Provenance Matters: The Importance of Knowing Where Your Wine Comes From
Wine Auction Abbreviations
Provenance is more important than price when it comes to buying wine at auction. Unless you know where the bottle has come from, walk away.
When you think of a wine auction, you probably picture a live event: an excited room full of people watching a suit-clad auctioneer. But auctions also occur online.
Lot Number
The atomic unit of wine auctions is the lot, a group of wines that the auction house puts up for bid as an indivisible set. Each lot carries a single price, which includes the requisite buyer’s premium (20-25%), sales tax (8.875% in New York, where many large auctions are held) and shipping (which can add another 20% to the final bill).
Lot numbers are a series of letters and digits that identify a specific batch or production unit, along with some other important data elements. They are used to recall a batch from the market or warehouse in case of a defect, and can help to track inventory as it is distributed.
You can avoid overpaying for wine in an online auction by setting your maximum bid before bidding begins. Most auction websites will automatically increase your bid by the minimum increment (set by the auction house) until it reaches or exceeds your maximum bid.
Auction Date
When many people think of a wine auction, they envision a live event with a room full of people and an auctioneer in a suit. Auctions are often loud, hectic affairs, where buyers frantically raise their paddles to show their interest in a lot and to signal to the auctioneer that they’ve bid.
Auction houses, including Sotheby’s, Christie’s and Zachys, specialize in high-end wines from private cellars that are sold to the general public through auction. The top auction houses carefully inspect the bottles they offer for sale, and the auction catalogs include lots of information about a lot’s history, bottle and label condition, fill level and whether a reserve price is in effect.
Auction attendees tend to be wine investors, brokers or consultants bidding on behalf of clients, restaurateurs or sommeliers buying for their cellars, and garden variety collectors. Don’t be shy about asking questions, but don’t pester other bidders with excessively personal inquiries (like what they collect or how much they’re willing to spend). The auctioneer will scold you if you do.
Reserve Price
The minimum price that a seller is willing to sell a lot for at auction. The reserve is usually not made public during the bidding process and if it is not met the lot will not be sold.
Buyer’s fees (added to the hammer price) and sales tax are also charged once a successful bidder has won a lot. Adding all of these charges together can significantly increase the final cost of purchasing wine at auction.
Sophisticated auction buyers know to set a maximum bid for each lot before the auction begins and then use their paddle to raise it as needed until they have successfully won the lot or are bidding above their limit. This method allows them to focus on other lots and avoid spending their entire budget at one time. This strategy is especially effective when bidding on rare or collectible wines. In some cases, multiple bidders will place competing bids on the same wine and can drive prices up quickly.
Auctioneer
While auctions offer an interesting way to buy and sell wine, they can also be confusing. For example, it’s important to understand the auction process and the fees involved (at iDealwine there is a 25% buyer’s premium added to the hammer price of a successful bid).
The key to success is being prepared for the event by reading the catalog and attending a presale tasting if possible. This will allow you to sample wines and get an idea of what the quality level is like. Then you’ll want to prepare yourself for the bidding, keeping in mind that your bid may be rejected if it is too high (i.e. if it pushes the lot number above its reserve). Finally, it’s best to wear bright colors so that the auctioneer can see you. Even if you’re participating remotely, most auctions use a licensed auctioneer who ensures that the sale is run smoothly and on schedule.