Prices Drop but Auctions Stabilize in First Quarter

    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 in the wake of the global economic crisis, a leaner—but more stable—auction market has emerged in the first quarter of 2009.

    Prices for wine continued to slip: The average price for wines tracked in the Wine Spectator Auction Index declined by 6 percent from the fourth quarter. And significantly less wine traded 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.

    But other indicators of consumer confidence—namely auction attendance and percent-sold rates—were up. Auction houses reported packed salesrooms and an increased interest in absentee bidding, spurred by collectors looking for relative bargains in this down market.

    Buyers responded as auction houses lowered their estimates and reserves—often by 30 percent or more—to accommodate the realities of a new marketplace. Estimates may still have been ambitious, as only four of the 11 auctions surpassed their presale low estimates. Nevertheless, in the first quarter of 2009, the 11 sales averaged a solid 91 percent-sold rate, around the same as the first quarter of 2008 and up from the abnormally low average sell-through rate of 72 percent in the fourth quarter of 2008. This indicates that prices have settled at levels that are perceived to represent fair value and that consignments are selling accordingly.

    More than 70 percent of all listings tracked by Wine Spectator in the first quarter fell below their previous levels. Collectors scooped up relative bargains. At Hart Davis Hart in January, a five-bottle lot of Château Mouton-Rothschild 1945 fetched $20,315, down 50 percent from its fourth-quarter 2008 average price. At Acker Merrall & Condit, six bottles of DRC Romanée-Conti 2003 brought $30,250 in January, down 17 percent. At Aulden Cellars-Sotheby's, two three-magnum lots of Château Le Pin 2000 each traded for $9,075, down 56 percent.

    Some wines, however, posted large gains. A five-bottle lot of Henri Jayer Vosne-Romanée Cros Parantoux 1990 sold at Acker for $16,940, up 66 percent, and six magnums of Château d'Yquem 1990 fetched $7,865, up 107 percent, at Sotheby's in March. Zachys sold a case of Armand Rousseau Clos de la Roche 2005 for $2,880, up 49 percent.

    Both Jamie Ritchie, Sotheby's auction director, and John Kapon, president of Acker Merrall and Condit's auction division, observed that while prices may be stabilizing, overall consignments are down. "At this time, there's not that much wine in the pipeline compared to previous years," said Ritchie. In total, 10,861 lots of wine were available during the first quarter of 2009, 27 percent fewer than the 15,034 lots offered during the same time period last year and 39 percent less than the 17,750 offered in the fourth quarter of 2008. Kapon added that many potential sellers may have been scared off by instability in the market. “I do think that once collectors realize that the market has adjusted and will remain at these levels for a while, we will see more consignors getting back into the market,” he said.

    It's still uncertain whether elevated percent-sold rates signal that the correction in the wine-auction market has finished. Paul Hart, president of Chicago's Hart Davis Hart, noted that hammer prices have been strengthening on an incremental basis since January. Ritchie feels that, for the next few months, prices should remain fairly consistent. "Going forward," he added, "everything will depend on the economy. For now, collectors demonstrated they still have a significant appetite for fine wine."