Liv-ex Fine Wine Market Blog

Super Seconds underperform in Hong Kong

Auction rooms in Hong Kong opened their doors over the weekend for two major sales. The Acker auction on the 13th and 14th of January achieved a total of £5.6 million, having shifted around 90 per cent of the lots. Bidding was slower at the Sotheby's sale on Saturday, where just 85 per cent of the lots found buyers. The auction failed to match its pre-sale estimate and raised a total of £3.7 million. 

Over the last few months we have noted that demand for top Bordeaux has receded. This was clear at the Sotheby's sale on Saturday, where numerous Bordeaux wines went unsold. On average, First Growth vintages from 2000 onwards were sold at a 17 per cent discount to Liv-ex transaction prices (if we exclude a buyer's premium of 22.5 per cent).

Although the Super Seconds have outperformed the fine wine market since June, they also met a cool response at auction. At the Sotheby's sale, Leoville Las Cases, Leoville Barton and Montrose all fetched prices well below their current market value. Winning bids for recent vintages of Leoville Las Cases were up to 53 per cent below trading prices, while those for Montrose were up to 38 per cent below market.

But where Bordeaux's biggest names came up short, DRC continued to shine. Romanee Conti 1988 held on to its value, selling at just under £79,000. At £126,150, a 12-pack of Romanee Conti 1990 was the most expensive lot of the day and sold at a seven per cent premium to its market price.

The table below shows the Sotheby's hammer prices and Liv-ex trade prices of selected wines, including post-millennial vintages of the First Growths. All values are for 12x75cl cases.

Plese note that Liv-ex trade prices do not include merchant margins and represent the prices merchants could expect to achieve when selling wine on the secondary market. Because we are approaching the auction results from a seller's perspective, and the buyer's premium does not go to the vendor, we have used hammer prices for our analysis.

Auction prices decline as bidders sit on their hands

Sotheby's sale in London on the 9th of November is the latest in a string of fine wine auctions to yield disappointing results. Only 80 per cent of lots found buyers and the auction raised a total of £713,200 - 18 per cent below its pre-sale estimate of £866,500. Even the top seller, Petrus 1982, failed to meet its estimate of £40,000, having achieved just £39,100 (including fees).

Ebbing demand for high-end Bordeaux saw the First Growths fall under the hammer at an average 17 per cent discount to the Liv-ex Mid Price (our trade-to-trade transaction price). Mouton Rothschild 2002 and Haut Brion 2002 were among the poorest performers, with the top lots fetching a quarter less than current trading prices.

The table below compares the sale's highest First Growth hammer prices (for 12x75cl cases) to the Liv-ex Mid Price. Please note that the Liv-ex Mid Price does not include merchant margins and represents the price merchants could expect to obtain when selling wine on the secondary market. Because we are approaching the results from a seller's perspective, the auction prices in our table are exclusive of buyer's premium.

 
All prices are in GBP and are for 12x75cl cases.

While prices for Bordeaux continued to decline, DRC fared much better. Single bottles of the 1990 vintage achieved mixed results, with Echezeaux and Romanee St Vivant outshining Tache and Richebourg.

All prices are in GBP and are for single bottles.

Sotheby's Finest and Rarest Wines: 15% of lots unsold

Sotheby's Finest and Rarest Wines Auction in London last week failed to match its pre-sale estimate of £2.59 million, having achieved less than £1.87 million. The sale, which featured a comprehensive collection of First Growth vintages, saw 15 per cent of lots unsold, including top vintages of Lafite and Margaux.

The table below compares First Growth auction prices to the Liv-ex Mid Price - our trade-to-trade transaction price. The Liv-ex Mid Price does not include merchant margins and represents the price merchants could expect to obtain when selling wine on the secondary market. Because we are approaching the results from a seller's perspective, the auction prices in our table are exclusive of buyer's premium.

As you can see, bidders were uninspired, with the majority of recent First Growth vintages fetching significantly less than the Liv-ex Mid Price.

All prices are for 12x75cl cases. Auction prices do not include buyer's premium.

Please note that Liv-ex will be at the Hong Kong International Wine and Spirits Fair this week (3-5 November). You can find us at booth 3D-B26 in the Wine Investment Zone. If you would like to make an appointment with a member of our team, please contact info@liv-ex.com.

Lafite leaves HK buyers unmoved; DRC gains momentum

The results of Sotheby's fine wine sales in Hong Kong this past weekend underscore Lafite's recent fall from favour. According to Bloomberg, the auction house failed to sell all of the wine on offer on Sunday for the first time in 17 sales. And it was Lafite - the former darling of the HK market - that was once again one of the poorest performers.

