Archive: July 2017

DRC assortment cases attract keen interest from Burgundy collectors.  And why not?  There is something attractive about getting an overview of the world’s greatest Pinot Noir all in one case.  This initial excitement, however, begs two questions: Is it good value?  And, once you’ve gotten the case in your cellar, what did you pay for each of those bottles?  The short answer is that for valuation purposes one should consider the Assortment Case as one unit.  If you plan to drink it, however, you might want to know how much each bottle is setting you back.  This is how to make the calculation:

As with so many things, the answer is, “It depends”.  We should begin with the caveat that the “DRC Assortment” is not a fixed thing.  Initially begun in order to ensure steady sales of the “non-monopole” wines, it was meant to reflect the amount of the wines available at harvest.  In an average year, there was one bottle of Romanée-Conti, three bottles of La Tâche, and two bottles each of Richebourg, Romanée-Saint-Vivant, Grands Echézeaux and Echézeaux.  However, in some years there were only two La Tâche (as in 1983 and 1984); in other years (1987 – 1992  inclusive) there were there were three Romanée-Saint Vivant and only one Grands Echézeaux.  In some years (such as 1984 and 1992) there were more than one variant.  The last official 12 bottle assortment produced was the 2001.  In 2002 there were two different six bottle assortments released; one for the U.S. and one for the E.U.  Since that time the Domaine has produced assortments at the request of individual importers, but there has not been one standard release since this time.

Looking at 2001 as the last official DRC assortment, then, we note that the average price at auction of the assortment is $34,893.00, while if one purchased each of the components, the aggregate cost would be $32,285.00, resulting in a premium of roughly 8% for the assortment case.   One finds furthermore that rounding to the nearest whole percentage that the bottle of Romanée-Conti accounts for 38% of the total, the three bottles of La Tâche account for 26% of the total; The two bottles of Romanée-Saint-Vivant and Richebourg each account for 11% of the cost; the Grands Echézeaux is 8% of the cost and the Echézeaux is 7% of the cost (weightings do not total 100% because of rounding – see above for exact figures).

These proportions change from vintage to vintage.  For example, looking at the 1996 assortment, the average price at auction of $36,052.00 represents a premium of 8.29%, with the Conti valued at 38%, the La Tâche at 27%, the Richebourg at 10%, and the Romanée-Saint-Vivant, the Echézeaux and the Grands Echezeaux all at 8% of the total.  However, the result is different in a year such as 1990 where the price of La Tâche is strong, and the proportions can look quite different.  Here the average cost of a 1990 Assortment Case is $49,016.00, while the cost of the components would be $55,480.00, meaning the Assortment sells for a discount of almost 12% over the component parts; Romanée-Conti is 32.24% of the total, the three La Tâche actually amount to 32.76% of the total; Romanée-Saint-Vivant is 11.90%, Richebourg, 11.31%, Grands Echézeaux 6.49% and Echézeaux 5.31%.

This somewhat anomalous result is due to the fact that 1990 Romanée-Conti has come off its historic high price, while La Tâche 1990 is still appreciating.  However, averaging each of these three vintages produces something like a balanced answer to this question:  The discount for an assortment is 0.91%, thus it is more or less the same price, and the relative weighting seems appropriate, with Romanée-Conti being 35.4% of the total, La Tâche at 29.4% of the total; Richebourg, 10.9%, Romanée-Saint-Vivant, 10.5%; Grands Echézeaux 7.2%, and Echézeaux 6.6%.

The value of wine moving through the auction market in live sales at major commercial auctions increased slightly in the second quarter of 2017 to $104 million, a gain of 1.7%. This brings the total for the first half of the year to $152.3 million as compared to $144.2 million last year, a gain of 5.6%. The Q2 gain came in spite of the fact that this period last year saw the $21 million mega-sale by Bill Koch. Average sell through rates across all auction houses during the quarter were a very robust 94.6%.

