Auction Pricing Question

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Paul Marshall
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Auction Pricing Question

#1 Post by Paul Marshall » February 10th, 2020, 6:52 pm

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

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Re: Auction Pricing Question

#2 Post by alan weinberg » February 10th, 2020, 8:38 pm

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

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Re: Auction Pricing Question

#3 Post by John Morris » February 10th, 2020, 9:02 pm

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.
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Re: Auction Pricing Question

#4 Post by Jeff_M. » February 10th, 2020, 9:20 pm

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.
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Re: Auction Pricing Question

#5 Post by Michael Martin » February 11th, 2020, 4:06 am

Jeff_M. wrote:
February 10th, 2020, 9:20 pm
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.
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Re: Auction Pricing Question

#6 Post by Ian Dorin » February 11th, 2020, 5:50 am

Paul Marshall wrote:
February 10th, 2020, 6:52 pm
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
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.
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Re: Auction Pricing Question

#7 Post by John Morris » February 11th, 2020, 7:04 am

Jeff_M. wrote:
February 10th, 2020, 9:20 pm
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.
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.
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Re: Auction Pricing Question

#8 Post by Jeff_M. » February 11th, 2020, 7:09 am

John Morris wrote:
February 11th, 2020, 7:04 am
Jeff_M. wrote:
February 10th, 2020, 9:20 pm
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.
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.
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Re: Auction Pricing Question

#9 Post by Ian Dorin » February 11th, 2020, 7:15 am

Jeff_M. wrote:
February 11th, 2020, 7:09 am
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.
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Re: Auction Pricing Question

#10 Post by R. Frankel » February 11th, 2020, 7:29 am

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.
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Re: Auction Pricing Question

#11 Post by Jeff_M. » February 11th, 2020, 7:36 am

Ian Dorin wrote:
February 11th, 2020, 7:15 am
Jeff_M. wrote:
February 11th, 2020, 7:09 am
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.
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.
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Re: Auction Pricing Question

#12 Post by John Morris » February 11th, 2020, 7:49 am

Jeff_M. wrote:
February 11th, 2020, 7:09 am
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.
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.
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Re: Auction Pricing Question

#13 Post by Jeff_M. » February 11th, 2020, 8:09 am

John Morris wrote:
February 11th, 2020, 7:49 am
Jeff_M. wrote:
February 11th, 2020, 7:09 am
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.
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.
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Re: Auction Pricing Question

#14 Post by R. Frankel » February 11th, 2020, 8:42 am

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).
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Re: Auction Pricing Question

#15 Post by Kedar Dubhashi » February 11th, 2020, 8:54 am

Which auction sites do you use?

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Re: Auction Pricing Question

#16 Post by Nathan Smyth » February 11th, 2020, 9:25 am

Ian Dorin wrote:
February 11th, 2020, 7:15 am
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.
Jeff_M. wrote:
February 11th, 2020, 7:36 am
I can only imagine the burden the unsold inventory of high end wine has on those wineries.
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tulips_daffodils.jpg
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cal-cabs_bourbon.jpg
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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?

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Re: Auction Pricing Question

#17 Post by Ian Dorin » February 11th, 2020, 11:25 am

Nathan Smyth wrote:
February 11th, 2020, 9:25 am
Ian Dorin wrote:
February 11th, 2020, 7:15 am
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.
Jeff_M. wrote:
February 11th, 2020, 7:36 am
I can only imagine the burden the unsold inventory of high end wine has on those wineries.
.
tulips_daffodils.jpg
.
.
cal-cabs_bourbon.jpg
.
.
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.
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Re: Auction Pricing Question

#18 Post by Nathan Smyth » February 11th, 2020, 12:29 pm

Ian Dorin wrote:
February 11th, 2020, 11:25 am
Second, it's how many potential clients exist for each... 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...
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].

