How Stewart Langton Created the Wine Auction Boom

It’s a seller’s market, provided you have the wines. Sure, the heat may have gone from the Grange prices of last year, but the Australian wine auction market is riding a wave of buoyancy and over-supply. Auctioneers, whose ranks seem to rise on almost a monthly basis, are having to ration the number of wines they put for sale at live auctions for fear of boring their audiences.

Speaking as somebody who has never bought a bottle of wine with the intention of selling it, it’s something of a concern just how much the wine investment phenomenon has struck deep in the heart of professional and corporate Australia. The questions I am most frequently asked at corporate tastings and dinners relate more to the investment potential of wines rather than how good they actually taste. That’s a concern in itself, for like most wine enthusiasts, I believe it was made to be drunk, not just to act as some form of rarefied currency.

For there’s no doubt that wine has become a currency of sorts. You only have to look at the wine lists of allegedly superior restaurants, reverently choked by pages of Bin 707s, Hill of Grace vintages, Granges, Armaghs and Mount Marys to figure just how deeply the major auction wines have become more akin to objects of worship than bottles to be enjoyed at leisure.

You can’t blame the likes of Stewart Langton for enjoying the moment. He must have dreamt of this. Seventeen years after he first entered the wine auction business it’s worth an estimated $11 million each year. That’s nearly double his estimate just two years ago of $6.5 million. Whether it would have happened quite so quickly without his own company’s pivotal role is a matter of some doubt, but there’s plenty of reason to suspect that wine auctions were simply waiting to explode.

With low interest rates, low inflation and buckets of money allegedly lying around waiting for something better to do, wine investment has arrived right on cue. For now that wines and wine auctions have such a high profile, an entirely new and well-heeled market now considers Australian wine to be a valid alternative form of investment.

And given that Langton’s has around 60 of the auction market, with a buyer’s commission of 10 and a vendor’s commission between 15-22, it’s easy to see why Langton is today a significantly happier man than when he first began. Back then, he says, Australian wine auctions were little more than a dumping ground.

You don’t need to be Einstein to figure why so many people are getting in on the act. ‘I’ve shown people you can make a living out of it and now everyone else wants a piece of it’, says Langton.

‘There are so many new auction companies out there, all claiming to have structures’, says Andrew Caillard MW, who heads Langton’s Sydney office and is a partner in the business. ‘They might have Internet sites, but there’s often nobody around. Over the last decade we’ve acquired a critical mass. They can only compete against us on commissions, but even then they don’t do as well. Our vendors keep coming back, for we do turn over our wines.’

Caillard concedes that Langton’s commissions may be more expensive than their competitors, but despite that says that his company offers a result that others are not getting. ‘What matters is what you get back in your hand and that’s where we score. Our commissions represent good value for the service we render and we offer no apologies for them. If you want a Rolls Royce you have to pay for it.’

Langton’s prodigious recent growth has been central to the creation of what Caillard describes as the ‘ultra-fine’ wine market. Through the slick and professional presentation of its promotional material and catalogues, its innovative Classification of Distinguished Australian Wine, the high profile it takes at major wine events like Wine Australia and its biennial Australian Fine Wine Investment Guide, Langton’s has successfully created and nurtured the appeal of collecting and trading Australian wine on the secondary market.

Of all the auction houses, Langton’s has been the one most to encourage this approach, which if successful will guarantee the auction market a regular supply and demand. ‘The idea of wine investors buying wine to put back into the market is recent phenomenon’, says Langton. ‘It’s a concern that around ten years ago the average age of a bottle of wine for sale at auction was ten years, while now it’s just three. But on the other hand, there’s less risk in buying the stock and in most cases they’ve been stored very well. It’s a safer and more organised market than it was ten years ago.’

Langton’s offers its customers tailor-made wine investment strategies and through Andrew Caillard’s professional wine background has begun to tip which wines will become the sought-after and high-priced headline-makers of tomorrow. Because of this I would argue that in this dual way, as both commentators and auctioneers, Langton’s has been very successful in increasing the prices of premium Australian wine, which each of the other auction houses have clearly benefited from.

‘We’re a small cog in a large industry’, says Langton. ‘A number of brands have benefited by what we’ve done, especially the overseas buyers who are looking for a ranking of wines they understand. I don’t know if we have pushed prices up. The secondary markets in London and New York have also boomed, but we have certainly done our bit to lift the profile of Australian wine locally and internationally.’

Given the value now associated with premium Australian wine and the likelihood that people will attach ever-increasing value to the cellaring history of the bottles they bid for, buyers are likely to become as choosy with their auctioneer as they are with their wines. In addition to the financial considerations like price, commissions, terms, insurance and freight, more informed buyers have begun to rate auction houses on issues like the accuracy of descriptions in catalogues, especially relating to levels in bottles. Langton’s are one of the auctioneers I would trust completely if queried about previous cellaring conditions or where their stock was sourced from.

But ultimately, as Andrew Caillard says, what Langton’s do best is to make certain that everyone is happy at both ends of the sale, which is all about understanding the difference between price levels and volume of demand.

I’m rather awestruck by Langton’s recent success, but as Stewart Langton would be first to agree, it’s all come about through nothing more complicated than hard work and attention to detail. And there’s little doubt that Australian wine and its burgeoning profile has been the collective recipient of Langton’s endeavours, despite the way that winemakers constantly grumble about the prices he regularly achieves for their better wines. Please login to post comment