Bordeaux pricing observations from the HDH auction...

[marcs]

as has been discussed here before, you don't really go to the HDH auction to save money. If you get out with retail price on some hard-to-get wines you've been looking for that's a good score. I did manage to pick up seven bottles of 2010 Geantet Pansiot Charmes Chambertin, a vintage no longer available in U.S. retail, for a significant discount to current release U.S. prices, hence had a good score, but those were about the only bottle of Burgundy or Italian or whatever I noticed that seemed to be below retail.

But it was a different story for Bordeaux. There were a LOT of recent vintage Bordeaux from 2015-16 in case lots, and they were almost uniformly selling below Winesearcher retail. E.g. cases of the 2016 Pichon Baron selling for $130 a bottle including fees, $20 a bottle below the retail price, 2015 Montrose for $120/bottle, $25-30 a bottle below retail, 2016 Montrose for $160/bottle, $15-25 a bottle below retail, 2016 Lynch for $130 a bottle/$15 a bottle below retail, etc. Those aren't amazing discounts but they take on more weight when you notice that 2015-2016 retail prices for Bordeaux have been stagnant at best compared to their futures prices and if anything have dropped somewhat. These are for vintages, especially 2016, touted as "best ever" when they came out.

So it seems like there is a whole lot of surplus inventory in the Bordeaux pipeline, and that is before the 2018 and 2019 vintages make landfall. Nor do I think the supposedly "bargain" pricing for the 2019s are going to clear it out. Those prices seem to have tempted back many BWE'ers but they aren't really all that great -- e.g. is the first tranche 2019 Pichon Baron at $125/bottle really that much better of a deal than the 2016 Pichon Baron at $150 / retail and $130 / bottle if you take the trouble to go to an auction? The story is similar when you compare the other good super seconds to prices currently available for 2015/16 (let alone 2014).

Bordeaux controls its prices pretty well, ok very well, but the last six years have seen four very good and two solid vintages. Plus we are in the midst of a historic economic slowdown, and the rising generation doesn't view Bordeaux as fashionable. How long can they keep the pricing ball in the air?

[DavidG]

And when we factor in the full economic impact of COVID, there will be even more downward pressure on prices in the coming year or two.

Pichon Baron has not been a bargain as a future for a while now, and the 2019 is not likely to be an exception. The wines have been fine, but financially you are spot on WRT timing.

[marcs]

I have loaded up a lot on wines in the last year, am pretty much set with everything I want to own for some time to come, perhaps I should have waited a year...been a huge price run over the last 18-24 months so I might have bought at the top of the market.

[Nicklasss]

I don't know who would sell 2015-2016 Bordeaux at the moment, but they surely lost lot of money to do so! Surely not a good time to sell wine at auction, less than 5 years after the vintage...

Nic

[marcs]

I don't think it's consumers selling this stuff, it's wholesalers in the commercial supply chain who can't find retail stores who are buyers. Or something like that, maybe even retail stores feeling they can't sell the bottles locally or whatever. Anyway, someone who knows the business better than I could give the details, but I'm pretty sure that people use auction channels as one way to unload excess supply.

[AKR]

Thanks for that market color. I've always had the suspicion that large trade buyers get secret rebates from the big auction houses. I just can't imagine anyone buying a couple million bucks a year of stuff isn't getting some kind of kickback as that happens in every other kind of sales business with published prices. Big customers don't want to pay the same as small fry, so adjustments are made behind the scenes, later.

So if it was the trade involved, those prices might be even softer...

[Musigny 151]

OTOH having large amounts of wine may be a good hedge if and when the Dow goes down to 18,000. And of course, in times of need, you have something to drink.

[Comte Flaneur]

Gold is on the move

Watches are very sought after, check out lot 38 in this Geneva auction

https://www.phillips.com/auctions/auction/CH080120

I suspect fine wine will hold up well

[marcs]

I don't really feel like wine prices truly diversify you from equity prices that much, it seems like stock market wealth drives a lot of pricing.

Unlike gold/diamonds/watches wine is not a practical alternative currency either, a little too bulky and delicate. But I guess it is in the same luxury market as watches.