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Re: Auction Pricing Question

#19 Post by R. Frankel » February 12th, 2020, 7:37 am

Kedar Dubhashi wrote:
February 11th, 2020, 8:54 am
Which auction sites do you use?
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.
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Re: Auction Pricing Question

#20 Post by Brady Daniels » February 12th, 2020, 8:47 am

Nathan Smyth wrote:
February 11th, 2020, 12:29 pm
When burgundian obsessives taste blind, they can [with reasonable certainty] exclaim, "Oh, that's obviously Charmes-Chambertin!" [rather than Le Chambertin].
Off topic, but this happens far less often than people think.
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Re: Auction Pricing Question

#21 Post by Rob Lynch » February 12th, 2020, 8:52 am

Current vintages are over-priced so they sit around a bit before they sell. Auction prices represent the "sell now" price.

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Re: Auction Pricing Question

#22 Post by Mark Golodetz » February 12th, 2020, 10:00 am

Rob Lynch wrote:
February 12th, 2020, 8:52 am
Current vintages are over-priced so they sit around a bit before they sell. Auction prices represent the "sell now" price.
This
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Re: Auction Pricing Question

#23 Post by Chris Seiber » February 12th, 2020, 10:45 am

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.

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Re: Auction Pricing Question

#24 Post by GregT » February 12th, 2020, 11:31 am

Mark Golodetz wrote:
February 12th, 2020, 10:00 am
Rob Lynch wrote:
February 12th, 2020, 8:52 am
Current vintages are over-priced so they sit around a bit before they sell. Auction prices represent the "sell now" price.
This
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 . . .
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Re: Auction Pricing Question

#25 Post by z_hart » February 12th, 2020, 2:40 pm

R. Frankel wrote:
February 11th, 2020, 8:42 am
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).
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.
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Re: Auction Pricing Question

#26 Post by Peter Panzica » February 12th, 2020, 3:20 pm

z_hart wrote:
February 12th, 2020, 2:40 pm
R. Frankel wrote:
February 11th, 2020, 8:42 am
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).
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

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Re: Auction Pricing Question

#27 Post by Ian Dorin » February 13th, 2020, 4:43 am

GregT wrote:
February 12th, 2020, 11:31 am
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 . . .
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-

1) 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.

2) 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?
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Re: Auction Pricing Question

#28 Post by z_hart » February 13th, 2020, 5:54 am

Peter Panzica wrote:
February 12th, 2020, 3:20 pm

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
Winery Library Release Price: $400
z a c h

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Re: Auction Pricing Question

#29 Post by Fred Davis » February 13th, 2020, 10:26 am

An auction is not the place one goes to find a "deal." Great if you're a seller though.

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Re: Auction Pricing Question

#30 Post by Ian Dorin » February 13th, 2020, 1:11 pm

Fred Davis wrote:
February 13th, 2020, 10:26 am
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.
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Re: Auction Pricing Question

#31 Post by Dennis Borczon » February 13th, 2020, 2:13 pm

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.

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Re: Auction Pricing Question

#32 Post by David_K » February 13th, 2020, 4:54 pm

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.
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Re: Auction Pricing Question

#33 Post by Fred Davis » February 14th, 2020, 8:39 am

Ian Dorin wrote:
February 13th, 2020, 1:11 pm
Fred Davis wrote:
February 13th, 2020, 10:26 am
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.
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.

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Re: Auction Pricing Question

#34 Post by jason stein » February 14th, 2020, 8:53 am

Fred Davis wrote:
February 14th, 2020, 8:39 am
Ian Dorin wrote:
February 13th, 2020, 1:11 pm
Fred Davis wrote:
February 13th, 2020, 10:26 am
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.
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?

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Re: Auction Pricing Question

#35 Post by R@y.Tupp@+sch » February 14th, 2020, 10:05 am

Fred Davis wrote:
February 14th, 2020, 8:39 am
Ian Dorin wrote:
February 13th, 2020, 1:11 pm
Fred Davis wrote:
February 13th, 2020, 10:26 am
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.
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.
Couldn't disagree more.

