Wine collectors eye cellars for liquidity
LOS ANGELES |
LOS ANGELES (Reuters) - Wine cellars have been taking a hit from the global credit crisis and it isn't because the owners of rare bottles are drinking more -- it's because they have been selling to raise cash.
The selling started with mortgage brokers and has moved to Wall Street as owners turn their collections of coveted vintages into liquid assets.
"People need money. Even richer people need money sometimes," Vinfolio.com founder and Chief Executive Stephen Bachmann told Reuters on Monday.
In the last few weeks, private collectors submitted offers to sell $10 million worth of wine to Vinfolio, a San Francisco-based company that buys and sells wine online. Normally the company has about $6 million offered to it.
Among the wines that that recently have come into Vinfolio's possession are a 6-liter Imperiale of 2003 Chateau Margaux that retails for almost $15,000 and a bottle of 1990 Romanee-Conti that lists for around $11,000.
One Aspen collector is looking to sell $750,000 worth of wine and another individual from the private equity world is offering up wine worth about $500,000 from his collection, he said.
"I think we're seeing a culling of people's cellars without necessarily a wholesale abandonment," said Bachmann, whose company has a five-person team dedicated to buying wine from private cellars.
SELL, SELL, SELL
Wine sales contribute about 95 percent of Vinfolio revenue and Bachmann expects 2008 sales to grow to $27 million from $14.3 million last year.
The privately held company, which also offers white-glove services like personal cellar management, recently launched a free site called WinePrices.com that tracks auction pricing information for more than 10,000 wines.
Bachmann said auction prices have softened recently but that demand still exceeds supplies of sought-after wines.
"I view weakness in the fine wine market as a buying opportunity," said Bachmann, who said Vinfolio has more than 2,000 different wines that sell at an average price of $150 per bottle. Wines from private collections often fetch even higher prices, he said.
Many high-end wines are finding homes in places like Hong Kong, which early this year eliminated a 40 percent duty on wine and is aiming to grow into a global wine auction hub rivaling London and New York.
Demand from Aisa has helped support the Liv-ex 100, an index of blue-chip wines, which was up 9 percent for the year at the beginning of October.
For years, a clique of affluent super-collectors in Hong Kong has established a reputation for outbidding global connoisseurs when top vintages have come up for sale.
"Follow the money is the message," said Bachmann, who this year set up a 50,000 square-foot warehouse in Hong Kong after the city's wine duty was eliminated.
That facility also serves Macau, China's gambling haven that also has abolished its wine tax.
Meanwhile, Bachmann is keeping his eye on the upcoming Zachys wine auction, its first in Asia, scheduled for Oct 25 in Hong Kong, which promises to gauge demand in the region. "That may be an interesting barometer of where things are," he said.
Not to be outdone, Christie's International Wine Department will return to Hong Kong in November with an auction of Bordeaux dating from 1865 to 2005. Those from Latour are directly from the chateau.
(Additional reporting by Leslie Gevirtz)
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