Numerous lots of Lafite went unsold, including cases of top vintages such as the 2000, 2001, 2003 and even the acclaimed 1961. But what of the lots that did find buyers? At the Classic Cellar sale on Saturday, recent vintages of Lafite changed hands at or below current market prices - with very few exceptions. The Sunday sale, Finest and Rarest Wines, saw no improvement, with 6x150cl cases selling at an average of eleven per cent below the Liv-ex Best List Price.

The highest prices achieved on each day (for 6x150cl cases that were common to both auctions) are shown in the table below, alongside the September Best List Price.

 
Prices include buyer's premium. We have chosen to show 6x150cl prices as 12 packs were only available on Saturday.

Whilst Lafite continues to slow down, DRC is gaining momentum in Asia. In a recent blog, we highlighted the producer's auction success and increasing popularity in Hong Kong. Sunday's sale reflected the same trend, with four lots of Romanee Conti 1988 delivering the highest bids of the day - between £70,140 and £75,150 per case.

DRC prices surge in Hong Kong

We recently reported on the blog that Lafite's performance at Christie's Finest and Rarest Wines auction in Hong Kong was relatively underwhelming. Burgundy's most eminent producer, however, has created quite a stir this month.

Over the past few weeks, DRC has been a major feature of several auctions around the world, including Hong Kong, London and New York. But although top lots of Tache and Romanee Conti set new records for the estate in London and New York, the results achieved in Hong Kong are equally, if not more, significant. This can be seen from the table below, which compares the winning bids from the Sotheby's auction in New York on the 10th with those from the Christie's sale in Hong Kong on the 4th. Auction prices include buyer's premium and are shown alongside current merchant list prices.

 
All prices are for 12x75cl cases and have been converted to GBP.

The above comparison reveals that buyers in Hong Kong were willing to pay an average of 48 per cent more than their New York counterparts for the same vintages of DRC. This seems to confirm that Asian interest has indeed expanded beyond Bordeaux - and it is the top names from Burgundy that are first in line to benefit.

Lafite underperforms at HK auction

A collection of Lafite spanning 1981 to 2005 sold for HK$4.2 million (£336,000) at a Christie's auction in Hong Kong on Saturday. Despite setting a new world record - the most expensive wine lot ever sold at auction - the collection failed to match its pre-sale high estimate of HK$4.5 million. 

Overall, the two-day sale was a success, raising £4.7 million against a pre-sale estimate of £3.7 million. More than 570 lots went under the hammer, including those featuring the top names from Bordeaux, Burgundy and Champagne. Bidders' enthusiasm for Lafite, however, was somewhat tepid. This is particularly interesting in light of the First Growth's recent descent. (Read more here.)

Lafite's relatively lacklustre performance can be seen from the table below, which compares the Liv-ex Mid Price to Lafite hammer prices. Please note that the Liv-ex Mid Price is a trade-to-trade price and does not include merchant margins. It represents the price merchants could expect to achieve when selling wine on the secondary market. (End-consumers could expect to pay 10 to 25 per cent more.) Because we are approaching the auction results from a seller's perspective, and the buyer's premium does not go to the vendor, we have used hammer prices for our analysis.

As you can see from the table below, all of the vintages sold at a discount to the Liv-ex Mid Price.

 
Prices for 12x75cl cases. Hammer prices based on a buyer's premium of 20 per cent (though this can be higher).

Christie's HK auction achieves £6m

The Christie's Finest and Rarest Wines Auction in Hong Kong on the 4th and 5th of March uncorked another round of keen bidding from Asian buyers. The two-day sale, which took place in the Mandarin Oriental Hotel, attracted just over six million pounds and saw 677 lots go under the hammer. Top achievers included Tache 1961 (£ 56,876; 6x150cl), Romanee Conti 1929 (£ 47,397; 3x75cl) and the 1982 vintages of Petrus (£51,188; 12x75cl) and Lafite (£42,657; 12x75cl). Compared to Liv-ex trade prices (represented by the Liv-ex Mid Price), Hong Kong buyers paid an average of 12 per cent above market for the First Growths. As we highlighted in a recent blog post, however, removing the buyer's premium shows sellers' less impressive returns. Based on a buyer's premium of 20 per cent (though this can be higher) hammer prices were an average of seven per cent lower than the Liv-ex Mid Price.

