Collecting fine wines, an upward trend since the pandemic

Recent years have been incredibly successful for wine and spirits auctions. Since 2017, Sotheby’s doubled its business, achieving $118 million in sales in 2019. At the start of 2020, the venerable auction house seemed to be on track for another record-breaking year, until COVID-19 arrived. The crisis arrived with $8 million of property already in its climate-controlled vaults, so Jamie Ritchie recognized the need to accelerate Sotheby’s plans for digital expansion. With 30 years working in Sotheby’s wine business, he was uniquely suited for the challenge. He has helped transform Sotheby’s from a London-focused auction house into a global powerhouse, spearheading openings in New York in 1994 and Hong Kong in 2009. These were prescient moves, as Hong Kong is now Sotheby’s largest wine business, achieving 50% of its sales in 2019, and New York accounts for 26%. Recently, Ritchie added retail to the Sotheby’s portfolio in both New York and Hong Kong, and launched a private-label wine, Sotheby's Own Label Collection. In 2016, he was named Worldwide Head of Sotheby’s Wine, but he doesn’t just run the business; he is also a leading wine auctioneer who has achieved staggering sums in his auctions, including numerous world records. During COVID-19, he speaks to us on a video call from his apartment in New York City about the state of the wine-auction market today.

How has your business changed in response to COVID-19?

On the auction side, we had a bunch of property that was with us in our warehouses in London, New York, and Hong Kong that was probably scheduled for live auctions. What we did was adapt pretty quickly to transform those auctions from live auctions to online-only auctions, because we weren't able to convene any format of live auction. That was about $8 million worth of property that we sold under six or seven different auctions. We did that very, very rapidly. It was obviously a very fast transition from what we'd been doing. The digital transformation of our business — what we've been probably planning to do over two years — has probably been done in two months.

How has the performance been in online-only auctions?

Some of the stats have been pretty interesting. We've been running somewhere between 20-50% new buyers and sales. In our auction a few weeks ago, 50% of the buyers were under 50, and in our London spirits auction, 40% were under 40. What's also really interesting is throughout COVID, we set some record prices. In our sale recently, for the highest value Methuselah of Burgundy ever sold. In the spirit sale 10 days before that, the highest value Dalmore ever sold and the highest value bottle of Cognac ever sold. So, what we've seen is the market remain strong, consistent, and buoyant. We've seen demand continue. And obviously few weeks ago was the first time returning to live auctions. It was valued as a $3.5-$4.5 million collection, which made just over $5 million. So the first time we retested the market with that sort of value of wine, it was super interesting.

What is driving these younger and new collectors to buy wine and spirits in online auctions?

It's a couple of things. I think people have more time on their hands, they're looking around for fun and interesting things to do, digital tools enable us to reach more people better, and to reach a broader audience. It’s a combination of all of those things, and I also think it's engagement. We have fun and interesting stuff to sell at a time where people are stuck at home, some with still a lot to do and some of them much less to do. During COVID, I think everyone was focused on making sure they had something fun and interesting to drink and look forward to.

How are you connecting with clients when you can’t meet them in person?

We’ve got this massive digital transformation going on, which essentially does automate a lot of the processes. But at the same time, we've had people and our clients valuing human interactions and their relationships with us, those are being more valued than ever. So you've got this sort of almost contradiction of these dual things going on, whereas you are digitizing everything and automating it, but yet the value of the relationship is becoming more important, which is super interesting. Obviously, there's a lot of email, there's a lot of WhatsApp messages, Teams, and Zooms. We use all the tools available.

You returned to live auctions few weeks ago with a single-collector sale that was very successful and broke three world records. Why did you decide to re-launch live auctions now and with this collection?

This was a live auction, but with no clients in attendance. So, for an auctioneer, that’s a little bit different. We had five of our colleagues bidding on the telephone, so they were the ‘audience’ and online bidders came in on a screen. The reason we chose this collection was that it needed a live component to maximize the value of that property. The collection was very special, they had pristine provenance and it had great red Burgundy from the best producers in absolutely impeccable condition. So we knew that would appeal to the audience. Having said that, a live auction is always a live auction. You need it to happen on the night. We obviously did a lot of outreach to our clients beforehand. We were pretty confident having seen the results of our previous auctions during this period that we would have a strong result. And the result was a very strong result. We're very, very pleased with it.

Over 50% of the buyers for this sale were under 50, which is young for wine collectors. What are younger collectors interested in and buying right now?

Younger collectors are getting into wine and interested in buying it. They obviously don't have a lot of these wines in their cellars, so the only way they can buy it is the secondary market. Throughout COVID we've seen a couple of things happening. One is that people are willing to explore a little bit more, be a little bit more adventurous, and discover new things. And at the same time is another one of these sort of slight contradictions: They're going back to old trusted favorites, like Bordeaux, and we're seeing them buying across the range, buying top red Burgundy has been the hottest part of the market recently, and we're seeing them buy Burgundy. We're seeing them go back to Bordeaux. And we're seeing explore new areas where they maybe haven't been so active in the past, like Champagne, Rhône, and Italy.

The three world records were set for large-format bottles. What is the importance of alternative sizes at auction?

Obviously, they're rare. The 2005 Methuselah (of Domaine Romanée-Conti) we sold for just under $300,000, there were only eight of those made and this was bottle number two. There's eight of those in the world, and that's it. Since 2008, Domaine Romanée-Conti hasn’t been selling any large-format bottles that they used to distribute the marketplace, so they're super rare. And I think people do two things. One, they're buying them for the rarity factor. And I think everyone recognizes that rarity increases value. Also, they'll say if you're going to open one, everyone realizes how special it is. I think in times like this, I think we want to look forward to celebrations, to fun times, to being with larger groups of friends, and those bottles are designed for that. So, when you're in this situation whereby you may be drinking with only one other person, or maybe a couple more if you've got older children, you want to plan for fun times when you can do things and share great times with your friends and family. And I think friends and family became a lot more important during this COVID period when you can't travel around, you can't access people. I think those celebrations are becoming much more appreciated.