SECONDARY WINE MARKET. HOW TO SELL WINE ONLINE AUSTRALIA
The secondary wine market is where pre-owned fine wine is sold, usually via auction, or Buy It Now and via negotiations between vendors and buyers with the use of an experienced licensed fine wine trader. Whether the wines are sold via auction or Buy It Now doesn’t really matter, they sell for around the same price as there is enough supply of secondary wine market wines to satisfy demand. Savvy buyers know the value of secondary wine market wines, it is highly unlikely a bottle of wine worth $50 at retail will sell for $100 or more at auction, even if it is a rare trophy winning wine. Selling wine for private collectors (vendors) can be hard work as all vendors want to achieve the highest return possible and buyers want to pay the least amount as possible. Vendors see bottles of Penfolds Grange advertised for $695 or more at fine wine merchants and on online websites and believe their bottle is also worth that price when it is not (which I explain later in this blog). Online sales have changed the way people buy goods, it is easy for a buyer to send offers (most of which are unreasonable and at times insulting) via emails and text messages. Buy It Now sales are popular as auctions take time to come and go, frustrating buyers who want the stock as soon as possible and also frustrating vendors who want to be paid immediately.
Generally, only fine wine is sold on the secondary wine market. There isn’t the demand for cheaper wine to be traded on the secondary wine market. There is an over supply of wine in Australia and current vintage cheap wine is readily available.
Pre owned wine is wine that has been purchased by a wine collector from a retailer, winery cellar door or fine wine merchant and then sold by that collector. It doesn’t matter if the wine was sold the day after it was purchased or 12 months later, it is still sold via the secondary wine market.
There are a couple of WineAuctionHouse’s who specialise in selling on the secondary wine market. Generally wines sold on the secondary wine market are done so via auction. These auctions occur once a month and are open for about 7 days. It is only in the final 15 minutes that bidding becomes frantic for those highly sought wines, but only if they are priced at secondary wine market levels. Buyers do not pay retail prices for wines sold on the secondary wine market. If you have a bottle or two of Penfolds Grange and are expecting and extraordinary result at auction then you will probably be dissapointed. There is enough fine wine floating about on the secondary wine market to satisfy demand. A 1996 Penfolds Grange is worth between $380 to $420 to the vendor on the secondary wine market, it won’t sell for a $500+ return to the vendor on the secondary wine market, the demand is not there.
When a bottle of wine is purchased at retail its price contains 39% tax. On a $100.00 bottle, that is $39.00. When that same bottle is sold on the secondary wine market, those taxes are not paid again; therefore it might be fair to argue that bottle is only worth around $61.00. But the value of a bottle is really only worth what someone is prepared to pay. Other factors that contribute to pricing and valuations of wine sold on the secondary market include provenance concerns (cellar history) over supply of that wine, wine reviews, poor vintage, label damage and collectors no longer wanting the wine. Again, your bottle is really only worth what someone else is prepared to pay. Auctioneers follow the secondary wine market closely; they watch prices, observing any trends and have vast knowledge of wine values.
Wine Auction House’s will take at least 27.5% of each bottle they sell at wine auctions. They all charge a vendors fee of at least 10%, most are 12.5% and higher and they all have a buyer’s premium of at least 15%, some as high as 20%. Buyers will bid for a Penfolds Grange and they might bid to $320.00, the auction house will take 12.5% of the $320.00 from the vendor and the buyer will pay a 15% premium from $320.00.
$320.00 Buyer bids to this amount at auction and wins the wine.
$368.00 is what Buyer pays, includes $48.00 buyers premium paid to the Auction House.
$288.00 is the net return to the vendor. Auction House collects $32.00 from sale price.
Total return to the Auction House is $80.00. It might seem like a lot of money but the auction house has a business to run and bills to pay. They also ship wine at below cost and need to buy wine boxes for postage, which can be quite expensive.
Buying wine on the secondary market generally has ‘Buyer beware’ warnings/conditions attached to each bottle sold. WineAuctionHouse’s cannot be responsible for the condition of wine sold on the secondary wine market. They do describe wines as best as they can and every bottle of wine does change during its life, for better and for worse. It is best to avoid wines that have substantial damage to capsules and labels, this could indicate the bottle has been moved often and/or not stored properly. Serious wine collectors pay a lot of money to store their wines in cellars and in wine fridges; they are generally in tip top condition even at 10 to 15 years of age. A small stain on a label could indicate another bottle leaked on to it and may not mean that particular bottle is suspect. It’s always good to ask a question if there is a bottle you are interested in purchasing and there is a note attached to the sale stating “stained / damaged label”.
Selling large volumes of the same wine at once isn’t something I’d recommend. If you have a large collection of Penfolds Grange and you are looking to sell them, it is best to release them into the secondary wine market slowly. For example, if a Vendor has 48 bottles of the 2001 Penfolds Grange, (8 timber cases of 6 bottles) I wouldn’t recommend selling them all of them at once. Auction reserve prices will be low, the buyers won’t be there, the secondary wine market is all about what someone is prepared to pay for them and, more importantly it is all about moving stock quickly. Wine sold at retail can hang around a bottle shop for 12 months or more, on the secondary wine market; your wine should be sold at the first auction or at least by the conclusion of the second auction, it’s all about moving excess stock quickly. No auction house will sell wine at retail prices; the secondary wine market does not work in that manner.
Please contact us at WineAuctionHouse if you have a collection of fine wine, big or small and we can help you. Our commission fee for Penfolds Grange and Henschke Hill of Grace is only 12.5% (no buyers premium so your return will be better) and for all other wines it is 17.5% with no buyers premium. We work hard to get you the best return, we pay our vendors quickly and we have been selling fine wine for unlicensed private collectors since 2007. We know the secondary wine market and we know what is hot and what is not.