The table below shows the First Growths that fetched the highest prices at auction. As you can see, many of the most expensive wines achieved less than the Liv-ex Mid Price. 

 
Prices are in GBP and exclude buyer's premium. 

Hong Kong auctions kick off 2011

The 2011 auction calendar kicked off in earnest this past weekend, with Hong Kong playing host to three headline sales in just two days. The Sotheby’s Lloyd Webber (LW) auction on Saturday sold 100% of its 746 lots, attracting HK$41.8 million (£3.4 million), whilst the Sotheyby's and Bordeaux Winebank (SBW) sale on Sunday amassed HK$68.8 million (£5.6 million). Meanwhile, Acker Merrall sales on the 21st and 22nd saw bidders splurge HK$84.6 million (£6.8 million) on more than 1,200 lots of premium Bordeaux and Burgundy.

These Hong Kong auctions’ success is yet another patent indication of the Bordeaux market’s current buoyancy in Asia. If we compare auction prices (including buyer’s premium) with Liv-ex trade prices (represented by the Liv-ex Mid Price, our mark-to-market value), we see that buyers in Hong Kong were willing to fork out an average 15% premium for the First Growths.

Twenty-five wines were sold across all three auctions in the 12x75cl unit size, giving us an interesting chance to compare the results. Although the best prices were generally achieved at the Sotheby's and Bordeaux Winebank sale, there was a great deal of volatility in the prices achieved, with all three auctions seeing their share of winners and losers.

Overall, buyers payed 9% above the Liv-ex Mid Price at Acker, 8% above at Sotheby's LW and 22% above at Sotheby's and Bordeaux Winebank.

Of course, the results below include the buyer's premium; 22% at Acker and 21% at Sotheby's. If we remove this and look solely at the hammer prices, we find that the sellers actually achieved around 10% less than the Liv-ex Mid Price at the Acker and LW sales and achieved little more than a par score at the SBW sale.

*Most recent available: for First Growths 1996-2007, 25/01/2011,  for all others 31/12/2010.

Top Burgundy fetches record sales at Hospices de Beaune auction

 

Burgundy’s top lots generated record-breaking bids at this year’s Hospices de Beaune auction, with a number of wines achieving higher prices than those seen in both 2009 and 2005. According to Decanter, the average prices paid for white wines rose by 15.7%, whilst the average for reds rose by 12.5%. But although the mean price per lot increased this year, the number of barrels on offer was curtailed by more than 20% owing to the vintage’s lower yields. As a result, total sales descended from last year’s high of €5.4 million to €5.1 million.

Hospices auction results are no longer considered to have a significant impact on vintage pricing; however, they are seen as a guide to general sentiment. And given the plethora of enthusiasm that surrounded the event’s most eminent wines – culminating in a bid of over €400,000 for a 500-litre tonneau of Beaune Premier Cru Nicolas Rolin - there does appear to be a keen appetite for the 2010 vintage. Importantly, a growing portion of demand now appears to be coming from Asia.

This year saw more registered bidders from Asia than from the US, with the former accounting for 12.5% of total sales, ahead of 1.6% of sales. (The vast majority of lots, however, still remain in Europe.)

These results add to the growing anecdotal evidence that the Burgundian trade has the Chinese market firmly in its sights. Nonetheless, we have yet to see any notable increase in demand for top Burgundy on the exchange (or significant upwards price movement). For now, at least, Bordeaux's dominance in Asia remains unchallenged.

First Growths see more restrained buying at Acker auction

After the jaw-dropping prices paid at the Lafite Ex-Cellars auction in Hong Kong at the end of October, the Acker Merrall auction held in the region on the 5th and 6th of November represented a return to reality. 

The event was a success by all accounts, yielding £7.6 million in sales. Nonetheless, top Bordeaux fetched less extravagent prices, with 12x75cl cases of the First Growths selling at an average of ten percent above their current price on Liv-ex. Interestingly, Lafite played less of a starring role, with buyers paying a mere five percent premium on average.  

As we said last week on the blog, extreme price volatility at Hong Kong auction makes it difficult to predict the long-term effect that recent high-profile auctions will have on long-term secondary market pricing. This is clear when comparing Acker auction prices with those seen at the Ex-Cellars auction, where the same vintages of Lafite sold (on average) at more than double the price.

But whilst the First Growths generated less excitement at the Acker sale, a number of Yquem vintages saw strong bidding, with the 1990 realising £3,870 per 12-pack (some 30% more than current market value). As we outlined in a recent blog post, is this a sign that the tide is turning for Sauternes in Asia?