Latour ex-cellar sale fails to hit Lafite high notes

After the extraordinary success of the Sotheby's Lafite ex-cellar sale in October, today's Latour ex-cellar auction in Hong Kong was expected to spark similar enthusiasm. The sale featured vintages from 1863 to 2009, and all bottles were fitted with a Prooftag seal and a label confirming their provenance. During the first rounds of bidding, however, buyers seemed somewhat uninspired, with the 2009, 2005 and 2000 all falling under the hammer at a discount to the Liv-ex Mid Price (our trade-to-trade transaction price, which is generally ten to 25 per cent lower than merchant list prices). 

The table below shows a selection of some of the recent vintages that were on offer. If we compare the prices that these 12x75cl cases fetched at auction (removing the buyer's premium of 20 per cent) to each wine's Liv-ex Mid Price, the majority of sales were in line with, or just below, current market prices. This said, many of the older, rarer wines were in strong demand and changed hands at two to three times the price of their auction estimates. The 1863, 1961 and 1945 were among the super-premium sales of the day, having drawn bids of HK$450,000 (£35,240; 1x75cl), HK$1,500,000 (6x150cl; £117,450) and HK$1,300,000 (12x75cl; £101,790) respectively, excluding buyer's premium.

  
Prices are for 12x75cl cases and exclude buyer's premium.

Comments

[Roshan P F]

Hi.
The buyer knows the precise buyer's premium and adds that cost to his bid when he is bidding. therefore excluding that will negate your analysis. If Liv-ex changed its premium, do you think your trade prices will not be affected? try putting on a 25% premium and see if your b-to-b prices remain unchanged. I will stop reading this blog and work out my own stats hereafter.

Thank you,
Roshan

[Liv-ex]

Thank you all for your comments. Earlier this year we decided to exclude buyer's premium when reporting auction results on the blog. We are a business-to-business exchange and it is of more interest to members to see what price they may achieve at auction, rather than what the end-consumer pays. Moreover, buyer's premium varies by auction house and by region, making comparisons more difficult when this is included.

The use of hammer prices in the above is why we have compared the results to the Liv-ex Mid Price - a trade-to-trade transaction price - rather than a retail price. Hence it represents what merchants, not consumers, can expect when buying or selling a wine. (It is generally 10-25 per cent lower than merchant list prices.)

Finally, although extremely scarce older vintages sold at high prices at the Latour ex-cellar sale (as was expected given their exceptional provenance), what is more interesting is that - unlike at the Lafite auction - more recent vintages did not generally sell at any significant premium to the trade-to-trade price. This has interesting ramifications for the sales of “ex-cellar” wines generally.

[AJ]

Further to the previous comments, I should add that I really think you've got the wrong end of this story. The premiums on 1982 (to say nothing of the 61) were spectacular and there were strong margins even for less famous vintages (e.g. 96 and 71).

Perhaps you can give us a more thorough piece next week, and correcting for the numerical bias pointed out above.

[N.W.R.Price]

Without wishing to harbour the point, the prices in your report on the Sotheby's Lafite auction included the buyers premium and yet the Latour sale last week did not. As has been pointed out already this makes an enormous difference to the "buyers" cost price. As a market analyst you must realise the importance of accurate reporting which ultimately can affect the marketplace.

[Roshan P F]

You should not remove the buyer's premium, as the buyer factors that into his bid. I have bought things at auction, and I keep a sheet of paper, which show show my bid translates to a fully loaded cost- this is what determines my bid, as I add the buyer's premium, as a compulsory cost. I see another reader has pointed this out as well. Your analysis is out by 25%, which makes it wrong.

[AJ]

Why are you exluding the buyers' premium, when that is the market price the buyer is paying for the wine?

Rather affects the interpretation of this.