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buying wine online at auction in Australia

What is an online wine auction?

A wine auction is a dedicated marketplace to buy and sell wine and other bottles of alcohol in an online (internet) setting. Wine auctions are mostly used to sell unobtainable and rare wines typically sourced from private collectors. The auction process enables a negotiation between interested participants (buyer and seller), consisting of placing bids via a third party (an auction house) to determine the price at which the wine is now valued.

Live auctions? Don’t drink and bid!

Nowadays, there are very few auction houses that deal with live wine bids. Live auctions are usually reserved for charity events. Whilst these events have honorable intentions, the resulting hammer price, typically induced by free flowing alcohol and live bidding, can give a skewed effect to the realistic market price of wine bottles.

Why buy wine from an auction house?

  1. Aged wine; Fine wine is meant to change flavor, texture and complexity as it ages over the decades. A slow and sometimes a hit or miss proposition that requires a large proportional investment in patience and capital. Wine auctions give everyone the opportunity to buy well stored, already aged wines at a fraction of the cost of DIY.
  2. Value for money; Well stored fine wine will often come to auction because of unfortunate circumstances (death, divorce, debt, doctors orders). This creates an availability of stock at unprecedented prices, typically 40% less than retail but always valued at market price.
  3. Discovering liquid gold; Many wine dinner tales have kicked off with stories of discovery and exploration at auction, of secret cellars revealed and treasures obtained. There is a limited and closely held pool of information available about the quality of older wines and it is often impossible to find out how good an older wine is drinking now. With research, patience, tolerance and experimentation it is very feasible to pick up incredible discoveries of excellent wines for a pittance that everybody else has been ignoring.

Where do the wines come from?

Typically from private collectors, restaurants, wine investors liquidating their portfolio, estates, divorces, foreclosures, doctors or dentists orders – anyone who has bought wine and decided they can no longer hold on to it. Many of these sellers have been collecting for years and they generally have the eye and knowledge for selecting excellent vintages, varietals and producers. As such you have a great opportunity to pick up a decent bottle of wine for a very competitive price, without the time and expensive of having to cellar them yourself.

Are auction wines a good investment?

Whilst wine should never be considered an alternative investment choice, you will get much better value when buying wine at auction than you will buying it retail.
Any wine, typically, loses around 40% in value when you walk away from a retailer, the value resets to wholesale prices as a default and it is only over time that a reputation may start to form value-added critical mass around one or more attributes such as the winery, the vintage or the label.
The reality is, unless you have the money, time, knowledge and patience – not to mention the appropriate storage, investing in wine is likely to end up in salty tears rather than vintage champagne.

How do I buy wine from an auction house?

If you are looking to buy wine at auction, as with most things these days, the secondary market primarily lives on the internet and google is your friend. There are many specialist auction houses both in Australia and overseas that deal exclusively with wine, whiskies and other spirits that have become increasingly popular to both buyers and sellers wanting to start a collection or cull their existing one.
The best way to start buying is to research websites that specialize in selling wine on the secondary market. Auction houses such as Wickman’s are some of the most prominent companies in Australia for buying and selling wine, both collectable investment lots and items that are ready to drink now or in the future.

What is a ‘Lot’?

The term ‘Lot’ refers to the items for sale in the auction. This can include one or several bottles of the same wine, a mixed number of wines from various producers, a case of different vintages, or even accessories that come with a bottle (i.e. a specialty stopper, presentation box, set of glassware etc.). Each lot has a designated number to differentiate it from other items and will detail in the description what is included in that lot number.

An auction lot should consist of the following information:

  • The item you will be bidding on.
  • Quantity you will be bidding on.
  • The date and time bidding closes.
  • A short description describing the condition of the bottle.
  • Any provenance (ownership and storage history in the case of wine).
  • The opening and current bid.
  • The history of the bidding (often not available until the auction closes).

How many am I bidding on?

The auction house will state in the listing how many bottles are included in the item lot, and whether the reserve price indicates that you are bidding a certain price per bottle, or for all bottles combined as one lot. This can appear confusing, as multiple items listed for a reserve price might seem like a bargain, until you read the fine print and discover that you are bidding your preferred amount for each bottle, rather than as a collection of three for the one value. It always pays to read the entire listing before placing a bid, otherwise your $30 bid could turn into a $90 bid when you realize the price was per bottle for 3 bottles, not 3 bottles for $30. Remember, all sales are final, and you will be expected to pay for your mistake.

How do I know what condition the wine is in?

