November 15, 2008

Acker's second HK auction

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Acker hosted their second auction in Hong Kong today. Everyone expected prices to come down, and buyers were determined to only bid if bargains were to be had. This was certainly the mindset not only of myself but of my friends.

A lot has happened since their last auction in May: stock markets around the world are down a significant amount, with HK's benchmark index down more than 50% YTD; US Dollar has strengthened as investors duck for cover, and the Pound has gone from almost 2.1 to below 1.5 to the Dollar; economies around the world are going into recession; people are dumping assets to raise cash, including luxury items such as sportscars and fine wine.

What does all of this mean? 1) the wide gap between UK bonded price and US/global auction price is narrowing fast, thanks to the deprecating Pound. In US Dollar terms, London's getting cheaper - and those of us in HK are basically Dollar-based. 2) liquidity in the wine market is very poor. Buyers are all sitting on the sidelines, and the bid/offer spreads nowadays are easily 20-30%. People with cash will only part with them if they see bargains.

Fortunately for John, he and his staff managed to convince consignors to accept lower reserves, so many lots opened at 80% of the reserve price. Some lots started at 70% and there were even a couple that started at 50%. This allowed John to find at least one or two buyers for most lots, even though this time around, I think very few lots actually even hit the low estimate price.

As I expected from watching the Zachys auction 3 weeks ago, the 2005 Bordeaux and Burgundies did not do well. The very first parcel of 2005 First Growth - Lafite - passed. 2005 DRCs found buyers in the morning, but many 2005 Burgundies from other producers - Vogue, Roumier, Rousseau, Ponsot - passed in the afternoon. As with the Zachys auction, buyers shied away from lots with high absolute dollar values. A couple of 3-bottle OWCs of Romanée-Conti were passed up early in the morning.

The most surprising lot that was passed up was the OWC case of 1990 Romanée-Conti. Another rare OWC of this wine sold for around HK Dollar 1.56 million (before premium) at the May auction. This time around there were no buyers even at the "low" opening price of HK Dollar 960,000...  The "super lot" this time was a vertical of DRC Assortment OWCs, from 1990 to 2001. This sold for HK Dollar 1.76 million before buyer's premium.

I think the auction went better than John's worst fears, and therefore it was a success. I also watched him open a lot at 50% of low estimate and work it up to just one spread below the low estimate. That's real auctioneering skill. He had a tough crowd to deal with and he did a great job under the circumstances. 

When I registered for the aucion, I foolishly thought I wouldn't stay the whole day and that I would pop out for lunch. What a mistake that was! Not only did I not get a table seat (had to sit in the back of the room), I also missed out on the wines that they served during lunch, including 1993 Armand Rousseau Chambetin and something from DRC... Aaarrrghhh!!!! Won't make that mistake again. I did get to sip on some 1998 Krug, which was very lovely.

As for bidding, I picked up two lots of aged white Burgundy, plus a few bottles of Californian cab from a top winery. Looking forward to enjoying these some day soon...

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