Consistent with recent experience, the U.S. sales totals led the market with just over $85 million in turnover, accounting for 55.8% of the total auction market. Due to the anomaly of the Koch sale, however, the total was slightly less than last year, at $86.7 million. Within the U.S., the bulk of the sales (65.8%) were done in New York, while the HDH sales held in Chicago accounted for 28.6%, and several small sales in California accounted for 5.6%

Auction House Acker, Merrall & Condit was the big winner in the first half of the year, with total sales rising to $42.1 million from last year’s $28.7 million, an increase of +46.7% Acker’s nearest competitor was Sotheby’s, who hammered down $33.7 million of wine in H1, a drop of -30.2% compared to last year when they led the field. Zachys ($25.9 million) edged out HDH ($24.3 million) for third place, and Christie’s came in fifth at $17.4 million. To put matters in perspective, however, Christie’s global sales were more than double the next three houses combined (Bonham’s, Heritage and Spectrum).

Burgundy sales continued to be very strong. Zachys Wine Auctions reported Burgundy to be the largest category in their auctions during the period. Prices for top Burgundy also continued to move forward: the average bottles of ’90 Romanée Conti rose to $17,900, + 2.8% for the quarter, while 1999 La Tâche increased to $5,100, +8.6% in the same period. Young vintages also performed well: Liger-Belair’s La Romanée was up +17.8% from last quarter and a robust +28.8% from the 2016 average. All of the Burgundy wines have advanced from their 2016 average prices; a bottle of 1993 Leroy Musigny realized more than $8,000, and 1996 Coche Corton Charlemagne sold consistently for over $5,000 per bottle. In some instances, the spread between the high and low price for top Burgundy over the past year has been marked: Sotheby’s New York sold a single bottle of 1990 Romanée Conti for $31,850 in May, while Acker, Merrall realized just $14,020 in their January Hong Kong sale. In April of this year, two bottle of 2005 DRC Montrachet made over $17,300, while a bottle sold at Spectrum in December sold for just over $3,900.

Interestingly, Acker, Merrall reported that Bordeaux wines led their sales in the first half of 2017 for the first time in several years. All of the leading indicators for the Bordeaux market have continued to move forward during the period, albeit at a slower pace than Burgundy. The price for ’82 Lafite is up 4.4% for the quarter and 5.7% for the year to an average of $2695. Unlike the ’82 Lafite, which experienced such a bubble in 2011, the 1989 Haut-Brion continues to make steady advances, to $1,671 in Q2 from $1,569 in 2016 and $1,520 in 2011, while 2000 Pétrus continues to gain as well. Counter-examples include 1963 Quinta do Noval Nacional at -27.6% to an average of $3,978, and 1999 Guigal Côte Rôtie La Mouline -16.4% against the 2016 average to $552/btl.

Significant single-owner sales during the period included the third tranche of the Don Stott cellar at Sotheby’s, which saw 87% of the lots sell above the high estimate. Six bottles of 1971 Roumier Musigny sold for more than $85,000 among several other world records for Roumier, Rousseau, Raveneau and others. Sotheby’s also sold the collection of an anonymous English vendor for US$ 9.3 million over the course of three sales spread across the U.S., U.K., and Hong Kong. Christie’s sold the cellar of Staffan Hansson quite successfully in New York and a consignment of venerable Burgundy from Bouchard Père et Fils, some dating to the 19th century in Geneva, while Acker, Merrall produced record results with single owner cellars from Wolfgang Grunewald and Sam Cook, and Zachys did an exemplary job for the cellar of Dr. Rob Caine in the course of their $7.9 million La Paulée sale.

In the primary market, sales of 2015 Burgundy have been delirious, with widespread shortages in spite of a rather generous vintage. This is good news for Burgundy growers, and welcome as yields in 2016 were sharply limited by frost, hail, and rot depending on the particular locality. Auction buyers can expect this limited supply to translate into increased prices on the secondary market, however, as new consumers turn to auctions to satisfy their Burgundy needs. The Bordeaux market is also showing moderate strength on the back of a fairly robust 2016 futures campaign. Quality in 2016 was superb, and while some châteaux tested the market by raising prices, others held the line and delighted buyers with the prospect of an eventual bargain. While recent statistics suggest that total worldwide wine consumption is flat to slightly down, it seems that the thirst for the good stuff is stronger than it has been in some time.