All items that pass through a specialist auction house are inspected by a team of experts before they even make it to the auction itself. Bottles will be assessed, photographed, catalogued and professionally stored in a temperature-controlled environment until they are sold. The latter is especially important, as wine that has been improperly kept could bake inside the bottle at temperatures near or above 30 degrees (Celsius), leaving you with homemade vinegar instead of that incredible wine you were hoping for.
Lot items will usually include a written description of the wine being offered for sale, stating the producer (winery), the varietal (what kind of wine), the vintage (what year it is) and what condition the bottle is in. Photographs of the item make up part of the listing information, and can often be a very valuable source of information for the buyer, as this gives you the chance to assess the ullage (the level of the wine in the bottle), the condition of the bottle, the labels, and if there is any indication of historic or active weeping. It is imperative that you check the authenticity of a photograph that accompanies an auction item, as occasionally you will find a stock image in place of the actual item you are bidding on. This is especially important when dealing with an older vintage of wine, where a small variation to the condition or level of a wine can mean a big difference in the value. If in doubt, always double check with the auction house.
Provenance may also be included in the listing, which details the ownership history of the wine being sold, whether its from a private collection, a restaurant, a museum release, or straight from the cellar door of the producer.
Making sure to read over an auction listing is the best way to answer any questions you might have about the wine on offer, as all the information is usually included within. It can even be as simple as helping to recognize the label from a wine you enjoyed at a friend’s wedding, when the name may have escaped you, but the memory of the good drop remained.

What is ‘weeping’?

Weeping is when wine has leaked through the cork or seal of the bottle. It can indicate poorly treated bottles, either stored at too high a temperature - which can expand the liquid in the bottle and push it up past the cork or rapid fluctuations in storage temperature - which can cause a vacuum in the bottle and break the seal letting in more oxygen to the bottle and creating an undesirable chemical reaction. These conditions can oxidize and prematurely age the wine, creating a veritable Russian roulette situation with the condition of the wine itself, which cannot be guaranteed until it has been tasted. These wines will generally have a lower reserve price than market value to compensate for this possibility.

What is Ullage?

In a wine auction it is the description applied to the distance between the bottom of the cork and the level of the wine. It is a rough indicator of how well the wine has been stored and the potential risk involved that the wine may be stripped of all flavor.

What is a reserve price and how is it set?

The reserve or starting bid price is the value amount that the auction house places on an item lot to start the bidding. This is generally a reduced percentage of the lowest common secondary market value for that item. All auction lots will usually indicate an expected range of value for that particular wine, from the lowest average market price to the highest, as dictated by the performance of the wine on the secondary market – retail markets will not give you a good indication of the value of a wine, as these are a separate market value designed to cover the costs of the retailer’s overheads, markups etc.

Bidding, Hammer Price and Buyer’s Premium

An Auction house will set a starting value to begin the bidding. In the past most auction houses have used a figure lower than the reserve set by the vendor to encourage bidding. However, most progressive online auction houses, such as Wickman’s, found that bidders preferred the honest approach of setting the opening bid at the reserve price.
When placing a bid on your desired item lot, you are encouraged to enter your maximum amount that you are willing to pay for the item lot (called a proxy bid) to ensure your success in winning the bid. If another bidder enters a higher amount, you can place another bid. Once the auction closes, the bidder with the highest amount on each item lot is the winner. They will usually receive a confirmation email, stating which items they have won, the amount per item. A buyer’s premium is applied (generally a percentage of between 10-30% the total amount, depending on the auction house and their terms), plus any sales tax or GST, and the shipping cost of the items to your location.  

Advice for first time bidders?

Always read the description of the auction items you are preparing to bid on and the terms of their sale. Be aware that by placing a bid you are entering into a contract to pay for the wine you are bidding on if you are the successful buyer, so do your research and be patient. Auctions will generally run for a duration of 7 days, unless stated otherwise, so it pays to take your time, to read reviews of the wines you are interested in, to thoroughly look through what’s on offer, and to keep an eye on your favorites. If you have any questions, or something doesn’t feel right about an item, get in contact with the auction house’s owner or administration team, as they are your best option for help and advice when buying your wine online.
You can also seek assistance when looking for what to bid on through online research, friends, sommeliers and even cellar door attendants. Winery and distributor tastings, such as Yalumba, Peter Lehmans and even Dan Murphy’s, are a handy and inexpensive way to get a feel for what you prefer in a wine. Experts like Robert Parker, James Halliday and Jancis Robinson have written many books and articles discussing and deconstructing thousands of wines - these are an excellent resource for getting a feel for which wines would best be bought to cellar, and which are ready to drink now.

And remember - whether you’re buying wine to store, to gift, to sell or to drink, wine was made to be enjoyed. So, take the plunge, bid now, and let the good times flow!

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