World auction market may shrink by 20%, say experts

  • Thursday 25 October 2012

The world auction market for fine wine may shrink by 20% or more in 2012, as the value of fine Bordeaux bottoms out, experts are predicting.

lafite 82

Lafite 82: 'steady demand'

Leading auction houses are warning that the market might fall by as much as US$100 this year, from US$500 to US$400m.

‘There has been a significant decrease and I would be surprised if it doesn’t shrink by more than that,’ Jamie Ritchie, Sotheby’s CEO of wine for the Americas and Asia told Decanter.com.

John Kapon of auction house Acker Merrall and Condit told Reuters that Bordeaux accounts for 50% of the world auction market, and that the ‘Lafite bubble has burst’ with the first growth down by as much as 50%.

Chateau Lafite 2009, considered a benchmark for top Bordeaux prices, is now trading for just above £7,500 a case, according to trading platform Liv-ex’s register of market prices, down from a high of over £14,000 at the beginning of 2011.

Chateau Latour 2009’s market prices have shown a similar, though not so severe trajectory, falling from a high of over £13,000 in April 2011 to £10,572 at the end of September this year, according to Liv-ex.

‘However Bordeaux is priced will always have a material effect on the value of the auction business,’ Ritchie said. ‘In the overall scheme, other countries [such as Italy and California] are largely irrelevant.’

The market for top Burgundy such as Domaine de la Romanée-Conti and Henri Jayer is increasing, but Ritchie said that ‘will not offset the changes in Bordeaux prices’.

At Christie’s in New York, Per Holmberg, head of wine for the Americas, told Decanter.com he thought it was ‘possible the market would shrink by as much as 20%, but it is not the doomsday scenario that people are saying’ and that what we are seeing is a stabilisation of the market.

‘Prices are flattening out and stabilising after being overheated – the market is re-setting itself,’ he said. There is still ‘a steady demand for wines ‘if they are rare enough and they are at the right prices’ and the provenance is impeccable.

‘Of course we are cognizant of the fall in prices and we are adjusting our estimates accordingly.’

As evidence of the continuing health of the auction market Holmerg cited Christie’s 12 October auction in New York in which 97% of lots were sold, including 11 bottles of 1982 Lafite which fetched US$33,880, a 12.9% increase on the US$24,000-US$30,000 estimate.

A four-bottle lot of 1969 Romanée-Conti sold for US$29,040, against a US$24,000- US$32,000 estimate

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