April 20, 2024

Internet Gives Wine Auctions New Wrinkle

HONG KONG — Wine, around since the Stone Age, is now slowly catching up with the Digital Age.

In recent years, a number of famous auction houses, including Sotheby’s and Christie’s, have been experimenting with online bidding during their live sales of brands like Château Lafite Rothschild and Opus One.

So far, the adoption of Internet bidding has been slow, with many buyers preferring to be physically present at auctions. But the gradual push to go online raises the question of whether it really matters where a wine auction takes place, even as some cities like Hong Kong vie to become global wine trading capitals.

Christie’s offered its first Internet sale in May 2007 through its system, ChristiesLive. Last year, it recorded £1 million, or $1.63 million, in online sales in London and $1 million in New York, with smaller sums spent over the Internet through its Geneva, Hong Kong and Amsterdam auction floors.

James Lees, the executive in charge of the site, said that online bidders often registered their locations.

“This adds a further international dimension to the auction, as those attending the sale know they are competing against international clients and collectors,” he said.

Acker Merrall Condit, the largest fine-wine auction house by dollar volume, says 10 percent to 15 percent of all lots sold at its live auctions go to online buyers, with online bids for a “significant” number of lots. It also runs monthly online-only auctions, and expects the tally for those to hit $10 million this year, having doubled within three years.

“We call those the drinking man’s auctions,” said John Kapon, the president and auction director, since wines sold online are often priced lower and have smaller volumes.

The start-up Spectrum Wine Auctions, based in Irvine, California, hopes to shift the rules of the game by holding auctions simultaneously in Los Angeles and Hong Kong. It has developed technology to allow buyers to inspect lots with 360-degree views of the bottles. It strives to create eBay-style bidding, with the sales open a month before the live auction. Like the biggest auction houses, it incorporates real-time streaming audio and video of its auctions.

The company, which began wine auctions in mid-2009, saw $17.7 million in transactions at its fine-wine auctions in 2010.

“For the first year of the company, we’re happy with that,” said Jason Boland, the company’s president and the developer of its Internet technology.

Though 53 percent of winning bids come live from the auction floor, the Internet is the second-most popular buying method at Spectrum’s auctions, accounting for 26 percent of lots sold. Some buyers still believe they get a competitive advantage by being in the room, or simply enjoy the mystique of the live auction.

But the company sees online auctions as a way of broadening its market — important for a smaller player taking on the big auction houses.

“Raising that paddle is a thrilling experience,” Mr. Boland said. “But there’s nothing stopping any of our clientele being on vacation in Hawaii right now and bidding live. We like to offer both opportunities.”

Some auctioneers have been slower to make the move. While online-only auctions allow auction houses to cut overhead, with no ballrooms to rent and clients to entertain, the technology expenditures for live auctions are currently adding to costs rather than reducing them.

The British house Bonhams is now testing the technology for online live bidding at its U.S. arm, Bonhams Butterfields. But so far, buyers must bid live or via absentee or phone bidding.

Zachys Wine Auctions has allowed online bidding for the past few years, allowing buyers to log in from anywhere in the world. But the company feels the technology has its limits.

“We have looked at 360-degree views of the bottles, and at this point it is not an ideal solution,” Jeff Zacharia, the company’s president, wrote in an e-mail.

He said that his buyers wanted a full catalogue description with the fill, label, capsule and color of each bottle.

“A lot of that simply cannot be seen with a picture over the Internet,” he said. “So for now we are staying with the written descriptions that we put in the catalog and are available online.”

Internet bids can garner as many as 80 percent of the lots, but may fall to as low as 20 percent, according to Robert Sleigh, the head of wine for Asia at Sotheby’s.

Wine professionals say Hong Kong, now the center of the fine-wine auction trade, is lagging behind the United States in moving online. The city lifted wine-import duties in 2008, a change that led it to surpass New York and London, combined, in fine-wine auction sales last year.

Many buyers in Asia like to be physically present at an auction. “What’s different about the Hong Kong market is that, like any new market, people like to bid live,” Mr. Sleigh said. “The bidding is as important as the buying.”

Auction rooms are often standing-room only in Hong Kong, much the same as when the law changed to allow wine auctions in New York, in 1995. Acker Merrall says two-thirds of all bidding is absentee-driven in New York, whereas two-thirds of bids in Hong Kong come from buyers attending the sale.

Article source: http://feeds.nytimes.com/click.phdo?i=ecbff2bc8d3aff207ecfaf9232553747

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