Buying Wine at Wine Auctions

As restaurant professionals, wine enthusiasts and or dedicated collectors,we are always looking for ways to acquire rare or harder to find vintage wines.The wines we desire are often unavailable or on heavy allocation from localwine and spirits distributors. Have you considered the alternative of buyingwine at wine auctions?

Wine auctions can be very entertaining, challenging (even to skilledbidders), but most importantly rewarding. Believe it or not, wine auctions canoffer some real buying opportunities. It is not uncommon for many wine auctionsto offer “sleeper lots”, or those wines that are flying low under the radar ofpublic awareness and perception. Sometimes it is just a matter of timing, and agreat buying opportunity comes up immediately and then disappears just as fastwith the loud report of the auctioneer’s gavel and his hallmark cry, “sold”,being spoken from the auction block. In their zeal to win their prized wines,many bidders will not only sacrifice pride but also a great deal of money inorder to accomplish their objective. Here are some of the basics regardingauction etiquette and rules to help you on your way to becoming an adeptbidder.

Wine auctions are conducted in two basic formats – live auctions and silentauctions. Silent auctions typically involve more passive bidding. Sealed bidauctions, as well as online auction formats are also used in silent auctions.Live auctions are obviously faster and more aggressively competitive. Liveauctions may also be conducted online and in real time Internet simulcastformats as well.

There are three types of wine auctions: retail, charity or non-profitsector, and then those specific to the wine industry. These types of wineauctions can utilize any one of the auction formats (live versus silent) andchoose to include online formats, real time Internet simulcasts, or basicsealed bid methods as well. There are more than 10,000 charity wine auctionsoccurring each year in the U.S., while there are only about eight well-knownretail wine auction houses and six reputable online wine auctions. All of thoseretail venues conduct from one to six auctions a year.

Retail wine auctions (i.e. Hart Davis Hart, Christies, Sotheby’s andZachy’s) are different in focus, as are bidder method and strategy. In thesevenues it is completely natural for the bidder who seeks to acquire the “greatbuy” or “steal of a deal”. Your better values can be found in these venues. Thewine auctioneer will almost always utilize “reserve bids” or opening bidamounts, so don’t be disappointed if the auctioneer does not accept a lowballbid offered under his stated reserve bid. Keep in mind that it is the job ofthe auctioneer to make money for the retail wine auction house, and fair marketvalue is established by the high or winning bid. buyer’s premiums (Additionalcommission percentage charged to you the bidder, typically 10% to 20 %.) arecommonly utilized by these retail wine auction galleries to cover overhead orincrease revenue. You may want to figure the buyer’s premiums and sales taxinto your bidding strategy.

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Charity wine auctions (i.e. California WineMasters and the Taste of Vail)are typically hosted by non profits or charity organizations seeking to raiserevenue for a specific cause. Charity wine auctions may also promote someincredibly rare wines, but you will usually pay a very high price as thecharities are the beneficiaries of these, usually more than generous, bids.Charity auctions or benefit auctions, as they are also known, have anattractive bidder perk; they are sales tax exempt and don’t typically involvebuyer’s premiums. The biggest bonus for bidders attending charity wine auctionsis that if bidder’s spending exceeds the posted retail amount on a particularwine auction lot, then the IRS allows the bidder to deduct the differencebetween the posted retail price and the actual amount paid for the item as acharitable tax deduction on his 1040 tax return. Don’t forget to check out thesilent auctions at these special event fundraisers, as many of the “sleeperlots” can be found there. You can acquire great wines at these fundraisingevents and help your local community at the same time.

Industry wine auctions (i.e. The Wine Barrel Auction of Napa) are some ofthe more esoteric wine auction venues. In essence, you must be employed in thewine industry in order to participate in the industry wine auctions. Today moreand more of these venues are becoming more public in nature as they aretransforming their events into more of a charity wine auction event.

How should I bid you might ask? The most common method is for the bidder tohold his paddle or card up. Perhaps you’ve noticed some bidders gesturing withtheir hands, winking, yelling, etc. Depending upon the venue, most thesemethods are usually acceptable. Determine your bidding method based on the wineauctioneer, his speed, style, the venue, the number of auction items, and thesize of the bidding crowd, all of which vary with each wine auction. If thewine auctioneer does not catch your bid, don’t worry; his “ring man” (bidspotter) surely will and then will report your bid with a very loud “Yep”. Restassured, if you are a good bidder the auctioneer will notice you and evenassist you in any way he can to keep you bidding and returning to his auctionhouse.

Your knowledge of wine and current wine market prices will undoubtedly helpyou to spot those bargains at the wine auctions in which you choose toparticipate. In the auction house the final word and authority for eachtransaction is the auctioneer. Do follow the proper auction etiquette, and donot make these common mistakes! Following the proper protocols will win youpraise, whereas engaging in inappropriate actions can result in public rebuke,or, worse, your expulsion from the auction. It is the auctioneer’s duty to actimpartially to keep the pace of the auction fast and smooth.

Wine auctioneer Tips: Bidder Dos and Don’ts

The Dos* Observe a wine auction or two first before youbid. Expensive lessons are learned the hard way!* Attend the wine auctionpreview – Personally inspect the condition of all wine lots you intend to bidon. * Knowing the history of the wine (i.e. previous ownership, storageconditions, etc.) will only help you.* Read the auction catalog. Note alldiscrepancies between the actual auction lots and catalog descriptions.* Readthe Auction House Rules to understand better the required auction etiquette andprotocols.* Attend the start of the wine auction. It is not uncommon to find afew bargains at the very beginning of the wine   auction while the biddersare still acclimating to the wine auctioneer and auction venue. * Listen to theauctioneer. The wine auctioneer will go to certain lengths, even telling thebidders “this is a bargain and value”, in order to sell a wine lot, rather than“pass” the wine over the auction block without selling it. * Stay through theend of the wine auction. The bulk of buying opportunities exists toward the endof the auction when the crowd thins out and the bulk of showcase wines havebeen previously sold.

The Don’ts* Don’t wave to other bidders because handsignals are often interpreted as a bid by the wine auctioneer. * Don’t involveyourself in collusion (violation of the Sherman Act) or conspiring to fix bidprices. * Don’t run up the bid unless you intend to buy the item. Running thebid up to spite other bidders will only make you an unwilling target of otherwrathful bidders. * Never interrupt the wine auctioneer or his clerk during thewine auction.

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