Once the preserve of die-hards and bargain hunters, auctions are now part and parcel of daily whisky life. Data from Scotchwhisky.com shows that from April to June 2017 more than 21,000 bottles were sold at auction – a 70% increase on the same period in 2016. The growth of online auctions continues unabated with a whole new cohort of buyers and sellers driving the secondary market to stratospheric levels never before seen. But, if you’re just setting out on your whisky journey and want to check out the auction scene, where should you start?
Fear not, for The Dramble has got you covered with our short guide to whisky auctioning.
What is auctioning?
An auction is simply where consumers gather to buy items by bidding against each other until a highest price is reached. Auctioning has existed for over 2000 years, with records showing that the Greeks in 500 BC were regularly auctioning off women to become wives. Indeed, the term ‘auction’ is derived from the Latin ‘auctus’ which means ‘increasing’. Slightly more recent history shows auctions taking place for livestock, crops, exotic imports and tools. In periods of depression, such as the early 1900’s in the US, auctioneering was commonplace to liquidate the assets of individuals and businesses suffering from the adverse effects of the economy. Nowadays, auctioning has become a everyday method of selling and buying goods and services. Whilst physical auction houses still thrive, technology has radically changed the market, and online auctions are now a familiar sight. Most of you will have probably bought something via eBay at some point – if you were bidding for it then you were taking part in an online auction.
Online whisky auctioning has essentially developed over the past decade – driven by improved technology, wider connectivity and, of course, an ever increasing market for whisky. The concept behind online whisky auctions is largely the same as of auctions of old – items (lots) are listed and buyers bid on those items until someone commits to the highest bid. But, there is some distinctiveness which it’s important to be aware of before venturing in and bidding your hard earned money on a bottle or two.
Where do I find a whisky auction?
Physical auctions still take place. Christies, Bonhams, McTears and other well-known auction houses all hold in-person gatherings where you can buy and sell bottles of whisky. It’s at these internationally known auctions that you’ll often see some of the oldest and most desirable bottles and collections trading hands. Sometimes for incredible sums of money. For the mere mortals among us, you’re more likely to be looking to sell or buy whisky at one of the many online auction sites. Here’s a crib sheet to help get you started:
Information as of August 2017. I’ve tried to be as accurate as I can be, but apologies for any errors.
N.B. as of writing, Royal Mile Whisky Auctions will be going live on 15th September.
This is not an exhaustive list of online auction sites. There’s undoubtedly more out there, and likewise there will definitely be new sites which will open up shop in the future.
What does it cost?
Before you dive in and start ogling bottles you need to be aware of the costs. Firstly, some sites will want you to register for a small fee – and that fee varies between sites. The fee is used as much to validate you as a bonafide auction user with access to a bank account, as it is to charge you a little bit up front. But now we get to the crux of the matter, the costs for buying and selling bottles. These too vary between sites with some offering free listing of items and some adding VAT on top of everything leaving you with a hefty bill to pay at the end. I can’t advise you which site(s) you should be using, but I can counsel that you should be 100% aware of the commission fees (and VAT rates) that you’re exposing yourself to in advance of placing any bids. Don’t ever think that the hammer price (the price that you buy the item for) is the final word – you’re going to have to top this up with a percentage payable to the auction house. Business is business, and these sites are not buying and selling bottles just for the love of it.
Again – know your commission fees.
Tips for buying
- Conditions: Bottles descriptions are your friend – they’ll not only describe the item, but they’ll often let you know the condition of the item itself. The fill level, the quality of the packaging – these are important things to note if you’re buying older bottles or wanting something for your collection. It doesn’t look quite as nice with a huge scratch down the front – read the descriptions carefully.
- Watch lists: Virtually all auction sites allow users to ‘mark’ lots for watching over time. You don’t need to place a bid immediately – most auctions run for around 7 days. Watch the item, see how the price moves and take your time over it. But, don’t bookmark everything on the first day of the auction – most of the ‘action’ takes place in the final hours, so low bids are common for the first few days.
- Research. Research. Research: Placing largely random bids is foolhardy – take a look at what the lot sold for previously and particularly look at the most recent auction results. This should give you a fair idea of what you should expect to bid in order to secure the bottle.
- Desirability: As above, it’s useful to do some research into a bottle’s relative popularity. If it’s a standard bottling of Glenfiddich 12 year old, you’re good to go, but if it’s the very latest limited release for a highly desirable (and sold out series) chances are the price is going to shift – sometimes way above the original RRP. You might consider waiting a few months for your limited bottling - the price may stabilise lower in a few months time.
- Gamblers conceit: Not a good situation to be in. Ever. I’d advise you to commit to your highest price and stick with it (most auction sites will automatically bid upwards for you until they reach your maximum bid). Don’t fall into the trap of constantly upping your bid if you’re not winning the item.
- Exposure: Perhaps you just want one bottle, more likely you’re looking at several at the same time. If you’re bidding on a whole raft of lots it’s a good idea to be aware of your overall exposure – I.E. calculating how much (including commission payments) you could end up paying if you’re lucky enough to win all your lots at the same time.
- Auction day: If you’re always on the hunt for a good bargain you should consider spending time looking through the entire auction (up to your budget) on the day it’s due to end. You might just find a gem or two languishing with only a couple of bids on them – consider watching these items – you never know!
- All by yourself: You aren’t - indeed many retailers have buyers whose jobs include buying stock from auctions when there’s a bargain to be had (and resold at a much higher price thereafter). Good auction prices are possible, but don’t ever think you’re the only able to spot them.
Tips for selling
- Conditions: The state of your bottle and its packaging is going to inherently affect the price you eventually sell it for. So keep it nicely preserved and well wrapped up when you send it to an auction house – especially if the bottle could be considered collectible.
- Research. Research. Research: Similarly to buying, when selling it to your advantage to check out the market before you decide to send something to auction. Assess what prices your bottles have sold for (particularly recently) and take a view of the best time to sell. Whilst I will never condone the concept of flipping (obtaining a bottle and immediately hawking it off), you’ll often see the highest prices for limited edition bottles at the very first auctions they’re listed at. Thereafter, prices tend to stabilise at a lower point, as the demand for the bottling calms down a touch.
- Shill bidding: Bidding on your own item (or getting a friend to do so) to artificially inflate prices is not permitted on auction sites – it’s also a scummy thing to do. So don’t.
- Reserve pricing: If you’re worried that a bottle will sell for less than you’d like it to then consider a reserve price (though most auction houses will charge you a small additional fee for doing so). If the bottle doesn’t achieve this minimum price then the auction house won’t sell it, and it lives to fight another day. But, be reasonable – your reserve price really should not be the highest ever price your bottle can be found for on the whole Internet + 10%. You’ll not sell it as, on the whole, buyers are canny folks. Greed is bad – be reasonable and realistic.
- Friendly neighbourhood auction houses: You can and should talk to your auction house in advance of selling items – they’ll give you a steer as to what they think your item should sell for (a valuation). They’ll also be able to tell you how many other identical bottles they currently have listed - after all, you don’t want to flood the market and dilute your price right?
- Don’t panic: Much of the action at online auctions happens near the end. Don’t worry if you’ve not received many bids in the opening few days – many people (myself including) only look at auctions on their final day, so you can expect the bids to come in the closer you get to the end of the auction.
- Know your commission fees
- Do your research
- Don’t be a dick
- Have fun!