You do realize many retailers and re-sellers regularly buy at auction?
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Re: Auction Pricing Question

#36 Post by Ian Dorin » February 14th, 2020, 10:08 am

Fred Davis wrote:
February 14th, 2020, 8:39 am
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.
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.
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Re: Auction Pricing Question

#37 Post by Nathan Smyth » February 14th, 2020, 10:25 am

jason stein wrote:
February 14th, 2020, 8:53 am
Where *is* the ideal place to fish, then?
The pond [or watering hole] with the great big hungry fish which no one else knows about.

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Re: Auction Pricing Question

#38 Post by Bryan Carr » February 14th, 2020, 10:26 am

Nathan Smyth wrote:
February 14th, 2020, 10:25 am
jason stein wrote:
February 14th, 2020, 8:53 am
Where *is* the ideal place to fish, then?
The pond [or watering hole] with the great big hungry fish which no one else knows about.
Which, in this metaphor, is...?
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Re: Auction Pricing Question

#39 Post by Nathan Smyth » February 14th, 2020, 10:44 am

Bryan Carr wrote:
February 14th, 2020, 10:26 am
Nathan Smyth wrote:
February 14th, 2020, 10:25 am
jason stein wrote:
February 14th, 2020, 8:53 am
Where *is* the ideal place to fish, then?
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.

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Re: Auction Pricing Question

#40 Post by Ethan Abraham » February 14th, 2020, 10:51 am

R@y.Tupp@+sch wrote:
February 14th, 2020, 10:05 am
Fred Davis wrote:
February 14th, 2020, 8:39 am
Ian Dorin wrote:
February 13th, 2020, 1:11 pm


Not sure I follow this logic. I think Peter's example is clearly a deal if you like that kind of wine.
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.
Couldn't disagree more.

You do realize many retailers and re-sellers regularly buy at auction?
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?

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Re: Auction Pricing Question

#41 Post by John J » February 14th, 2020, 12:37 pm

Ethan Abraham wrote:
February 14th, 2020, 10:51 am
R@y.Tupp@+sch wrote:
February 14th, 2020, 10:05 am
Fred Davis wrote:
February 14th, 2020, 8:39 am


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.
Couldn't disagree more.

You do realize many retailers and re-sellers regularly buy at auction?
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?
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Re: Auction Pricing Question

#42 Post by Fred Davis » February 14th, 2020, 10:26 pm

Ian Dorin wrote:
February 14th, 2020, 10:08 am
Fred Davis wrote:
February 14th, 2020, 8:39 am
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.
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.
I agree with your points and my comment was based on a working assumption of many buyers at auction. But if there's only one or two, then certainly what I stated above wouldn't apply, and yes, there would potentially be the opportunity to do very well--as you have done.

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Re: Auction Pricing Question

#43 Post by Wes Barton » February 15th, 2020, 2:07 pm

Yikes!

First off, I see plenty of CA wines that only go up in price.

Second, if the secondary market isn't recognizing an increased value of maturity of a wine, don't expect that fact to suddenly change. Don't expect current releases of those wines to appreciate in price. Don't expect them to be a good investment. That doesn't mean you may not have a good reason to buy them. We live in a buy high, sell low culture.

This disparity is a clear sign we are talking about different markets. The supply of a current release of a wine is much much larger than the supply in the secondary market. Of course, we know some wines that are clearly bought as investments and are omnipresent at auction. Also, distributors may dump unsold wines of one vintage to make room for the next. Culty producers will control the supply that gets out into the market and adjust production volume to the market, to keep their margins huge.

Of course auctions are a great place to look for deals. They are also a great place to get carried away and over-pay for one of those omnipresent investment wines. Some smaller ponds are great, some are too-good-to-be-true in one way or another. Another way to find deals is to know things the other buyers don't. Of course, that's for looking for great wines to drink, not resell.
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