Tim James: Observing the current wine-auction scene

I’ve been musing about what’s going on with local wine-auctions. Firstly because Eben Sadie has been complaining publicly (not only with regard to auctions, but also brokerages like those of Wine Cellar and Rueda) about his older vintages being traded “at crazy prices” with “greed taking the place of ‘drinking’” (he especially doesn’t like his customers “flipping” their allocations). Secondly, because  it’s getting increasingly clear that wine auctions have been successful enough that all the auction houses now want in on the business – and yet the auctions themselves are not achieving the sales and prices that they were a year or two back.

Strauss & Co, working with wine-men Roland Peens and Higgo Jacobs and making use of the storage facilities at Wine Cellar in Cape Town, where Peens is a Director, started their auctions in 2019. I think I wasn’t popular for being doubtfuly unenthusiastic in an article called “The rise of wine speculation in South Africa”, about this move to, as Strauss said, “bring an exciting new asset class to our client base”.  I said, with leaden irony, admitting I was being curmudgeonly and over-romantic about wine: “You thought wine was for drinking with pleasure? Don’t be naive, it’s much more important than that: it’s an asset class. Transform yourselves, from wine-lovers to wine-collectors.”

Well, this strategy to help establish a firm, public secondary market for wine in South Africa prospered (and I have been both a seller and purchaser), both generally in the auction and brokerage worlds and specifically for Strauss. A recent celebratory review says that Strauss “has sold more than 68,000 bottles with an average price of R2,060 per bottle on its auction platform”. That R140 million take includes foreign wines, which have hugely dominated the top end of prices achieved for individual wines. The most successful local producers in terms of total sales value are Kanonkop and Sadie Family Wines. Next, in order of sales volumes are Meerlust, Klein Constantia (for virtually only Vin de Constance), Vilafonté, Alheit, and Mullineux.

(A word about all the sale prices mentioned in this article, for those not au fait with auctions. These are the total price that the bidder pays, comprising the “hammer price” and a commission paid to the auction house plus VAT on that, totalling something towards 25% of the hammer price; it does not include the commission that the seller also pays. No wonder that all the auction houses are muscling in on what has been a pretty successful line.)

The recent downturn is, by definition, only relative. It refers both to the volumes being sold and prices paid. To an extent it is the result, as Roland Peens told me, of a generally poor market and squeeze on buying power; and also of the passing, as he admitted, of the Covid-19 period “when prices went crazy”. Perhaps we should also connectedly invoke, as some people do, a “maturing” of the secondary market,with customers, that is, getting more sensible and less carried away by the unusual excitement of pressing that “Bid” button.

I’ve spent some hours looking at the well-organised records on the Strauss website and doing some arithmetic (you can look up any producer ever included and find a full record of the achieved sales and failed offerings.) An emblematic result is that for Kanonkop Paul Sauer 2015, the top-selling wine overall (I’m omitting CWG bottlings and larger formats in all that follows, for the sake of ease).

At three sales in 2019, a total of 42 bottles of Paul Sauer 2015 were sold for an average of R1,762. This even after Tim Atkin had famously awarded the wine 100 points. The May 2020 auction estimated an expected price in line with that, but something happened, and the average price rose to R5,784; it went even higher in June. The Covid effect, it would seem, even more than the fame brought by the Atkin score. Speculators piling in, do you think, or wine-lovers with FOMO? But Covid passed and, after a bit of a dip for a few years, Paul Sauer 2015 was still getting average prices over R4,500 in 2023 and 2024 (R1,000 a bottle more than was being paid for the 2009 vintage, for example).

A comparative collapse came only this year: in March, 27 bottles got an average of R3,604 and in July six bottles got R3,517 each. Even more telling than this decline is the fact that another six bottles didn’t find a buyer.

That’s the story of Paul Sauer 2015. More briefly, with a different point, let me tell you about another famous Stellenbosch red on Strauss auction: Le Riche Cabernet Sauvignon Reserve. Like Kanonkop, this wine showed that there is some demand for older vintages, but it’s not great. The 2000 vintage got R1,495 per bottle in 2021, and 2007s and 2009s were getting about R1,200. Some 2011s for some reason went for nearly R2,000, though most went at about half that. Not great prices. This year, 2015 Le Riche Cab Reserve has been going for R1,270. That’s a famous vintage, now approaching maturity, being sold for scarcely more than the current 2021 costs retail. The seller will probably have lost money on the deal, given inflation and the costs of storage. The buyer did nicely.

Let’s look at a few other well-known, supposedly rather “cultish” wines. At the Cape Heritage sale ths year, Van Loggerenberg Kameraderie Chenin 2018 got R625 per bottle, and this is not an untypical price received for various vintages of this wine over the years. It’s less than R100 more than the current vintage. David&Nadia Aristargos 2013 and 2014 did reasonably well at R586 – a vaguely decent jump, at least, on the current release price of about R450, though the seller is unlikely to have made a profit if they’d been paying storage costs at Wine Cellar, for example, also taking inflation into account. But four lots of Badenhorst single-vineyard chenins didn’t even sell at their lower estimate of around R700. Nor did a number of Sadie whites sell (which I suppose would please Eben if it means they get drunk instead), while Palladius 2016 and Skurfberg 2014 got, respectively, R2,540 and R1,465, more in line with the high prices Sadie wines usually get.

Generally, it seems to me that there are a few producers (especially Sadie and Alheit) whose wines mostly get great prices, making decent money for the seller as well as the auctioneer; some are more in the Le Riche mould described above, and others are inbetween. The secondary market is very patchy, at best. I would say that, for more middling producers, the auctions at present offer great deals for wine lovers who want maturing or mature wines for which someone else has paid the storage costs – and Strauss at least is careful about the provenances of wines they sell, though I’m not at all sure that all auction houses are.

The aim and hope of the auction houses and brokerages – as well as those wine-buyers who have the speculation bug – is to build a viable secondary market for Cape wine. I think we can say they have effectively started the process, but there’s a way to go. It needs more people buying and carefully laying down wine; at present the supply of older vintages – pre-2015, say – is very limited. That, together with buying and selling it, also requires confidence in the value of maturing such wines to go beyond the pretty small element of the industry that presently enjoys it. I suppose it also needs more people with a taste and appreciation for older wine, and that’s no more universal than is the ability to afford serious wine.

• Tim James is one of South Africa’s leading wine commentators, contributing to various local and international wine publications. His book Wines of South Africa – Tradition and Revolution appeared in 2013.