Cellar's Market Thanks to the sluggish economy, wine collectors are dumping good bottles to get quick cash. And you stand to gain.
By Jean K. Reilly

(FORTUNE Magazine) – Collecting wine is a well-known hobby of businesspeople. So what happens when the economy tanks? In many cases the wine goes on the block. Says a director of an international bank in New York: "You create your bonus by lobbing out the pricey stuff."

Experts estimate that double, possibly triple, the usual supply of auctionable wine is on the market. Add to this a proliferation of players--numerous online sites and retail stores have entered the field--and much of the scarcity that drives prices at any kind of auction is gone. Many lots are within reach of just about anyone with a paycheck.

Fifteen years ago the wine-auction market in this country was dominated by the two London-based giants, Christie's and Sotheby's. Now several major wine shops, including Acker Merrall & Condit, Morrell & Co., and Zachys, regularly hold auctions that are equal to or exceed in size those of the traditional houses. A myriad of websites has also sprung up, though just two, WineBid.com and Ackerwines.com, still command notable consignments.

One small but significant part of the wine market has held steady or even increased in value: the last century's top wines. Experts attribute this to the wines' superior performance as investment vehicles, attracting the funds of those fleeing the stock market. Very little wine at this level--$4,000 or more per bottle--ends up being consumed.

But things are different for wines that actually have a chance of seeing the inside of a glass. "I was shut out by high prices for the past three years," says Jean Luc Le Du, a New York City sommelier who buys for the restaurant Daniel and private collectors. "For the past six months, I can get everything I want."

The decline has most affected California cult wines. The flagship in this category is Screaming Eagle Cabernet Sauvignon, a six-liter bottle of which went for $500,000 at a charity auction in June 2000. (That's still the highest price ever paid for a single bottle of wine.) At the time, prices of the standard bottles sailed past $2,000. By last September, however, bottles of the 1998 vintage were selling for a comparatively modest $537.

Online auctions have many small lots and tend to include wines that are too unusual or not pricey enough for the live venue. Obscure bottles can go for as little as $10 and often undercut not only retail but wholesale prices as well. Take the Chateau Greysac Bordeaux 1990, which recently sold at Ackerwines.com for $9.49 per bottle, below the average retail price of $15 for the less mature, less impressive 1998 vintage and even a shade under its $10 wholesale price. Lots at the other end of the scale, especially full cases, end up in live auctions where savings are equally impressive. The sublime 1982 Chateau Margaux sold for $345 at Christie's December auction, compared with an average retail of $700.

While many people are intimidated by the idea of auctions, they shouldn't be. "Auctions are now for everyone," says Bob Sleigh, head of Sotheby's New York wine department. "We're very consumer-friendly." The houses all have websites with calendars, glossaries, past sale prices, and other helpful information. You needn't reveal your net worth or family history to get in, and attendance is free. The auction itself can even be entertaining, though the rooms tend to be sparsely populated, as much bidding takes place by phone, fax, and e-mail--a good option for those who have managed to hang on to their highflying jobs.

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