Fine wine is in high demand. But how do you know your Château Lafite is real?
There were just three bidders left in the room as the gavel came down to signal the $2,400 sale to an absentee buyer. There were no gasps or murmurs. The purchase, of a case of Domaine Ponsot wines at Sotheby's in London, marked the denouement of a daylong sale that racked up an unremarkable $2.3 million for the august auction house. The relatively modest earnings at the Oct. 24 auction, and the sepulchral feel of the event, reflected a departure from the frenzied activity at wine sales in recent years — notably in Hong Kong, where the auction houses from 2008 to 2011 smashed estimates month after month. For behind the plush facade of Sotheby's headquarters on boutique-lined New Bond Street, and in many other corners of the rarefied world of fine wine, all is not well.
Sotheby's 2012 earnings from its wine sales are likely to be significantly down from its $85.5 million sales of last year (earnings had reached just over $54 million by Oct. 31). The market as a whole is expected to shrink this year by 20% to $400 million. Sotheby's worldwide head of wine, Serena Sutcliffe, insists that the modest prices achieved at the Oct. 24 sale merely reflect a correction from the "surreal" levels of recent years — an economy-defying boom driven mainly by the Asian market — to something more "realistic." But other wine experts say the market for high-end wine is not simply settling down after a boom but contracting because buyers are no longer confident they're getting the wines they're paying for.
It is four years since Laurent Ponsot, owner of his namesake Burgundy domaine, arrived at a New York City auction held by Acker Merrall & Condit to demand the withdrawal of several lots of his wine because he was sure they were fake. That event shook the wine world; until then, forgeries had largely been whispered about, not denounced in such a public way. With the issue now out in the open, members of the wine fraternity confessed to one another, quietly, that they had no idea how many fake bottles were out there. They still don't.
Rudy Kurniawan, the man who consigned the bottles Ponsot says are fakes, is now in the Brooklyn Correctional Facility, awaiting trial on four counts of mail and wire fraud. His arrest by the FBI in March marked the beginning of the most high-profile case of alleged wine fraud to date and gave everyone in the industry an unprecedented view inside what is allegedly a major counterfeit operation. Investigators say they discovered a laboratory for manufacturing fake bottles at Kurniawan's Los Angeles apartment: inside, they say, were wine labels, corks, stamps to imprint vintages on corks, a device to insert corks in bottles — and lots of empty bottles. Kurniawan pleaded not guilty to the charges at his arraignment on May 23.
So who, other than law-enforcement agencies, should be policing the high-end wine trade? Ponsot places much of the responsibility on the auction houses. "They are not doing their best to authenticate wines," he claims.
But identifying a fake wine is not easy. In the art world, says Ann Colgin, a former art dealer who is now a winemaker and consultant to Sotheby's, copying an old master is an intricate challenge and that makes a fake "relatively easy to spot." By comparison, "with the amount of wine now sold at auction, spotting every fake is labor-intensive and takes a very trained eye." And even if bottles are opened, how can even the most experienced wine drinker pronounce whether a 1799 Lafite is bogus or not?
The signs, though, are that after years of stratospheric price rises, the market is finally softening in Asia. With any luck, that will help put a cork in the demand for this damaging trade.