NEW YORK (Reuters Life!) - The bears may be mauling Wall Street, but the bulls are barreling through Bordeaux.
Wine auctions are on a tear and auctioneers forecast a continued, though perhaps a bit muted, run up this year.
“We’ve have had a record year in 2007,” Richard Brierley, Christie’s head of wines sales in America said, adding wine auctions are usually a lagging economic indicator.
“If you look at the cycle, we’re usually six-to-nine months behind (Wall Street) so we’ll probably see something of a cooling off in the fall,” Brierley
But he is not expecting prices to drop from their Pyrenean peaks so much as see “the rate of growth moderate.”
Jeff Zacharia, of Zachys wines, which held this year’s first auction on January 11 at New York’s Daniel restaurant, illustrated the rise by noting that in 2001, a bottle of 1982 Chateau Lafite-Rothschild could be had at one of his auctions for $400. On Friday, a bottle of the same wine sold for $2,200, or a gain of 450 percent.
The auction’s total sale was $2.5 million against a pre-auction estimate of between $1.7 million to $2.6 million. Some 98 percent of the lots offered were sold.
Jamie Ritchie, senior vice president of Sotheby’s North American wine department, said all the vintages of premier cru Bordeaux “have come up significantly in the last 18 to 24 months.” Asian collectors have taken up any slack left by the bonus-wounded Wall Street and City traders in New York and London.
“There’s more volatility in the very rare end of the market And what we have seen in the last two years are a lot of interest from new buyers, younger buyers,” he said.
Ritchie estimates that the average age has come down to 40 to 45 years old from 60 to 65 years old. The bidders’ demographic has also evolved.
“Of course, we are seeing buyers from financial backgrounds - hedge funds, private banking, from tech and entertainment in North America. But we are also seeing new buyers from Asia and India. Hong Kong has long been a very strong market for us. And, we are seeing buyers coming in from Russia,” Ritchie said.
Peter Meltzer, author of the book “The Keys to the Cellar,” which deals with the strategies of wine collecting, does not see prices continuing to climb.
“They are already into the ether, but I’ve been wrong so many times,” he said.
The London International Vintner Exchange (www.liv-ex.com), the electronic marketplace for merchants trading fine wine, said its Liv-ex 100 index finished up 40.1 percent in 2007.
“There are definitely signs of a continued strong market,” Meltzer said. “And in the world of luxury, in comparison to say a Picasso, a case of a rare wine for $25,000 is just a drop in the bucket.”
Paul Hart of the Chicago-based auction house Hart Davis Hart Wine Co, noted four of the seven auctions he ran in 2007 had a 100 percent sell-through and believes that wine prices will continue to rise slightly or level.
“It’s hard to judge with all the interest we have seen. It’s not simply a small group of people. There is a broadness to the market,” he added.
All the auctioneers said they expected to have a steady supply of the grand cru Bordeaux, which makes up the backbone of many collections.
Tyler Coleman, who runs the Dr.Vino Web site (www.drvino.com), believes that even as the U.S. economy softens, "wine will remain hot. I'm reminded of Napoleon's quote about champagne: in victory, you deserve it, in defeat you need it."