Before the pandemic took hold in March of 2020, I was doing 2-3 wine or spirits appraisals per month.  Since then, I have seen a shift to purchasing and consumption, and less of a focus on collection management.  The obvious reason is the reduction of travel and limited access homes for the inventory work required to complete an appraisal or work with a collection. However, I have often completed appraisals based on spreadsheets without ever visiting the cellar.  Outside of access, there are several dynamics I have observed and believe may have had an impact:

1. The uncertainty with the economy and the political environment has led collectors to stay on the sidelines and await more clarity before updating values
2. Collectors may assume that the wine and spirits markets have remained unchanged or even decreased in value over the course of the pandemic and believe an appraisal is not needed
3. Collectors have not been dining out as much and are drinking much more of their collection while at home, even some of the higher value bottles.  A bottle of wine at a restaurant is marked up 2-3x, so a better-quality bottle can be drunk at home for the same price or cheaper
4. Collectors have been replacing consumed wines and searching for deals in the marketplace, focusing more on acquisition than management and valuations
5. Collectors are home with their collections, so may feel more secure and not worry about a loss like theft or damage from a storm

All collectors and trusted advisors should be aware of the current market conditions and the continued strength seen at auction and review a wine or spirits collections.  Read below for our 2020 Recap.

WineAdvise would like to offer a complimentary review of your or your client’s wine or spirits collection to determine if any updates are suggested. We would also upload any wine collection to our new software Vitis as a trial to manage the value and drinkability of a collection. Please contact Brian at ward@wineadvise.com to learn more about this offer.  Click the link below for information on Vitis.

2020 Wine Auction Market Recap

I reviewed the top 4 auction houses and have found the market was strong in 2020 and continues to show steadiness in the new year.  Here are a few highlights to recap the 2020 market.

Auction House	2019	2020
Acker	$ 92.6M	$ 122M
Sotheby’s	$118.5M	$ 92M
Zachy’s	$121.5M	$ 85.3M
HDH	$ 68.5M	$ 66.3M
TOTAL	$400.6M	$365.6M

At first glance it may seem only Acker had a successful year, however with the need for so many shifts and pivots in the way business was done, it was a very strong year as the major indices were very resilient and had steady if not impressive performances for the year.  One of the most noticeable effects in year-to-year results was the drop in volume as auction houses were not often able to pick up consignments from cellars to bring to auction.  As an example, Acker was very well set up with consignments in the first quarter and completed approximately $24 million in sales before the pandemic took full hold.  Compare that to Sotheby’s with only $2.8 million who usually has auctions in the spring and did not yet bring in the full slate of cellars.

Encouraging trends were seen throughout all auction venues;

• Burgundy – After seeing an almost 15% decrease in 2019, Burgundy ruled 2020 with an almost 10% increase according to the Wine Market Journal Burgundy index. Nine out of the top ten sold lots across all auction houses were Burgundy.  Burgundy accounted for 56% of Acker’s sales.

• Online shift- As auction houses shifted to mainly online sales, online bids shot upward. Sotheby’s saw $60 million in bids from online buyers compared to $28 million in 2019.  Both Acker and Zachy’s saw a roughly 20% increase in sales from online-only auctions.

• Asian Market – The Asian market proved strong, with Sotheby’s reporting 73% of all bids coming from Asia, and Zachy’s reporting 46% of sales coming from Asia compared to 28% in 2019.

• Demographic Shift – 2020 saw a shift to both first-time and younger buyers. Sotheby’s reported that new bidders made up 20% of all bids in Asia and 40% of bids from those in their 20s and 30s.  Additionally, 40% of global buyers were new and 46% of those were in their 20s and 30s.

• Category Expansion – 2020 saw an increase in sales of Spirits, with Sotheby’s opening a dedicated division for spirits.  This resulted in 20% or $18 million of all auction sales being spirits.  Several records were broken, including $435,000 for a bottle of Karuizawa 52 YO Zodiac Rat and $144,000 for a bottle of 1762 Gautier Cognac.

The current market in 2021 is continuing the trend of both shifting dynamics to a younger audience and increased virtual experience along with the continued advance of most segments.  This advance follows a very strong Q4 that exhibited an increase of near 20% with California Cults, 15% with Italian Blue Chips and almost 10% with 2^nd Growth Bordeaux according to The Wine Market Journal.  Burgundy still sits atop the market, but all categories seem to be seeing a lift and there is little to indicate this will slow down in 2021.