RETAIL PROFILE: The Antique Wine Company: Adding value to vintage

Retailing not only extensive collections of sought-after fine wines, Stephen Williams’s The Antique Wine Company creates a point of difference by creatively pairing them with luxury goods.

By Patrick Schmitt

Most of us have been in a similar situation: it’s someone’s anniversary and you’re asked to find something to commemorate the occasion. A carriage clock? Definitely not. A photo frame? It’s hardly original. A pen? A little impersonal.

Stephen Williams, who was running a small Midlands-based wine merchant, was asked to find a wine from 1920. A customer explained it was a retirement present for a colleague born in that year. After some searching he found three bottles of Latour 1920 and put them in a case, before adding an original issue of The Times from the person’s birthday. This was back in the ‘80s, and the idea for The Antique Wine Company was born.

“I thought maybe there’s a market for old wines to match anniversary occasions,” says Williams, “so I took out classified advertisements in magazines like Country Life offering such a service. Now, in the Plimsoll Report, we are in the top 25 out of 500 wine merchants when it comes to efficiency and adding value.”

Over the years Williams has built up a database of 16,000 customers around the world, meaning that today, “it is not difficult to sell something that you might think, ‘where would you sell that?’”

Unlike auction houses such as Sotheby’s or Christie’s, which tend to break up collections by selling them in lots, Williams prefers “to bring individual bits together for one person”.

For example, Williams sold 135 bottles of Château d’Yquem, housed in two specially constructed walnut cabinets by David Linley, (a customer of Williams and nephew of Queen Elizabeth II). The unique collection, which spanned three centuries, fetched £775,000. The buyer was so impressed with the furniture, he has apparently asked Linley to refurbish the inside of his private jet.

Creative thinking
Williams also purchased the best of French president Jacques Chirac’s wine collection, before containing it in another Linley creation – a scale model of Paris City Hall. He later sold this for US$600,000 (£297,000) to a South American businessman. As he explains, “With the transparency offered by the internet it is easy to compare prices, which has led to their erosion. However, creativity gives you the opportunity to add value.”

Driving the market for fine wine is the rising consumption in markets such as Eastern Europe, South America (especially Brazil) and Russia, according to Williams. “China is just beginning,” he adds, “but I think there’s a lot more business in Russia than China.”

Currently 30% of The Antique Wine Company’s trade is in “emerging countries, but that will rise rapidly,” says Williams. “Fifty percent is sold to the US and less than 15% to the UK.”

“In mature markets in Western Europe people tend to start with wine at the low end, learn a little more and then gradually trade up until eventually they have their first glass of Château Petrus. In new markets there is a demand for the very best – Latour, Lafite, Petrus, Romanée Conti – right from the beginning. The super-rich want wines with established brand status because they associate them with a Western civilised lifestyle.”

Hence, Williams reports the incidence of a type of instant fine wine collection. “Suddenly people want an entire cellar and will spend a few million on creating one.”

Williams also points out that such consumers are “very dependent on Robert Parker and Wine Spectator… and they want the best brands in the best vintages”.

Not surprisingly, 60% of Antique Wine Company’s business is in Bordeaux first growths, followed by 30% in Burgundy, and 10% in Italy, California and a small amount from the Rhône. “The new Californians are not making a dent in the status-driven market,” says Williams, “and it will be a long time before the likes of Harlan Estate has the same global recognition as Château Petrus.”

As for supply, Williams claims to have “good relationships with châteaux”, although he admits there is a reduction in the allocation for traditional markets to serve new ones. He also buys a lot on the secondary market, adding that when it comes to selling whole wine collections, he finds it hard “to sell the lesser wines and I’m looking to acquire a wine merchant to sell these wines – ideally one which is strong in the restaurant market”.

Interestingly, he states that mature wine (more than five years old) “is more expensive in Bordeaux than anywhere else”. This is because top Bordeaux is sold en primeur to fine wine centres such as London, which subsequently have more stock, competition and better prices for older wines. “We even supply quite a lot of wine back to Bordeaux,” he comments, adding, “Buyers assume, incorrectly, that Bordeaux is the cheapest place to buy.”

Due diligence
Is Williams worried by counterfeiting? “I don’t come across a lot of counterfeit wine,” he says. “I’ve seen two or three examples and we handle thousands of bottles.” He is careful to check original documents such as invoices, but “the most important thing you can do is to look into the eyes of the person you are buying from”. He also reports on a test being used on a collection of Château Lafite Rothschild to verify its date by analysing the chemical elements of the bottle. “It’s very expensive,” says Williams, “and will cost around £30,000 when finished, but this collection is worth over £1 million and therefore it is our professional responsibility to use the maximum due diligence possible.”

If the wines are in good condition, however, “older vintages are performing unbelievably at auction”, explains Williams, proving his point with a recent sale: Mouton ’45 at $300,000 (£149,000) a case. A positive side effect of these high prices for a retailer such as Williams is the increase in the amount of stock coming onto the market as collectors choose to sell wines.

“For instance, there’s a cellar in Dallas owned by a property developer. It contains 15,000 bottles and the collector is selling one quarter of the wines to fund the other three quarters.”

Continuing, Williams says of the state of the market: “Since ’72 there has been no dramatic crash – wine is considered a non-correlated investment. Even in 97/98 when the Asian currency collapsed, the market for fine wine flattened but didn’t go down, and two years later, in 2000, there was the most successful en primeur campaign ever.”

Williams ascribes fine wine’s somewhat economic shockproof status to the fact that in times of recession, capital tends to go into asset-based categories, like wine. In boom times on the other hand, fine wines are bought to drink, and the market is driven by consumption.

Star treatment

What is interesting about Williams’ approach to this market is his ability to add value to an already high-margin product. From the moment he placed a historic newspaper with those antique wines he realised the benefit of a creative touch, and the Linley cabinets are a more sophisticated example of the same approach.

Today Williams is taking this technique to a further, less tangible level. Not only is he looking at developing commercial relationships with suppliers of luxury goods, but he is acquiring an old pub in Belgravia to display wines, perform tastings and hold dinners, as well as house a new office. Finally, he’s launching “Club Etoile” – a service for his top clients, which includes the likes of first growth châteaux visits.

Now there’s a good anniversary present.

© db September 2007