Bidding for an Auctioneer

Stewart Langton has dreamt of this. Seventeen years after he first entered the wine auction business, there’s a buoyant secondary wine market in Australia, replete with sellers, buyers and overseas interest. And most of all, high prices. Whether it would have happened quite so quickly without his own company’s pivotal role is a matter of some doubt, but in 1999 Langton’s company, Langton’s Fine Wine Auctions, reckons the Australian auction market is worth around $11 million. Nearly double their estimate two years ago of $6.5 million.

Given that Langton’s has around 60 of this market, with a buyer’s commission of 10 and a vendor’s commission between 15-22, it’s easy to see why Langton is today a happier man than when he first began. Back then, he says, Australian wine auctions were little more than a dumping ground.

You don’t need to be Einstein to figure why so many people are getting in on the act. ‘I’ve shown people you can make a living out of it and now everyone else wants a piece of it’, says Langton.

‘There are so many new auction companies out there, all claiming to have structures’, says Andrew Caillard MW, who heads Langton’s Sydney office and is a partner in the business. ‘They might have Internet sites, but there’s often nobody around. Over the last decade we’ve acquired a critical mass. They can only compete against us on commissions, but even then they don’t do as well. Our vendors keep coming back, for we do turn over our wines.’
Caillard concedes that Langton’s commissions may be more expensive than their competitors, but despite that says that his company offers a result that others are not getting. ‘What matters is what you get back in your hand and that’s where we score. Our commissions represent good value for the service we render and we offer no apologies for them. If you want a Rolls Royce you have to pay for it.’

Langton’s prodigious recent growth has been central to the creation of what Caillard describes as the ‘ultra-fine’ wine market. Through the slick and professional presentation of its promotional material and catalogues, its innovative Classification of Distinguished Australian Wine, the high profile it takes at major wine events like Wine Australia and its biennial Australian Fine Wine Investment Guide, Langton’s has successfully created and nurtured the appeal of collecting and trading Australian wine on the secondary market. In doing so it has attracted the imagination of a new and well-heeled corporate market which, in the present climate of low commercial interest rates and the high profile taken by wine and wine auctions, now considers Australian wine as a valid alternative form of investment.

Of all the auction houses, Langton’s has been the one most to encourage this approach, which if successful will guarantee the auction market a regular supply and demand. Wine becomes another form of share or currency. ‘The idea of wine investors buying wine to put back into the market is recent phenomenon’, says Langton. ‘It’s a concern that around ten years ago the average age of a bottle of wine for sale at auction was ten years, while now it’s just three. But on the other hand, there’s less risk in buying the stock and in most cases they’ve been stored very well. It’s a safer and more organised market than it was ten years ago.’

Langton’s offers its customers tailor-made wine investment strategies and through Andrew Caillard’s professional wine background has begun to tip which wines will become the sought-after and high-priced headline-makers of tomorrow. Because of this I would argue that in this dual way, as both commentators and auctioneers, Langton’s has been very successful in increasing the prices of premium Australian wine, which each of the other auction houses have clearly benefited from.

‘We’re a small cog in a large industry’, says Langton. ‘A number of brands have benefited by what we’ve done, especially the overseas buyers who are looking for a ranking of wines they understand. I don’t know if we have pushed prices up. The secondary markets in London and New York have also boomed, but we have certainly done our bit to lift the profile of Australian wine locally and internationally.’

Given the value now associated with premium Australian wine and the likelihood that people will attach ever-increasing value to the cellaring history of the bottles they bid for, buyers are likely to become as choosy with their auctioneer as they are with their wines. In addition to the financial considerations like price, commissions, terms, insurance and freight, more informed buyers will rate auction houses on issues like the accuracy of descriptions in catalogues, especially relating to levels in bottles. Auctioneers who can accurately describe previous cellaring conditions and where the stock is sourced from should ultimately do better business. Personally, I’d never buy any wine from Sydney, Perth or Brisbane unless I knew it had spent its entire cellar life in temperature-controlled conditions.
But ultimately, as Andrew Caillard says, the auctioneer’s job is to make certain that everyone is happy at both ends of the sale. And that’s all about understanding the difference between price levels and volume of demand. And that’s from a happy auctioneer.

Australia’s Wine Auctioneers
James R. Lawson Pty Ltd
Auctioneer: Michael Buring
212 Cumberland St, Sydney, NSW, 2000.
02 9241 3411. www.lawsons.com.au

Since Michael Buring began the wine division of this fine art auction house two years ago, business has increased sevenfold. Buring believes that not only were buyers and sellers looking for an alternative to Langton’s in the Sydney market, but that the more attractive commissions he offers have won market share. Around 30 of wines sold at Lawsons are given reserve prices and many of the lots sold are just single bottles.

Langton’s Fine Wine Auctions
Auctioneers: Andrew Caillard MW, Stewart Langton
Sargood House, 69 Flinders Lane, Melbourne,
Victoria, 3000. 03 9662 3355.
52 Pitt St, Redfern, NSW, 2016. 02 9310 4231.
www.langtons.com.au

The dominant force in the Australian secondary market, and although its slice may have fallen from 70 to 60 in recent times, it’s a much bigger cake than ever before. Its size and reputation mean this house can take no risks. ‘We turn away stock because the provenance and condition of wine we sell is important’, says Stewart Langton. ‘We know from experience that some wines are useless. I know that what we reject is sold elsewhere. The service we provide in our catalogues is unsurpassed and those who trade with us trust what we do.’

