Jan. 4 (Bloomberg) -- ``Wine auctions are fast becoming big business; they're starting to look like the art market,'' Zachys auction adviser David Wainwright said in November at the Scarsdale, New York, retailer's first-ever evening sale.

In the second half of 2006, the U.S. wine auction market set records as prices spiraled upward. U.S. sales topped $167 million, while New York auctions rose 66 percent from 2005. The finest wines seem to be the world's hottest luxury goods of late, and the thirst for them appears to be unquenchable.

Noisy participants at the Zachys sale eagerly raised paddles while enjoying an elegant BYOB six-course dinner prepared by chef Daniel Boulud. Their bids on 290 lots of stellar wines pulled in a total of $4.35 million, and every lot was sold.

At my table, we savored several great bottles contributed by mega-collector Wais Jalali of WDJ Capital Holdings, who had plucked them from his 30,000-bottle cellar. ``I drank a bottle of 1961 Chateau Petrus on my 36th birthday recently, and it was better than sex,'' he said.

Auctions remain the key source for such blue-chip wines. About 45 commercial sales are held in the U.S. each year, mainly in New York but also in Chicago, Los Angeles and San Francisco. As in today's art market, buyers are global and include rich newbie collectors from China, Russia and South America as well as the usual hedge-fund billionaires. A collector at my table joked, ``Bidding is like sustaining your manhood: How long can you keep your paddle up?''

$21,330 a Case

Jalali, who was dressed in a pinstriped suit and a red power tie, dropped $128,573, including an 18.5 percent buyer's premium, on seven lots during dinner. Among them were a case of 1978 Chateau Rayas Chateauneuf-du-Pape Reserve Reynaud for $21,330 and three cases of Spain's legendary Vega Sicilia Unico from the 1989, '90 and '94 vintages for $22,515. Both sold for about double their high estimates.

Never before have there been so many trophy-grade wines on offer, as collectors unload to cash in on the high demand. ``The wine market is so hot,'' said California-based collector Ronald Friedman, who was selling 30 lots from his 8,000-bottle cellar that evening. ``I bought wine in quantity, and prices are now 10 times what I paid. I don't have to sit down at dinner with $1,000 bottles.'' Friedman, 43, has plenty left, anyway.

What's drawing bottles from collectors' cellars are numbers like these: In September, Christie's International realized the highest auction price ever paid for a case of wine -- twice -- at their first Los Angeles evening sale. Moments after a 12-bottle case of 1945 Chateau Mouton Rothschild fetched $290,000, a six- magnum case of the same wine was snapped up for $345,000 -- the equivalent of $28,750 for a regular, 750-milliliter bottle.

`Greatest Cellar'

In October at Cafe Gray, New York retailer Acker Merrall & Condit Co. held a two-day auction of wines from the collection of ultrarich, California-based, Indonesian-born Rudy Kurniawan, 30, who was said to possess ``arguably the greatest cellar on Earth.'' It brought in $24.7 million, beating the previous world record for a single auction by more than $10 million.

In mid-November, at an Aulden Cellars-Sotheby's charity auction in New York, a European telephone bidder shelled out $1.05 million for a 50-case lot of 1982 Mouton, or more than $1,750 a bottle, the record price for a single lot of wine sold at auction. (The same wine can be had in smaller quantities at retail for half that price.)

The lot was part of a single-owner sale of about 14,000 wines from the 60,000-bottle cellar of renowned collector Park B. Smith. The hardback catalog with lovingly lit photos of the best bottles -- even a glossy foldout of the '82 Mouton -- resembled the books printed for art sales. Other featured collector offerings in 2006 included Bordeaux from ice hockey Hall of Famer Mario Lemieux at Chicago's Hart Davis Hart Wine Co. and a single sale of 1,219 lots from businessman Russell Frye at Sotheby's in New York.

Top Vintages, Top Prices

``It's been a real insane year; a new level of pricing is being established,'' Acker Merrall auction director John Kapon, 34, said in November. (Acker Merrall was the year's world auction leader at $60.3 million.) ``The question is how fast and how much prices will rise. The top 20 wines seem to be bulletproof.''

The wines that are fetching the biggest bucks -- what one collector calls ``deep ocean wines'' -- are top vintages of first-growth Bordeaux (especially Mouton, Petrus and Le Pin) and wines produced in tiny quantities, thus ensuring rarity, from a handful of Burgundy estates. In the past two years, prices of top Burgundies have more than doubled. High prices for 2005 Bordeaux futures are pulling up prices of recent vintages like 2000.

California Split

Among California wines, Harlan Estate and Screaming Eagle command top dollar. ``The market is polarizing as the very top- end wines move away from the middle,'' says wine dealer Richard Torin, owner of Santa Barbara, California-based Clarets. ``The question is, how high can they go?''

