How Bonhams Helps To Inflate The Bubble – A Case Study

by Oliver Klimek on October 31, 2012

This is a followup to my recent article about the failed Bowmore 1957 auction. After it had been published I was pointed to an interesting blog post that gives us a different angle on the whisky pricing issue.

Curiously, Bonhams is involved again. This is because of another outcome of their recent New York auction that would probably have gone unnoticed if it was not for the clever folks of the L.A. Whisk(e)y Society who reported that quite a few recent cheap bourbon bottles were misdescribed as “ca. 1950s” and hence sold for triple digit bids.

Of course this touches the subjects of sincerity and professionalism of a well-reputed auction house. I don’t want to accuse Bonhams of deliberately misleading bidders, but if they did not intend to do so, then their whisky experts must have had a very bad day when they were writing the lot descriptions. It is their bloody job to make sure a description is as accurate as possible, regardless of any exclusion clauses in the terms of service. Describing a 1996 vintage bottle as “ca. 1950s” is inexcusable.

But in a twisted way we can be thankful to Bonhams here. The high auction results for these El-Cheapo bourbons perfectly highlight the current situation of the whisky auction market. People buy those presumable ‘dusties’ blindly without even knowing what liquid they bid on: modern bourbon of unknown provenance exported in bulk and bottled elsewhere under fancy names that – (im)properly described – give the illusion of long-lost brands.

Buyers without any fundamental knowledge have entered the whisky market and pay ludicrous prices for bottom-shelf booze. This is a textbook symptom of the approaching end of a speculative bubble. And of course those fools don’t only bid on misdescribed bottles. They also buy the real goodies with the same amount of ignorance. For instance a bottle of Ardbeg Day was sold for €243 at whiskyauction.com this September. Rare, expensive, old, bingo, who cares about the price then, the only way is up. They can only be saved by even greater fools buying from them… if they ever come around.

Another little piece in this mosaic is the New York based elitist 1494 club of whisky investors, founded by David Clelland, which is so secretive that they don’t even want to disclose their street address. Apart from a luxury car and private jet service they offer, curiously, annual valuations from Bonhams, possibly done by the same people who do the lot descriptions.

Regarding all this in conjunction with the fact that empty bottles of collectable whisky often sell for frankly amazing prices (Lagavulin 25 for €125 to name just one example), I feel creepy shivers running up my spine. Careless auction houses selling fake whisky bottles to clueless ‘investors’ is the last thing the whisky market needs.

Just like in the stock market, in any stage of the cycle it is possible to pick good whisky bottles for prices that allow a profit. But for doing so you need knowledge, the more the better. If you can’t afford the time to learn about whisky and study the market, better keep away from it. It is high time the whisky market is swept clean again.

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