Online wine auctions

I always prefer to buy wine from the producer or directly from the importer.  My most satisfying purchases come from those two sources.  But from time to time I buy wines at auction too since, well, I think I like finding wines as much as I like drinking them.  And auction prices are sometimes quite reasonable, there are wines and vintages that might not otherwise be available from the producer or importer and there are online auctions in Australia seemingly almost every other week.  Other times, auction prices seem frustratingly high, you get a bad bottle or two, you might have to wait weeks for delivery because the weather is hot, cold or somewhere in between and it all seems a bit of a pain.  So, while I have had mostly rather good experiences, I thought it worth sharing a few thoughts as an occasional auction buyer.

Wine provenance

Often little will be known as to the provenance of the wine available at auction except for what the auction house may say.  This is to an extent unavoidable since, well, it's an auction and the vendor is not going to tell you that they have stored the wine in a manner uncanny in its resemblance to the ageing process of a Rutherglen muscat under a hot tin roof.  Nor will they tell you, at least typically, that their dog found the bottles in the park, their dog found the bottles in a park in Rutherglen or that sundry nocturnal mammals in their backyard are able to offer up an unexpectedly fulsome and eloquent description as to the wines' quality potential.

So unless the auction house provides this information, we are left without key information such as who the seller is, why they are selling, how the wine has been stored by the seller, and how long the seller has had custody of the wine, assuming the wine has only seen one custodian.  And even if there has been just one custodian since purchase, storage and transport conditions as between the winery and that purchaser's purchase may be an open question.  At every point, exposure of the wine bottle to extremes of heat, light and humidity (for wines sealed under cork) most likely will be relevant to the ultimate enjoyment of the wine.  Studies suggest that wine for example doesn't have long at 40c.  This study is a bit wordy, but see here if you are interested in reading more.  Light is bad too.  You can read about that here (this article is shorter).  Now of course some may tell you that storage doesn't matter, wine is resilient, the backyard possums in fact have a good and proven palate or some combination thereof.  But faced with a choice, good storage trumps bad storage, and at auction you may have little way of actually knowing either way.

Wine fraud  

There is no central database registering every wine and its consumption status.  The world happily has not yet come to that.  And some wines are fantastically rare and expensive.  This combination I imagine is more or less a magnet to bad actors.  The scale of the issue is the big question.  It may be a correct bottle, with different contents to those described (i.e. a refilled bottle of a wine that has been drunk up).  Or perhaps a newly minted bottle with different contents to those described.  Or perhaps not even wine.  I do not know the extent of wine fraud in an Australian context.  Overseas reports of the quasi industrial scale of Rudy Kurniawan's reported wine production endeavours are not pleasing reading.  The ever lapping tides of international travel and trade presumably do not make this problem better.  Fraud risk is very difficult to manage as a buyer without access to considerable resources or experience of such matters, so carefully and ruthlessly weeding out the imposters will remain a core duty of wine auction houses.

The online wine bidding process

While the bidding process itself is routine, where it can get more interesting is how online auction houses deal with vendor bids and reserves.  For vendor bids, a simple question might be whether they are permitted.  In a real estate context, people get awfully excited about vendor bids, and I tend to agree with them.  Bidding against yourself is not entirely rational from a buying point of view.  Well, not on most days.  If vendor bids are permitted, there is then a question of disclosure.  Are these disclosed when the bid is made so that the bidder can see that they have been outbid by the vendor?  Or is some other arrangement in place?  For reserves, the concept is simple enough - if the bid doesn't make reserve, it is passed in to the vendor.  If vendor bids are permitted and a reserve is in place, and the auction is entirely online, the position may be more complicated to decipher.