Robert Rosania, 36, chief executive officer of New York- based real estate firm Stellar Management, bid on Burgundy while chewing gum and sipping champagne at Christie's fall evening sale in New York the night after the Zachys auction. He snagged a methuselah (the equivalent of eight regular bottles) of 1971 Domaine de la Romanee-Conti Romanee Conti for $59,000, slightly below the low estimate.

``So many trophy lots are up for sale that it's causing a reduction in power pricing,'' says Kevin Swersey of New York- based Connoisseur's Advisory Group LLC. ``What surprises me most are the market anomalies, the swings in price for the same wine, like 1945 Chateau Mouton Rothschild.'' Despite a flurry of bidding, cases at Zachys's and Christie's evening sales sold for less than half of the Los Angeles highs. ``Collectors shouldn't march to market using price spikes as their guide,'' Swersey warns.

Storage Worries

Provenance and condition -- who's owned the wine and how it's been stored -- are important factors in the price of older wines, as all deteriorate rapidly if subjected to excessive heat. Added to that is a growing concern about counterfeit bottles. That's why wines coming direct from chateau or negociant cellars or those of known collectors like Smith attract the highest prices. ``Right now, the strength is in the best of the best, but over the next 18 months, everything else will catch up,'' Jamie Ritchie, senior vice president of Sotheby's North American wine department, predicted in November.

``After the market absorbs the new highs, it will move up again,'' says collector Robert Schagrin, managing partner of New York shop Crush Wine & Spirits. That's from the man who spent $1,267,500 at Christie's in 1999 for the dress that Marilyn Monroe wore when she sang ``Happy Birthday'' to President John F. Kennedy at Madison Square Garden. He says the dress was just appraised at $4.8 million.

Auction How-To

Here are Web sites and auction dates for the biggest wine auction houses:

Chicago: Hart Davis Hart, http://www.hdhwine.com, Feb. 3.

New York: Acker Merrall & Condit, http://www.ackerwine.com, Jan. 27, Feb. 24, March 24. Christie's, http://www.christies.com, March 24 (also in Los Angeles). Morrell & Co., http://www.morrellwine.com, Feb. 10. Sotheby's, http://www.sothebys.com, Feb. 10. Zachys, http://www.zachys.com, Jan. 19-20, March 2-3.

San Francisco: Bonhams & Butterfields, http://www.bonhams.com/us, Jan. 27, March 31 (also in Los Angeles).

A helpful new guide that outlines auction strategy is ``Keys to the Cellar'' by Peter Meltzer (Wiley, 258 pages, $29.95).

Here are 12 blue-chip wines to look for at auction:

Bordeaux

First growths from recent top vintages (1945, '47, '59, '61, '82, '89, '90 and 2000) are selling at all-time highs.

1947 Chateau Cheval Blanc ($4,500-$8,900; $20,000-$50,000+ for a magnum). It's heaven, but check the provenance carefully.

1982 Chateau Mouton Rothschild ($800-$1,700). A great modern classic. Ready to drink.

1982 Chateau Petrus ($2,300-$3,000) Ditto. The '89 is also hot.

Burgundy

Romanee Conti and La Tache garner the highest prices. Top recent vintages include the '59, '62, '71, '85, '90, '93 and '98.

1971 Comte de Vogue Musigny Vieilles Vignes ($2,000 and up). Sublime, silky and seductive.

1985 Domaine de la Romanee-Conti Romanee Conti ($7,500- $9,300). The most-wanted label.

1993 Henri Jayer Vosne-Romanee Cros Parantoux ($1,500- $2,000). Legendary winemaker Jayer also made great wine in lesser vintages.

Rhone

Many are still undervalued even though prices have risen.

1978 Chateau Rayas Chateauneuf-du-Pape Reserve ($1,000- $1,800). Amazingly complex. The '95 can be had for $400.

1989 E. Guigal Cote Rotie La Mouline ($600+). One of three great single-vineyard wines; explosively rich.

California

No real vintage track record. Prices are increasing.

1994 Harlan Estate ($800-$1,600). Glossy, rich and concentrated.

2001 Screaming Eagle ($1,200-$2,000). A cult favorite.

Italy

Undervalued. Some great Barolos can still be had for less than $300 a bottle.

1985 Sassicaia ($800-$1,300). A great vintage for the king of the Super Tuscans.

Champagne

Top-name vintages can be long-lived; prices are strong.

1985 Krug ($1,000-$1,300 for a magnum). Classic fizz with astonishing complexity and finesse.

(Elin McCoy writes on wine and spirits for Bloomberg News. The opinions expressed are her own. This article appears in the February issue of Bloomberg Markets magazine.)

To contact the writer on this story: Elin McCoy at emcwine@aol.com.

Last Updated: January 4, 2007 00:08 EST