With many wine auctions traditionally reliant on in-person events, one might think the pandemic would have hobbled the industry. Instead, it’s turbocharged sales.
“It’s one of the most frenzied and active markets I’ve seen in my 20-plus years of doing this,” says Acker Wines Chairman John Kapon. “It’s just incredible demand and continues to surge.”
At an Acker auction earlier this fall, six of the top 10 lots broke records. Bids on some wines are currently 50–100% higher than when the pandemic started and, overall, sales from January through October 2021 are up 33% compared to the year prior.
“We were amazed how resilient the market was and how active it stayed,” Kapon says of 2020. “In 2021, it took off to a whole other level the first six months, and then the fall rolled around, and it’s gone to even another level.”
Digitization and Changing Demographics
What’s driving this frenzy? Quite simply, the pandemic forced many auction houses to radically change the way they conduct business.
“We’ve become a digital first company,” says Jamie Ritchie, worldwide head of wine at Sotheby’s. Previously, in-person auctions were the norm. Now Sotheby’s does a combination of online-only auctions, live auctions with no physical attendance and live auctions with attendees, where people can also participate online.
“We used to hold roughly 25 to 30 live auctions a year,” says Ritchie. “We’re now holding closer to 60 auctions, and everything is heavily digital.”
Seattle-based WineBid.com has been conducting online auctions since its inception in 1996. They too have noticed a change.
“We’ve definitely seen a big increase of buyers and sellers moving to digital first, as opposed to digital second,” says CEO Russ Mann. This move toward online buying has influenced who participates.
“Through the pandemic, both the seller base and the buyer base have become younger, more diverse and more global,” says Mann.
Ritchie agrees regarding digitization. “It has really led to a younger audience coming in,” he says. At Sotheby’s, 75% of new buyers are under 50 years old, Ritchie says, and 43% are under 40. Digitization has also changed what is being offered and how.
“Our older model was we gathered a large amount of property and hosted it in a live auction,” says Ritchie. “In the digital world, it allows us to be much more fluid.” This can involve working with smaller or more focused collections and also presenting offerings faster and more frequently.
Burgundy and Spirits Show Dramatic Growth
Another change has been the rise of Burgundy. While this trend began prior to the pandemic, the last 20 months have accelerated the region’s ascendancy.
“Bordeaux and Burgundy are the two superpowers, but Burgundy has become the super-er of the two,” says Kapon. He says that five years ago Bordeaux commanded 50% of the market. Now Burgundy does. “It’s kind of flip flopped.”
While Burgundy is strong overall, Domaine de la Romanée-Conti is the proverbial elephant in the auction room. At Sotheby’s, the producer represented a whopping 48% of all Burgundy sales by dollar in 2020, and 20% of total wines sales.
But it’s not just Burgundy thriving at auction. Spirits have also shown sharp growth. Five years ago they were a mere 1% of Sotheby’s sales. Today, they are 19%, with the average auction bottle price an eyepopping $7,058 in 2020 (wine was $686). Many of these sales are to Asia, which comprises a total of 85% of Sotheby’s spirits sales by value.
“They’ve been driving the market,” says Ritchie. Acker has also seen strong growth in spirits and now conducts a monthly auction.
“That market is exploding,” Kapon says. “There’s huge growth and huge potential.”
A Market Forever Changed
Overall, the pandemic has made people much more comfortable buying and selling wine online. The results for the industry are profound.
“I’d say since the start of the pandemic, we’ve probably accelerated at least five to 10 years of online wine buying, and not just auctions,” says Mann. “The pandemic drove wineries, retailers and auctioneers all to improve their digital game.”
The pandemic has also greatly altered wealth. While many have struggled, others have profited handsomely.
“The vast majority of wealthy people got more wealthy during the pandemic,” says Ritchie. “And as a result, they are willing to spend more money on the things that they enjoy.”
People have also altered their drinking habits, enjoying more wine at home rather than at a restaurant, and consuming higher quality and quantities of wine. With many now fully comfortable buying and selling wine online, the tectonic shifts in the auction marketplace are likely to continue in the years ahead.
“What I see is the market for auction and fixed priced resale wines will continue to grow aggressively as it gets easier and easier for people to put wines up for auction or for resale,” says Mann. “I think there’s going to be a higher velocity of trading, not just in the higher end Bordeaux and Burgundy and investment quality wines but even kind of mid-range, $40 or $50 to $250 wines.”