Wine isn’t just a beverage. It’s a way of viewing the world— a living, breathing piece of history and tradition, which reflects the identity of the people and places in which it’s made.

Online Wine Auctions Wooing New Collectors

Online Wine Auctions Wooing New Collectors

Will a new generation of online auction bidders bypass traditional favorites Bordeaux and Burgundy?

By Zachary Sussman | Posted Tuesday, 21-Apr-2015

It has become a familiar trope that we're living in a golden era of wine appreciation, with a higher level of quality and wider range of choices than ever before.

Given the power of Google – and Wine Searcher – we have more information at our fingertips than any previous generation of drinkers. But for all the new-found promiscuity with which we've been enjoying everything from Assyrtiko to Zweigelt, one particular area of the wine world – the auction market – has seemed resistant to change.

Just a quick survey of the categories mentioned in Wine Spectator's 2014 year-end auction report confirms the extent to which collectors still target a narrowly defined range of critically acclaimed cult and "blue chip" wines, with proven track records for fetching large sums. First growth Bordeaux, the finest Burgundies, and a smattering of high-end Napa Cabernets dominate.

While it may come as no surprise to most that this "fine and rare" segment of the market has remained, well, fundamentally fine and rarified, the rise of online auctions over recent years points to certain shifts within the makeup of the industry. In addition to exclusively web-oriented platforms like WineBid.com, which was among the first to bring bidding online in 1996, major houses like Christie's and Acker Merrall & Condit now supplement their live auctions with online versions, typically featuring smaller lots of relatively affordable – and often more eclectic – bottles.

According to WineBid.com CEO Jerome Zech, the online environment represents a non-intimidating way for new collectors to enter the auction market. A critical part of this mission has involved offering significantly fewer bottles at a time than the standard 12-bottle lot. "From the start, we focused on single-bottle lots, which brought a broader audience to the auction world, since it makes the experience more affordable," he explains. "For a hundred dollars, you can buy two or three interesting bottles that you're not going to find in your local shop."

Due to their lower overhead costs (for one thing, there's no glossy catalog to print) and swift turnover, internet sales actually offer certain financial benefits for auctioneers. "It's no secret that everyone developed an online auction because there was so much wine to be had, and not everything could go into a live sale," explains Jeremy Noye, CEO of Morrell & Company Retail and Auctions. "In this way, the web maximizes your ability to take consignments, since there's a limit to how much wine you can go through in one live sale."

© Wine-Searcher/Wine Spectator 

In terms of practical results, the numbers have been impressive. According to The World of Fine Wine magazine, "the proportion of revenue that the [traditional] auction houses now derive from online only sales has… increased, by 12.8 percent", and Wine Spectator reports that in 2014 "internet only" auctions accounted for $46.25 million of the entire auction market's $352.26 million in global sales. At an estimated $24 million, WineBid.com alone generated more than half of that, representing the rough equivalent of the total New York sales for Sotheby's and Christie's combined (at $15.4m and $10.18 million respectively). 

Whether they represent a democratic effort to embrace a wider public or a savvy strategy to diversify profit sources, there's no denying that online auctions have started to expand the parameters of what is viable in an auction platform, offering evidence of broader interest among collectors than previously imagined.

"The online auctions have been a great way to offer wines that, before, we would have possibly rejected outright," says Charles Antin, specialist head of sales and associate vice president of the Christie's wine department. "We've sold cases of Montrachet for over $30,000, but we've also sold cru Beaujolais."

Jeff Zacharia – president of retailer and auction house Zachys Fine Wine, based in Westchester, New York – has observed a similar pattern. "I've been in the auction business for 30 years," he says. "When I first started off, it was all about expensive, collectible wines, mainly Bordeaux and Burgundy. Now I'm seeing diversification in all areas."

To that end, earlier this year the company held its first "domaine-direct" internet offering, which consisted of bottles consigned from Alsace's celebrated Zind-Humbrecht estate. According to Zacharia: "For Olivier Humbrecht, it was a way to introduce his wines to a whole class of collectors who didn't know them, or who weren't aware of Alsace and the greatness of the wines that come from there."

Still, the fact remains that the same highly pedigreed wines that have historically fueled profits continue to dominate. "While there has been a large diversification of wines in the primary market, in the secondary market the process happens much more slowly," says Jamie Ritchie, CEO and president of the Americas and Asia division of Sotheby's Wine. "We're still heavily driven by Bordeaux, which represents about 60 percent of the market. Burgundy is around 25 percent."

On the other hand, he acknowledges certain recalibrations taking place within that hierarchy. "As prices rise, there has naturally been a move down the scale in Bordeaux, for instance, since competent wines are being made in better price points," he says. "At each level, I think people trade down in categories and look for diversity, whether it's in the Rhône, or even Spain and Italy." When asked about the possibility of hosting an internet sale, however, he responded in no uncertain terms: "Although bifurcating the market [with online auctions] might be interesting to some people, it's not for us." However, Sotheby's does have an online presence through a partnership with online auction site eBay.

For other major houses, however, the platform has emerged as a growing part of the business model. Christie's, for example, whose first internet sale went live in 2012, reports that the web accounted for approximately 7 percent of total sales in 2014. A spokesperson for Acker Merrall & Condit, which launched its web version as early as 2001, confirmed that the internet typically accounts for 10 percent of sales.

Even if online auctions have only just begun to impact the wine industry as a whole, the changes they forecast resonate on a symbolic level. Difficult as it may be to make predictions, and entrenched as traditional attitudes towards collectability have been until now, the situation signals the possibility of a new fine-wine audience – one with less established notions about what that term entails, and whose influence can only grow.

Oenophiles’ Latest Obsession: Unicorn Wine

Oenophiles’ Latest Obsession: Unicorn Wine

Bar Chuko: Restaurant Review

Bar Chuko: Restaurant Review