Wine sales by leading world auction houses declined for the second straight year as muted collector appetite for recent Bordeaux vintages and a clampdown by China on gift-giving sent prices lower.
Sales by Acker Merrall & Condit Co., Christie’s International, Sotheby’s, Zachys Wine & Liquor Inc. and Hart Davis Hart Wine Co. dropped 15 percent to $278 million in 2013, according to data compiled by Bloomberg.
The Liv-ex Fine Wine 50 Index tracking top Bordeaux wines declined 3 percent last year after a 10 percent slump in 2012 and a 17 percent drop in 2011. The index rallied before declining since mid-March as collectors shunned Medoc first-growth wines and sought out other areas such as Burgundy, Italy and California. Discounts offered by Bordeaux estates on 2012s relative to their preceding three vintages, sold en primeur, or in barrel, failed to revive demand.
“The market clearly has shrunk,” Paul Hammond, director of London-based IG Wines Ltd., said in a phone interview. “It’s due to the demise of Bordeaux. People feel disenchanted because of recent en primeur campaigns. The auction sector is speculative, and if speculators feel Bordeaux is a bear market, they just don’t bother.”
The decline in auctions last year followed an 18 percent plunge in 2012 wine sales by the five houses to $326 million, including Internet-only events, from a record $397 million reached at equivalent sales in 2011, according to data compiled by Bloomberg. Earlier provisional data, since adjusted for final figures, had indicated a 19 percent decline.
Acker posted a 23 percent drop in auction sales to $63.8 million last year while Christie’s sales fell 18 percent to $67.1 million, according to e-mailed data from the two houses. The Christie’s tally excludes its Hospices de Beaune charity auction held in Burgundy in November, which totaled $8.51 million and brought its overall sales to $75.6 billion.
Sotheby’s saw its auction sales drop 10 percent to $57.9 million while Chicago-based Hart Davis Hart reported a 37 percent rebound to $36.1 million. Sales at New York-based Zachys fell to $53 million, a 25 percent drop.
“Bordeaux headlines all our sales in terms of volume and we calculate its top wines have dropped 25 to 30 percent in price at auction since 2011,” David Elswood, international director of wine at Christie’s, said in a phone interview. “The Bordelais were trying to sell wines en primeur in 2011 at prices that seem ludicrous now. As a result, there’s been a revaluation of Bordeaux across the board. I’ve never seen such a ripple effect.”
China’s discouragement of gifts over the past year has also reduced demand for fine wine, as President Xi Jinping has moved to curb extravagant government spending since taking office in March. The steps are part of a campaign against corruption and misconduct by officials.
“The Chinese government has clamped down on gift-giving and the market for Chateau Lafite has been hit particularly hard,” Miles Davis, partner at Wine Asset Managers LLP, said in an interview. “We don’t see that coming back for some time.”
With demand for first-growth Bordeaux slackening, the top end of the auction market was dominated by Burgundy, particularly wines from Domaine de la Romanee-Conti.
A 12-bottle lot of Romanee-Conti 1978 sold to a Chinese buyer for HK$3.675 million ($474,000) at Christie’s in Hong Kong on Nov. 23, a record for any 12-bottle case of wine at a public sale.
“Burgundy is our top performer at the moment, but that region only represents 20 percent of our sales,” Elswood said.
The Romanee-Conti vineyard in Vosne-Romanee is slightly smaller than 2 hectares (5 acres) and has its own appellation as a grand cru, the highest regional classification. The rarity of its wines regularly makes them the highest-priced lots at auctions.
Elswood said the market for Bordeaux wouldn’t improve significantly unless the region’s en primeur campaigns were more attractively priced with larger discounts. “They need to make a gesture,” he said.
With the addition of Hong Kong-based Internet sales last year, Zachys took its online-auction total to $6.27 million, while Acker said it sold almost $5 million in Web events.
Christie’s held 11 online wine auctions in 2013, raising $3.66 million, more than double the 1 million pounds achieved from three online-only sales in 2012. The format is aimed at clients buying wines valued at below 1,000 pounds a case and the company plans to hold 12 online-only auctions in 2014, six in the U.S. and the rest in Europe, Elswood said.
Hong Kong maintained its position as the world’s largest center for wine auctions, according to data compiled by Bloomberg, with sales by the five houses in the city totaling more than $100 million last year. New York accounted for more than $70 million in sales and Chicago and London more than $30 million each.