Selling Wine at Auction Can Be Just as Easy as Drinking It: Q&A

Jan. 12 (Bloomberg) -- I’ve never been much of a wine collector and have run low on reasons to keep expensive old bottles in my cellar. So, for the first time, I thought I’d try to auction off about 20 notable wines and be a little more cash- heavy for Christmas.

This was back in August, before the global economy went south, though the auction, through Zachys Wine & Liquor in Scarsdale, New York, was held in December. Zachys is one of only a handful of wine auction houses in the U.S., the others being Sotheby’s, Christie’s International and Hart Davis Hart Wine Co. I brought my wines to the Zachys retail store, they were examined, and within a few days a contract and a printout of each lot’s reserve price and estimate were sent to me.

The auction was held on Dec. 4, with an estimated total for my lots of $5,900 to $9,150. One bottle, a 1961 Mouton- Rothschild, didn’t meet the $800 reserve (its condition was questionable). When the last hammer came down, the total for the others was $5,750, at the lower end of the estimated range and minus a 15 percent commission. Still, I was happy enough to have the money, though a year or two ago it might have been much more.

There’s no question that wine auction prices have fallen in the past six months. In a phone interview, Peter Meltzer, author of “Keys to the Cellar: Strategies and Secrets of Wine Collecting,” estimated that global wine auction sales in 2008 fell about 8 percent.

‘Opportunity to Buy’

“In the wake of October’s financial meltdown, prices for fine and rare wine at auction dropped an average of 30 percent, much like other collectibles,” Meltzer said. “So if you are looking to capitalize on purchases made in the past couple of years, you may not see a good return on your investment. In contrast, vintage classics like Chateau Lafite-Rothschild 1990 have more than tripled in value over the past decade, yielding a very acceptable return. In retrospect, however, this may prove a golden opportunity to buy.”

I also interviewed Jeff Zacharia, 47, president of Zachys, about the current market and how one goes about selling wines at auction.

Mariani: What should a person consider with regard to what he has to sell?

Zacharia: Only consider wines that make sense -- high- profile wines. Bordeaux and Burgundy are the bulwarks, top Rhone wines, but really top wines from anywhere. Champagnes and Ports are doing very well. But you’re not going get any money trying to sell a case of 2005 New Zealand chardonnay.

Storage Questions

Mariani: How does one begin the process of selling one’s wines through auction?

Zacharia: Contact us and send a list. We will then discuss it with you, ask how the wines are stored, how long you’ve had them and, if it’s a large cellar of several hundred wines, we may visit and ask to taste some of them to see how they’ve been stored. Then, we set prices for the lots, and if you’re comfortable with that, we will set them for an upcoming auction.

Mariani: What are some of the guidelines you use to set prices?

Zacharia: Prices are based on what have been selling in the near past. Prices do vary a lot for the same wines in different auctions, which is why we give estimates.

Mariani: Do you guarantee the soundness of the bottles you sell?

Zacharia: Auctions do not offer a guarantee that the wines are sound, but we try to be very careful.

Two Months in Advance

Mariani: How long in advance do you need to have the wines, and how many auctions do you hold each year?

Zacharia: We need the wines two months ahead of time. We hold 12 auctions a year, most of them in New York and L.A., but one in Las Vegas and a couple in Hong Kong.

Mariani: Can a person pull wines out of the auction prior to it?

Zacharia: Only if we agree to, and there is usually a charge to do it. We have to print the catalog well in advance.

Mariani: What percentage commission do you take?

Zacharia: It depends on how much we get. The higher the estimate, the lower the percentage. It starts at 15 percent and can go down from there.

Mariani: Is it a good idea to attend the auction as a seller?

Zacharia: Actually we encourage you not to attend because sellers tend to focus on this or that lot, especially if it doesn’t sell. As a buyer, though, it’s great because there are always values you wouldn’t expect to get. You can also now bid live online.

Mariani: Given the current economic conditions, is this a bad time to sell holdings?

Zacharia: It was better six months ago, but wine prices are still at historic highs, though down from their peaks. How long will it be before prices go up? I have no idea. But the wine market is still performing better than many other markets. And for a buyer, auctions are some of the best places to get mature wines because prices are often much less than at a retail store.