The recent turbulence on Wall Street has caused some pain: Bear Stearns is laying off 240 people, the easy money of the yen carry trade is drying up, and bonuses are rumored to be only 25 percent of what they were last year if the year ended today.
How does this affect the auction market for collectibles? Billionaire Eli Broad recently told Bloomberg that he thinks prices will decline for the high-end art market. As the fall auction season kicks into high gear, auctioneers must be wondering if the same fate awaits them for wine.
I think not for three reasons. First, there’s gotta be a pretty limited number of people who would pay $100 million for Damien Hirst’s diamond skull, while fifty cases of 1982 Lafite can be broken down to 50 different buyers if need be. Even 25 percent of last year’s bonus still buys a lot of wine. Ferrari? Maybe that gets the ax, but wine stays.
Size matters too: total US wine auction sales last year were $162 million, strong growth year over year, but at the rate of a skull, that doesn’t even add up to an entire diamond encrusted skeleton should Hirst ever do one of those. The $1.7 trillion hedge fund industry may be down, but it’s by no means out. And if you’re trading down from big ticket art, why not shift into lower-ticket but still investment-grade wine? There are a lot of new empty cellars in Greenwich, CT and beyond just waiting to be filled up.
Finally, it’s tangible. At the end of a day trading, going home and sitting in the 55 degree cellar and looking at the wine is fun. It’s there. It’s real, unlike many mortgage backed securities or derivatives thereof. And alluring. It might even make you want to uncork a bottle. As Napoleon is reputed to have said, “Champagne. In victory you deserve it; in defeat, you need it.”
What do you think about the market for collectible wines this fall? Have your say in the comments below.
Select wine auctions fall 2007: (after the jump)
September 8, New York City, Sotheby’s
September 12, London, Sotheby’s
September 14-15, NYC (Daniel), Zachys
September 15, Chicago (Tru), Hart Davis Hart
September 15 NYC (20 Rockefeller Plaza), Christie’s
September 17, London, Christie’s
September 28, NYC (Daniel), Zachys (the Stormby cellar)
October 10, London, Sotheby’s
October 12, Los Angeles (Peninsula), Zachys
October 13, NYC, Christie’s
October 25, LA, Christie’s
October 27, Chicago, Hart Davis Hart
October 29, NYC, Sotheby’s
October 30, NYC, Christie’s (the Mähler-Besse cellar)
November 3, LA, Christie’s (the Christen Sveaas collection)
November 8, NYC (Daniel), Zachys
November 30-Dec 1, NYC (Daniel), Zachys
December 1, Chicago, Hart Davis Hart
December 8, NYC, Christie’s