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Bordeaux Bubble Bursts in Wine Auctions

Posted: Thursday, 25 October 2012 12:15

Bordeaux Bubble Bursts in Wine Auctions

October 25: As expected by experts, the Prices of Bordeaux wines have fallen significantly, with the global auction market for fine wines expected to shrink to about $400 million this year after crossing $500 million in 2011 and Chateau Lafite-Rothschild, one of the five First Growths of Bordeaux, a hot favourite of the Chinese buyers seeing the auction price of a 9-liter case of ‘82 falling from $60,000-$80,000 a couple of years ago to $40,000 or even less

‘The Bordeaux bubble has officially burst, according John Kapon, CEO for the auctioneer for Acker Merrill & Condit, the biggest auctioneer in Hong Kong. "Bordeaux accounts for 50 percent of the auction market, Burgundy 35 percent, which means that Italians, Californians, cults make up the rest," he said adding, "Now, Bordeaux is down 30 percent in price, in some cases even 50 percent - the Lafite bubble has burst."

For Kapon diversity seems to be the buzz word as Asian collectors have branched out from Bordeaux and Burgundy. His last sale in Hong Kong netted nearly $8 million, and included a prominent Champagne collection, as well as wines from the Rhone, California and Italy. "As collectors become more sophisticated, they also become more adventurous and want to try new things and that's what will keep the market vibrant," Kapon explained.

The fall in the prices and the demand for Bordeaux is not sudden but gradual since last year. According to an article in Wine Spectator in early January this year, ’three recent wine auctions in Hong Kong—held by Sotheby's, Acker Merrill & Condit and Zachys during the first two weeks of the year, brought in $18.71 million. The same three events brought in $34.59 million in January 2011. Burgundy was a big seller this year, while several top Bordeaux lots sold below estimate,’ according to a report on January 18 this year.

The downhill slide for Bordeaux had started in July last year and only now has it become official. The same article had explained, “Demand and prices have definitely dropped off since July,” said Simon Staples, sales director at Berry Bros & Rudd. “A load of people are trying to get out of their wine, so they are selling, so more wine is on the market.”

The Wine Spectator Magazine Auction Index, which tracks fine wine auctions in the United States, reportedly fell nearly 3 percent in the third quarter of the current year, with the year-on-year quarterly fall being much more substantial. The average price per lot in the quarter was $2,300 compared to $3,616 for the same period a year earlier.

While most experts agree that the top Burgundies have gained a part of this loss and are very strong, particularly Domaine de la Romanée-Conti, being a much smaller area than Bordeaux, supply is the problem and is not enough.  The production is not large enough to make up for any shortfall from Bordeaux sales in real value terms. This has benefitted a few cult wines from California and some top Italian wines. Besides, some wines from Rhone are also showing more strength.

Apart from the bidders backing away from Bordeaux this year, experts said on Tuesday that supplies and credit tightening had also affected the Bordeaux auction sales prices, according to the report in Reuters.


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