[JimHow]

I got three bottles of 1989 Lynch Bages at a recent K&L auction that I would have had to ask one of my children to forego a semester in Ivy League if I had children.

[tim]

Jim, can I ask how much they set you back?

I only ask because I recently purchased some myself. And damn they were not cheap.

[JimHow]

well they were like$330 each Timmy, but when you factored in premium and taxes, they were over $400. Which of course is ridiculous. I now have 4 bottles in my cellar, which I will drink on my 65th, 70th, 75th, and 80th birthdays, and then I hope that I will die. Fortunately MichaelP is helping me get them across the counry so I'm at least saving a little on shipping. I'm done, though, no mas, no more '89 Lynch. we have created a monster. It is not THAT good.

[tim]

Ok, the ones I picked up were $300 a bottle all in. Expensive but still below market.

[JimHow]

Yeah, I'm done with '89 Lynch. No mas. No mas.

[tim]

Ok, I'll make a note: don't open any more 89 Lynch for Jim. No mas. No mas.

[marcs]

There was a 3-bottle lot of 89 LB at the recent HDH auction that went for $300/bottle all in.

The other case lots were actually more expensive, $380-400 a bottle all in.

Current retail is $345 a bottle with many available at that price from reliable sources.

[JimHow]

Ok, I'll make a note: don't open any more 89 Lynch for Jim. No mas. No mas.

Ha I meant no mas buying it, I'm happy to drink this 100-year wine til the day I die!

[marcs]

I have only purchased wines over $300/bottle twice in my life, a total of five bottles, and some of those were for my son's birth year.

I do sometimes wonder if I would have been better off building a collection that was half the size but twice the per bottle price.

[stefan]

Marcus, how many times have you opened an expensive bottle of Bordeaux and thought, "it is so good that I should buy more at the CURRENT price"?

[marcs]

A couple of times actually. 05 and 09 La Conseillante, and several times with Pichon Baron.

1995 Grand Puy Lacoste as well.

[DavidG]

It's a well-known phenomenon that retail prices are more than rarely lower than all-in costs for auction winners.
The few times I've participated in auctions I put an upper limit on how high I was willing to bid that worked out to at least 5% less after buyer's premium, tax, and shipping than I'd have been able to get the wine for at retail, also after tax and shipping. I can understand a willingness to pay more for impeccable provenance. That's never been in play for me, and I'm not really sure how certain one can ever be about provenance. So that upper limit is a hard stop that's easy to adhere to. Once the bidding crosses that line, I just go to retail.

Totally different story for wines that I can't find at retail. I'm not ITB but CellarTracker has WMJ data. I'm not sure how accurate a guide it is to market value. But I look there to get some idea. I'm sure the pros like Mark have better resources.

[s*d*r]

Why would anyone pay more at auction than at retail for a wine still available at retail?

Yes, if provenance is a concern but for a recent release, which is usually all you find at retail, that is not normally something of major concern.

I buy heavily at auctions - but only items so old or so rare (even if very young), they are not available anywhere in the US at reputable retail shops.

The only comparison I can sometimes make is the price at shops in Europe, usually France. And yes, I always pay more than that.

Stu

[DavidG]

I often see Bordeaux available at retail back to before 2000 on Wine Searcher. Maybe not widely available but there always seem to be a few who’ve figured out a way to ship into MD. But I’m not buying 1945 Petrus or 1961 Latour like Stu.

Why would someone pay more than they have to?

Unaware of retail pricing and availability
First time auction buyer unaware of vig, tax, and shipping details
Carelessness, caught up in the adrenaline rush, auction fever
Price is no object
Familiarity with auction house matters more than price
Shipping hassles (though in this case not really available at retail)

[tim]

The other psychological aspect of auctions is pre-auction estimates. During the last auction I participated in, I let a couple of deals go because the pre-auction estimates were so low compared to the value of the wines. Well that and I felt that my competitor would have gone quite a bit higher. Nonetheless, there is an impact to these estimates. If I look at an auction with really high estimates, I tend to avoid it. It can be a catch-22.