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Lafite Demand Cools, Auction Growth Slows to 14% in Debt Crisis

Romanee-Conti ''Superlot''
A ''superlot'' of vintages of Romanee-Conti. Ranging from 1952 to 2007. Source: Acker Merrall & Condit via Bloomberg

Growth in wine sales by the leading five auction houses slowed to about 14 percent this year from 75 percent in 2010 as the global financial crisis cooled demand for Chateau Lafite-Rothschild and other top Bordeaux producers.

Sales by Acker Merrall & Condit, Christie’s International, Sotheby’s, Zachys and Hart Davis Hart Wine Co. still achieved a record of about $405 million this year, helped by a late flurry of activity this month, according to data compiled by Bloomberg News. That total compares with $353.7 million in 2010.

While Hong Kong accounts for half of the global auction market, buoyed by Chinese appetite for top Bordeaux and rare Burgundies, expansion in the market has slowed. Asian buyers have become unwilling to pay ever-higher auction records for First Growths such as Lafite, and they also balked at Bordeaux’s ambitiously priced 2010 “en primeur” campaign. The benchmark Liv-ex 100 Fine Wine Index is down 11.4 percent this year.

“It feels a lot more than that,” Simon Staples, the Hong Kong-based head of sales and marketing at London wine broker Berry Bros & Rudd said in an interview. “Prices for some First Growths such as Lafite ’08 have dropped off by more than 40 percent and haven’t reached the bottom yet. Our clients are looking instead at Bordeaux Second Growths and the top 10 names in Burgundy.”

Prices for Lafite, which soared to bubble levels for some vintages in the past two years as Chinese demand propelled bids higher, showed signs of peaking in the final quarter of 2010.

Lafite Vintage

A case of Lafite-Rothschild 1982 fetched a record HK$1.03 million ($132,700) at a Sotheby’s auction in Hong Kong in October last year, while another case of the same vintage sold for HK$720,000 at a Christie’s sale in the same city the following month.

Since then, auction prices for the vintage have fallen to less than half that level as the financial crisis has curbed spending and collector attention has switched more to Burgundy. A case of Lafite 1982 sold for just 23,000 pounds ($36,100) at Sotheby’s in London on Dec. 7.

Acker kept its global leadership of the auction market, reporting total sales for the year, including internet business, of $110.45 million.

Christie’s auctions are up 30 percent at about $92 million, according to Bloomberg calculations, including the $7 million Hospices de Beaune charity auction, and Christie’s itself has confirmed its sales were “in the region of $90 million.”

New York-based Sotheby’s says it sold $85.47 million worldwide during this year.

Hong Kong Sales

Acker has established itself as market leader in Hong Kong, with its 2011 sales of $69 million in the city accounting for close to one third of the local auction market. Sotheby’s, Zachys and Christie’s have also expanded in the territory and all achieved sales in excess of $40 million there this year.

Zachys, whose global sales surged 40 percent in 2011, and Acker were leaders in the New York market this year, while Christie’s led overall in Europe, Sotheby's in London auctions and Hart Davis Hart in Chicago.

“This year’s increase in a falling market shows that exceptional auction lots still attract the money,” said Peter Lunzer, founder of London-based Lunzer Wine Investments. “There are still wealthy people out there and for them these amounts are pretty insignificant.”

Acker’s auction in Hong Kong on Dec. 8 and 10 included a lot of 55 bottles of Domaine de la Romanee-Conti’s signature Romanee-Conti wine in vintages ranging from 1952 through 2007. It sold at the upper end of its estimate for HK$6.34 million to a Chinese bidder on the telephone. The price was the highest achieved for a single lot at any wine auction this year, as well as a salesroom record for a Romanee-Conti item.

Burgundy Demand

Romanee-Conti’s 1990 vintage topped both Christie’s and Sotheby’s final wine auctions of the year in London on Dec. 1-2 and Dec. 7 respectively. An Asian bidder paid 115,000 pounds for 12 bottles at Christie’s, while a U.K. dealer secured a case at Sotheby’s for 82,800 pounds. Cases of the more tannic 1988 vintage commanded prices of 63,250 pounds and 62,100 pounds respectively at the same auctions.

Romanee-Conti, Burgundy’s premier wine, is made out of grapes from a vineyard measuring just 4.3 acres. “Burgundy has enormous potential for price increases,” said Lunzer. “The problem is getting hold of it. In the meantime, it’s become easier to buy Bordeaux in a falling market and I expect the Liv-ex 100 to climb back up by May 2012.”

Other auction houses active in the wine market include, Spectrum and Bonhams. The first two operate over the internet, with Spectrum also holding live sales in Hong Kong, while Bonhams sells in London, Hong Kong, New York and California. The global trade in fine wine, of which auctions represent just a part, is worth about $4 billion, according to Liv-ex.

(Guy Collins and Scott Reyburn write about the art market for Muse, the arts and culture section of Bloomberg News. Opinions expressed are their own.)

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