Innovating for fun and interaction in wine auctions w/ Jeff Zacharia, Zachy’s

Jeff Zacharia, President of Zachy’s, the global leader in wine auctions, tells us about how they made wine auctions more fun, have been moving to studio sales and bidding parties without live auctions, and how they narrowly escaped being swindled by Rudy Kurniawan’s wine fraud scheme.  We learn all about the wine auction process, what regions are trending, and where he sees the market going.  Don’t forget to rate and review XChateau wherever you get your podcasts! 

Detailed Show Notes: 

• Zachy’s founded in 1944 by Jeff’s grandfather, Jeff joined in 1983
• Zachy’s wine auctions started in 1995 when wine auction became legal in NY, started with a partnership with Christie’s, and then went independent in 2002
• Expanded to Hong Kong in 2008 and London in 2020
  • London is to expand in Europe, believes it is underserved from a wine auction perspective
  • Having wines in Europe enables quicker delivery for European customers
• London was the wine auction capital, then became New York, then Hong Kong, now it’s in between New York and Hong Kong
• Auction Process
  • Send a list of wines, get a low and high estimate, sign a consignment contract
  • Organize wines to Zachy’s warehouse, catalog wines in detail (including fill, labels, etc.…), and print catalog, either electronic or print
  • 3 methods of auctions - live auction, studio sales (live auctions online), and internet / timed sales
  • Zachy’s differentiation - great effort in researching and inspecting the wines
• Auction Market
  • Saw steady growth year over year, with a spike in 2019 due to big sales
  • 2020 - beating projections (12% above projections)
• Zachy’s leadership - how they became the #1 wine auction house globally
  • Wine is all they do. They are focused and passionate about it
  • Jeff has been in the wine business for 40 years and built deep, long-term relationships
  • The team has invested years building their relationships with collectors and wineries
  • Innovations - centered around making auctions fun and engaging
    • Changed from the classic auditorium-style auctions to restaurant-style with food and wine
    • Bidding parties - often for studio sales, smaller gatherings around the world (e.g., Sweden, London, Germany, China, Hong Kong) that have the same food and wine atmosphere connected via Zoom to the auction
    • Investigating how to make virtual auctions more interactive
• Auction business model
  • Currently focused on buyer’s premium
  • May have seller’s commission, but depends on consignment size - the larger the consignment, the smaller the commission; substantial sales may even have rebates from the buyer’s premiums
  • Getting more consignors is the challenge currently
  • Expect prices to continue to rise - quality keeps rising (especially weaker vintages), and more collectors out there for a relatively inexpensive luxury
• Growing auction markets - Burgundy remains strong, some growth in Champagne and Rhone, California hasn’t yet gotten traction - potentially due to a different style of wine than those who are buying Burgundy
• Provenance premium often from ~20-200%
• Producer direct - can introduce or reintroduce wines to Zachy’s buyer base, sharing these wines for them to taste, and another way to help build the brand
• Scores declining in importance with more wine critics
• To be auctionable - need quality, rarity, and fashionable - what people are looking for
• Rudy Kurniawan story - bought a lot of wine from a Zachy’s auction and never paid, sent a list of wine to be sold in order to pay, but Zachy’s was uncomfortable with the wines (~60% seemed suspect) and rejected the whole consignment

Hosted on Acast. See acast.com/privacy for more information.