 just topped me by two smackeroos. Geez, $43 is a lot of money for village-level Burgundy, but it is Bouchard ..."

Thus began the madness of my downward spiral into the world of wine auctions, which, in my case, is mostly an online affliction. Not quite bricks-and-mortar, not quite vaporware — online wine sales get my juices going.

Why? The maturation of the auction process into viable business models in both the snail world and on the Internet is, to me, a sign that some technologies are, in fact, reaching maturity. They’re also fun to play with except that mistakes cost money. My money. But there’s always the possibility that I can score something really cool at less than retail price, and this fact alone means I end up buying a lot of wine online.

Of course, vino has been sold at auction for centuries but almost always as a small part of some other transactional event — often an estate auction or perhaps a bankrupt restaurant’s asset sale. And just as with most products that are sold in both retail stores and online, there are several varieties of wine auctions.

But a lowering tide grounds all ships, and the onset of the recent worldwide recession is evident in total wine auction numbers over the past three years. While global sales increased 45 percent to $240 million in 2006 and went up another 25 percent to $301 million in 2007, they fell to $276 million in 2008, according to figures released by the major commercial auction houses. But the good news is that, after a disastrous fourth quarter in 2008 in which auction prices for fine wine plummeted and percent-sold rates plunged as low as 31 percent, a smaller but more stable auction market has emerged in 2009.

Even so, values continue to slip and significantly less wine trades hands. In total, 11 auctions in the first quarter of 2009 brought in $22,791,490, compared with $42,628,275 from 15 auctions during the same time period in 2008.

Yes, the marketplace takes all comers on a wild and woolly ride; wine at auction is a luxury commodity fully dependent on the state of the economy at the time of sale. Yet $22 million per quarter is still a lot of moolah.

Where Began the Madness?

To know the whole story, we have to go back to the mid-1960s, when Michael Broadbent re-established venerable Christie’s wine auction business. Or perhaps we should journey to the early 1920s, when the most prestigious French Bordeaux houses began to self-bottle their crops, thus creating brand awareness and significant value all in one fell swoop. Either way, the seminal moment occurred just past 2 pm on Thursday, December 5, 1985, when Broadbent auctioned off a 1787 Lafite Rothschild reputed to belong to Thomas Jefferson for $156,000.

From that point, wine became an auction rage, a very hip way to barter. Christie’s, Sotheby’s and a host of other auction houses madly competed for the very best bottles, even though they comprised a vanishingly small percentage of total sales. Wine prices peaked in the mid-1990s, just a few years before the dot-com bust, and although the current economy has put a damper on sales of all sorts of luxury items, wine still has significant intrinsic value, heightened by the increasing rarity of older vintages.

While traditional auction houses charge additional premiums and thus net sellers less on a percentage basis than free-for-all consumer Internet sites, they also create a more genteel atmosphere in which to contemplate fine wine purchases. Some also offer greater levels of buyer protection, including stronger antifraud provisions.

But personally, although I’ve always been treated properly by traditional auction settings, my preference tilts toward online auctions. For one thing, I’m not often in the market for ultra-high-end bottles, juice that is so expensive a bad bottle makes the purchaser skirt with insolvency. No, I spend most of my time under $50 per bottle, thank you. And for such items, online is just fine.

Where to Shop

First on the list are consumer-driven sites such as Wine Commune, the eBay of wine. There are no buyer premiums, and caveat emptor rules. There are always great deals to be found in such places, but the downsides include everything that is wrong about Web 2.0: no editorial control, no control period. Did I mention there’s really no control?

Winebid.com can be slightly more swish, as can Brentwood and some other sites. But there is something that must be said now. The most important element of the sale, whether in person or online, is provenance, or the conditions under which the wine has been stored since bottling. There’s an old saying in the world of wine: As the years pass, there are no longer any good vintages, merely outstanding bottles.

Less than two percent of all wine is meant to be aged more than a year or two after bottling, and thus the fraction of the world’s annual fermented grape juice production that would even come up at auction is disappearing. On top of that, the number of collectible bottles from each vintage inexorably declines as the years pass because, after all, wine is mostly made to be drunk. And the percentage of these valuable bottles that have actually been stored properly is even smaller, thus making a wine auction an extremely hazardous place to satisfy a viniferous hankering.

Another unfortunate consequence of this monetary mayhem has been a substantial jump in wine counterfeiting, a constant hazard at auction. Wine Spectator magazine notes that some experts suspect as much as five percent of the wine sold in secondary markets could be counterfeit. One form of fraud involves affixing counterfeit labels of expensive juice to bottles that are much less cher.

Examples abound, including an incident in 2002 when some of the weaker 1991 vintage of Château Lafite Rothschild was relabeled and sold as the acclaimed 1982 vintage. Another black eye came in 2000, when Italian authorities uncovered a warehouse with nearly 20,000 bottles of fake Super Tuscan 1995 Sassicaia. They arrested a number of people, including the group’s salesperson, who was selling the fake wine out of the back of a Peugeot hatchback!

So fraud is a very real risk when buying wine through a third party (wine may be the only collectible product that doesn’t require some certification of origin when resold). Add in the chance that improper provenance or chance microbial infection may have damaged the wine in a way that can’t be detected except by opening the bottle, and auctions are no doubt a hazardous undertaking, especially for a novice wine buyer. If you’re in this category and want to dip your toes into the auction waters, I highly recommend you first take the time to form a relationship with the wine manager at a good liquor store in your neighborhood.

In east Denver, I recommend Will, wine manager at Chambers Wine and Liquor. To the south lies Davidsons Liquor, where you can’t go wrong listening to Dennis and Jack or Andrew, Justin, Tom, and the other fine folks at Heritage Wine & Liquor. Downtown, I’d talk to Sheila at Argonaut.

There are also some specialty shops scattered around town that have very knowledgeable personnel, including Brad at Primo Vino in Old Town Westminster and Wayne and Sally, both Master Sommeliers who hang out at Boulder Wine Merchants. Any of these folks will be able to steer you toward wines you will most likely be able to thoroughly enjoy. Only after you learn your own tastes would I ever recommend you go after bottles at auction, and even at that point, only seek wine that you’ll actually drink.

And then? Auctions can be thrilling, especially with wine, which is guaranteed to become more scarce over time. So when you’ve become truly knowledgeable about your own tastes, feel free to dip your sandals into the auction surf. The water can be just fine, especially to the properly prepared.



“What the hell; it’s only money.

Winobuddy371, $43 it is, and I hope you choke on it. What’s that? You’re speechless? Just a few seconds … three, two, one. It’s mine! It’s mine! Take that, winobuddy371!”