Wine world: Online wine auctions

Global Finance, Jun 2000 by Thurston, Charles W

E-commerce could not have evolved too far before it became possible, in New York City, for example, to place an online bid during one's coffee break for a case of 1986 Mouton Rothschild cru Pauillac-still in the wooden box-for something over $2,400, at an auction in Paris. Indeed, on April 26, Leftbid.com, a New York-based global auction portal featured that case as lot number 449 out of 460 lots that day.

Leftbid, which started up late last year, is not alone in offering such delectable goods to buyers over the Internet. Several online auction houses that deal in wine have emerged with the boom in e-commerce over the past year. According to an analysis by Salomon Smith Barney, the US market for online wine auctions could rise from an estimated $75 million last year to $3 billion within five years.

Now prospective buyers no longer need to keep a long-distance voice line open to their bid representative in order to participate in sales in Paris, Milan, or Melbourne. Auctions are streaming across the Internet real time, churning through the bids that potential buyers have placed at odd hours in the days leading up to the strike of the gavel.

Leftbid.com has positioned itself strategically by signing contracts for exclusive US distribution rights for access to 25 major auction houses in Europe and the Far East, says Mark Borghi, the founder and president of the auction site. Leftbid.com, which also operates a brickand-mortar show room on Madison Avenue, expects to run from four to eight wine auctions per month, although the company runs more frequent art auctions.

"We use two techies with two laptops-for system redundancy-at a bidding table at the auctions and a third body to convey bids to the auctioneer," Borghi explains. While the site also streams video from the auctions, many buyers won't have access to sufficient bandwidth to tap it, he notes.

Another wine auction house is Mid-Atlantic Wine Auction, based in New Castle, Delaware, which was started up last year by 76year-old Hillard Dormer. He is the proprietor of Mills Wine & Spirits Market, which has been operating in Annapolis, Maryland, since 1945. Mid-Atlantic, which thus far only auctions wine online, also operates live auctions in Wilmington, moving unsold merchandise from the live auction to the Internet auction and vice versa, says Gary Refiner, Mid-Atlantic's vice president. The company has run four auctions this year and expects to do another three, featuring collectible Californian and French wines, he says. One lot of wine featured in an April online auction-at livewineauction.com-included Screaming Eagle wines from California, which buyers passed up at $1,500 a bottle, he notes. The company takes wine on consignment and gathers up the lots for the online auctions in a 3,000-square-foot refrigerated warehouse in New Castle.

For buyers interested in more than a few bottles or cases for the cellar, the Wine Futures Exchange project, Winfex, is being developed by ParisBourse in Bordeaux. The bourse will first conduct a feasibility study for the creation of a regulated futures market for fine wines. The group hopes to begin by selling futures for the 2000 vintage of Bordeaux wines for delivery 32 months later.

The evolution of wine auctions in the United States will be somewhat limited by the number of states that permit the activity-currently only California, Delaware, Illinois, and New York-and by the number of states that permit the interstate transportation of wines, says Refiner.

There are also business-to-business online wine companies, which unite buyers, sellers, and all the services in between. Uvine.com and winebuyer.com are two such marketplaces, which propose to lower costs and increase efficiency in the wine trade. Here's to it.