Younger Buyers and Million-Dollar Whiskeys: Uncorking the Changing World of Wine and Liquor Auctions

“The allure of wine as an alternative asset class is unmistakable."

Late last year, Sotheby’s announced it would sell what is expected to become the most valuable assemblage of wines ever to come to market in a series of five auctions over twelve months. Curated by Taiwanese billionaire Pierre Chen, the 25,000-bottle collection titled An Epicurean’s Atlas could fetch up to $50 million when all is said and done. The first sale, “The Epicurean’s Atlas: The Encyclopaedic Cellar,” brought in $16.8 million, with a top sale of ten bottles of Vosne Romanée Cros Parantoux 1999 from French vintner Henri Jayer, which sold for $240,488 in Hong Kong, setting a new auction record for the wine.

Chen’s collection is coming to market at an auspicious time. Recent data suggests younger adults are consuming less alcohol, but that doesn’t necessarily mean they’re averse to investing in it (more on this later). Nick Pegna, Sotheby’s Global Head of Wine & Spirits, told Observer that there is indeed a new, younger demographic participating in wine and spirit auctions, though he’s careful to qualify that younger doesn’t necessarily mean young. Sixty percent of new buyers in the auction house’s alcohol sales are in their 30s and 40s, which wasn’t the case five years ago.

“We’re really encouraged and excited by that,” he said, but the staggering growth in this sector—Sotheby’s wine and spirits auction sales hit a record $159 million in 2023 with a nearly 400 percent increase in bidders in a decade—has been driven by several independent contributing factors. According to Pegna, these include new formats (online, no reserve), expanding global audiences and enhanced visibility via social media coupled with a more democratic range of lot values—something that’s not limited to Sotheby’s.

In the online “Finest & Rarest Wines featuring The Epicurean’s Atlas” sale, there are lots expected to sell for tens of thousands of dollars on the high end and lots with estimates of a hundred bucks or even less on the low end. Meanwhile, “The Epic Cellar” sale at Christie’s Hong Kong has lots ranging from a 1971 Domaine de la Romanee-Conti with a high estimate of about $256,000 to a 1966 Château Mouton Rothschild that could go for less than $350 on the first of June.

Then there are the spirit auctions—sales that put everything from cognacs to rums to liqueurs on the block, but it’s the whiskeys that tend to make headlines. A single rare bottle can fetch five or even six figures these days, and late last year, even as overall spirit sales were flat in the U.S., a Macallan Valerio Adami bottled in 1926 and owned by collector Richard Gooding went for $2.7 million with premiums at Sotheby’s, setting a new world record for the most valuable bottle of whiskey ever sold.

Alcohol as an alternative asset class

These sums naturally invite questions about what winning bidders are doing with these bottles. According to Irvin Goldman, chief executive officer of Acker Wines, buyers today view wines both as a source of pleasure and a potential investment vehicle. “The allure of wine as an alternative asset class is unmistakable, with the Fine Wine Index boasting an 8.38 percentage average annual return over the past twenty years, rivaling the S&P 500’s 9.66 percent,” he told Observer, but was quick to add that an emerging generation of wine enthusiasts is also driven by a passion for the product itself, with many purchasing with the intent to consume. “Pleasure and profitability are intertwined,” he explained, “forecasting a multifaceted future for the world of fine wine.”

What that multifaceted future will look like is anyone’s guess, given current economic conditions. The Knight Frank Luxury Investment Index, which compares the annual returns of alternative assets like art, classic cars and collectibles, shows consistent and significant wine and whiskey price increases from 2013 to Q4 2023—146 percent and 280 percent, respectively, far outpacing assets like jewelry and vehicles and even beating out art. However, the twelve-month price change was a mixed bag across asset classes, with much curtailed growth for wine and negative growth for whisky.

Of course, that may not matter when it comes to wine and spirit auctions. Even the most serious collectors, Pegna said, are usually buying to drink, not with the expectation of reselling for a profit. “Sometimes they’ll see really big market movements and decide to sell, but even then, they’re probably going to put the money back into wine.” Buyers of the very rarest spirits are the exception in their intention to resell, but they’re also not the norm, which Pegna finds encouraging.