Langton says he tries hard not to take reserve prices, saying it’s crucial that the market speaks for itself. ‘Buyers should know the wine is genuinely for sale. Buyers and sellers should understand that it’s a free market; we’re not retailers. If we start setting prices it makes an artificial market fraught with danger, not just for auctioneers, but for the whole industry. We live in a low inflation environment but we’re selling an inflationary product. The market needs stability.’

On one hand it can certainly be argued that Langton’s are themselves one of the prime factors behind the recent price increases in Australian wine. On the other, it would certainly have happened anyway.

Langton’s is sumptuously headquartered in Melbourne attached to the Langton’s Restaurant in Flinders Lane.
Oddbins Wine Auctions
Auctioneers: Colin Gaetjens, Stephen Lumb
2 Grenfell St, Kent Town, South Australia, 5067.
08 8362 4700. www.oddbins.com.au

Based in Adelaide but selling 75-80 of its stock interstate or overseas, Oddbins recently sold the highest-priced ever bottle of Australian wine, the 1951 Grange. It went for $27,100. This phenomenon and others like it are pure wine investment. Only a plutocratic cretin would drink this thin, varnishy wine today.

Oddbins is a wide-ranging business which not only auctions wine, but vineyard and winery plant and equipment, plus wineries and vineyards themselves. Through Colin Gaetjens, an experienced and highly regarded wine industry professional and Stephen Lumb, who brings fifteen years of wine auction experience, it ranks next to Langton’s for wine cred and expertise.

Lumb says that Oddbins has a smaller, niche market than Langton’s, but still can sell well to that market. ‘We’re professional in our standards, our catalogues and our knowledge of wine and vintages is second to none’, he says.

Gaetjens is adamant that auctioneers should be agents who stand entirely on their ability to sell by commission. He is ‘hot’ on auctioneers who buy and sell their own goods, or who themselves buy passed in wine, only to sell it later at a profit.

Richardson’s Wine Auctions
Auctioneer: David Richardson
15 Kingston Avenue, Richmond, SA, 5033.
08 8351 7373. www.erauctions.com.au

‘People selling require a regular outlet for their wine, proper promotion and payment reasonably quickly after the auction, say in 2-3 weeks’, says David Richardson, who is providing Oddbins with some highly publicised opposition in Adelaide. He is also beginning to create a market in Brisbane.
‘Buyers want regularity of supply and variety, with boutique wines that aren’t normally available. Plus, they’re to be as cheap as possible, which can be difficult. I very rarely enter stock with reserve price and virtually all the wine I offer is for sale. It’s a distinguishing feature. So is the fact that we display all the wine for auction prior to the sale.’

Richardson’s can take live bidding from the Internet, although the process is slow at present. He receives around half his absentee bids from the Net.

RMG Auctions
Auctioneer: John Roper
60 Dawson St, Brunswick, Victoria, 3056.
03 9388 9592

A newcomer to the Melbourne scene, RMG only conducts live auctions of 500-600 lots. Wine collector John Roper says he started because ‘people were saying that other companies were too off-handed’. He says he used to puts wines into other auctions and was eventually approached to do his own.
Operating at very low levels of commission, RMG says it pays its vendors within a week of each sale, against the three months Roper says its vendors had been dealing with prior. Roper discounts any suggestion that his company might lack the wine expertise of others, saying that most of his staff have been involved in the higher end of the retail trade and that ‘Our bottles of Margaux are as good as anyone else’s’.

Roper says that the demand for his auctions has been so great he could conduct one per week and that he is having to restrict the number of lots per auction for fear they would last too long.

Sterling Auctioneers
Auctioneer: Lynton Barber
388 Hay St, Subiaco, WA, 6008. 08 9388 9955.
www.sterlingauctions.com.au

Also a jewellery specialist, Sterling is Perth’s only wine auctioneer and an aggressive one at that. The latest Sterling catalogues have featured Vin Rude-inspired black and white photographs of what some would call art, others soft porn.

‘Our reliability and integrity stand us in good stead’, says Lynton Barber. ‘Image and reputation are issues that we feel are important in a town the size of Perth. We don’t bid up items and work very hard, especially with absent bidders, to help our customers buy at the lowest price. We often find the market value is set by absent bidders, who can set a price not reflected by the floor.’

Barber isn’t concerned that he doesn’t have a formal wine background. ‘We’ve a body of expertise as wine merchants, of meeting market demands and current pricing. These are the important issues people focus on. It’s not terribly relevant to have a huge wine knowledge.’

Sterling’s website offers a free pricing database for anyone interested in valuing older wine.

Vines Premium
Auctioneer: Greg Cornish
15 Peony Court, Morphett Vale, SA, 5162.
07 3221 5600 vines.netauctions.net.au

After twenty years in the wine industry and having worked as a wine evaluer for the last five years, which involved passing a large volume of wine into the auction system, Greg Cornish commenced this year to establish his own auctions. More than any other auction operation in Australia, his uses the Internet in all aspects of its business.

Using what he describes as a ‘live/absentee’ style of bid, customers post their bids any time up to a specified cut-off time. If their bid is beaten, even by only a dollar on any lot up to a $200 estimate, they receive an e-mail informing them so they have the opportunity of submitting another offer. ‘People need to know what’s going on. There’s no way you’ll get a phone call saying you missed out by a dollar at a silent bid auction’, says Cornish, who has already received bids from all over the world.

Wine stays with the seller until it’s sold. Then it’s forwarded to Vines Premium for examination and transfer to the winning bidder, once payment has been received. If it’s not up to scratch, Cornish returns the wine and refunds the money. ‘Ninety-nine percent of clients do the right thing’, he says, ‘but if there are any doubts like label quality, we’ll negotiate between the two parties.’ Please login to post comment