Bottle, fill levels and labels

Some clues as to the quality of the wine provenance might be detectable from the appearance of the bottle, the fill level of the wine (the higher the better) and the condition of the label (good is usually good, unless it's "too good").  Leaky or raised corks are generally not good.  You can fritter away hours on the internet reading of the glorious endeavours of wine obsessives and businesses in the United States devoted to exactly these types of questions.  Unfortunately, or perhaps even fortunately, I have no bottles of Domaine de la Romanée-Conti or '82 Margaux to fret about the provenance or precise storage conditions of!

Any comments much appreciated as usual.

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3 comments:

  1. What auction sites have you used? I've used Langtons and Wickmans. Langtons has a lot more volume and is a smoother user experience than Wickmans. Wickmans is probably a little more honest with the buyers, in terms of provenance, reserves and bidding process. Wickmans also has a slightly lower buyer's premium.

    Langtons is mostly fine but it's designed to give you the feel you might get a bargain when the reality is you're just playing against the house. Typically bottles start bidding at some percentage under the low end of the "expected" price range. So a bottle predicted (by Langton's) to sell for $65-$80 will typically start bidding at $50. The reserve may be higher, but you won't know. The only time you get a bargain there is when the resale value of the wine is significantly less than the rrp.

    The "expected" price ranges for the wines are not really true market values of the wines. Wines don't sell under reserve, so the "market" value of the wine is really made of cases where they managed to find a buyer to meet the seller's price. If a wine keeps getting bids but failing reserve, there's no effect on the expected price range.

    Langtons often do "no reserve" auctions, but for most decent wines, it's meaningless. It seems that many of the good bottles still have starting prices as above, so the fact a bottle has no reserve on it has little meaning when its starting price is $50 - the bottle just has a $50 reserve on it.

    Similarly, in their "no buyer's premium" and "no reserve" auctions, you'll be hard pressed to find many good wines. A normal auction typically has pages of grange, hill of grace, st henri, etc, but almost never in auctions with no/reduced premiums.

    Langton's ts&cs allow them to make vendor bids to increase the price, or sell the auctioned bottle through their wine store instead.

    If you go in with those points in mind, Langtons can be quite useful. I mostly use it to find older vintages of wines I know I like. I've had a few bargains along the way, but only a few. Also had a few dead bottles as well.

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  2. I've used Langtons from time to time over the years, and also look at Wickmans from time to time too who have given me a favourable impression that they are trying hard with their service. The latter's imported range seemed more limited than Langtons when I last checked in, but I see a bit stock on their latest release.

    I think the points you make are good ones - there's some devil in the detail in the interaction between expected price ranges, market values, starting bids and vendor bids when applied to the online setting. I think vendor bids in particular could/should be more transparent. The end result does seem to be to steer prices towards the seller's price. I guess that is the very thing sellers will be seeking. But the potential cost is what this does to clearance rates and the chance of increasing buyer activity in terms of volume. And agreed the bottom line is that auctions still prove quite useful for finding older vintages and wines you can't otherwise source. My own strike rate is probably 8 or 9 good bottles in 10, which is pretty ok in the scheme of things. Thanks for your considered thoughts.

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  3. I have used Langtons extensively over the last four years. All things considered I have found the whole experience pretty satisfying. I have picked up some pretty good wines at very competitive prices and although I've bought some bad wines, only one or two were because the wine was spoiled/heat affected.

    The only real bugbears for me are where reserves are set above their 'price guide' and where one is left with the feeling that the auctioneer is also a vendor in their 'unreserved' or '$5 Reserve' auctions.

    For example in their weekly '$5 Reserve Auction' it is not uncommon that the highest bid on several lots of a single wine may rise to to the same price, say $22, seemingly all at the same time within a few hours of the auction opening (and often overnight). Now Langtons clearly permit vendor bids and I have no problem with that. Where it gets a bit murkier is when, given the volume of a particular wine for sale and its appearance in a large number of auctions over an extended period, it gives the appearance that Langtons, or a wholly owned subsidiary, has either bought said wine on consignment or is acting on behalf of the vendor. So in effect Langtons as auctioneer and vendor is effectively setting higher reserves than advertised, which appears a little disingenuous.

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