“We want people to love these and cherish them and drink them,” he said. Stored correctly, wine and particularly spirits will last a long time but not indefinitely. Whiskey and wine auction specialists doing estimates can encounter bottles that are closing in on the end of their natural life spans where drinkability is concerned. In those cases, Pegna is a proponent of sharing the experience versus trying to sell.

“The advice I give is to drink it at home with friends and family on, say, a Monday night where there’s no other reason to do it,” he said. “Don’t make a big occasion out of it because then you’ll never get around to enjoying it.”

The changing face of wine and spirit auctions

Asked about demographic shifts in wine auctions, Goldman said that while traditional collectors remain a cornerstone of the market, a long-anticipated diversification is finally being realized. Beyond an influx of younger enthusiasts and the decreasing average age of participants, there’s a new wave of bidders from around the world. “Digital evolution has not only lowered barriers to entry but also extends our global reach, prompting expansion into markets such as Singapore, Dubai and Taiwan,” he said. It’s a market where, increasingly, different generations and cultures are converging over a shared passion for fine wine.

Meanwhile, Pegna has also seen an “explosion of interest” in wines and spirits in Asia. According to Sotheby’s 2023 market report, buyers in Asia accounted for half of the auction house’s spirit sales and the highest share of wine auction sales that year, and Hong Kong, Singapore, Mainland China and Taiwan were key markets. Coincidentally, this comes at a time when demand for Japanese whiskeys is growing. Last year, Sotheby’s sold a bottle Beam Suntory’s Yamazaki 55 for more than $340,000 (retail price:$27,500 plus tax); in 2020, a bottle sold by Bonhams realized over $645,000 before premiums in Hong Kong.

The past, present and future of alcohol auctions

With wine auctions and spirit auctions making headlines seemingly out of the blue, one might be forgiven for thinking of them as a new phenomenon. The first wine auction, according to popular accounts, took place on February 20 in 1673 at Garraway’s Coffee House on London’s Change Alley, the site of trading activities that would eventually give rise to the London Stock Exchange. In December of 1766, London auctioneer James Christie held his very first sale, which featured three dozen cases of claret. The Hospices de Beaune in Burgundy hosted its first charity auction in 1859, after selling wine to raise funds since 1443, and the annual wine auction has been running for more than 160 years. That said, it took some time for alcohol auctions to become normalized in the U.S.—New York, for example, didn’t legalize wine auctions until 1994 and only legalized liquor auctions in 2007.

Pegna, who joined Sotheby’s in August of last year, has seen a rise in media coverage of both wine auctions and liquor auctions as the market has grown, which has driven new interest and attracted new buyers, creating an auction ecosystem that, for almost any other product, would feel unstable: as in, it’s newsworthy because it’s growing and it’s growing because it’s in the news. But people love alcohol, for better or for worse.

The onset of Covid in early 2020 sparked a remarkable surge in wine auction sales, according to Goldman. There was a degree of self-correction in subsequent years, but despite facing headwinds in 2023, the fine wine market has demonstrated resilience and adaptability. The demand for premium wines from Burgundy and Bordeaux reached new heights in 2023, especially for select historic vintages from wines such as Petrus and Raveneau which ended the year up by 20 percent,” he said. “Looking ahead to 2024, we anticipate a balanced, positive trend and project a healthy and prosperous fine wine market for both auction and retail.”

Beyond that, the future of wine and liquor auctions appears as of yet unwritten. Ultra rare vintages and unicorn spirits will almost certainly continue to attract the kinds of bidders who can drop six or seven figures on a bottle—a one-ounce pour of the aforementioned 1926 Macallan Valerio Adami is a $100,000 dram, and as far as Pegna knows, the buyer has every intention of enjoying exactly that. But moving forward, today’s younger bidders—and those who will age into auctions in the next ten years—may be more interested in what newer producers are bottling. “People don’t necessarily want to drink what their parents used to drink,” he said. “I see that as part of our responsibility, to be knocking on new doors and making new discoveries and opening new doors of opportunity for buyers.”