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Baby Boomers, Mortality, and the Wine Market

As wine collectors advance in age, many individuals elect to liquidate all or part of their cellars for a variety of reasons. For many collectors, taste preferences change over time, and the financial reward of selling certain bottles eventually outweighs the pleasure of drinking them. Others are purely practical: they might wish to convert their wine collections into cash or other assets, or to reduce their physical footprints in anticipation of retirement or passage into the non-drinking world. In recent years, however, a growing number of savvy collectors from the baby boomer generation have realized that wines purchased at favorable release prices 20 to 30 years ago and stored properly over time now command exponentially higher prices, and this has led to a glut of iconic vintages in the marketplace. At the same time, demand for these back-vintage (pre-2000) wines has exploded, particularly in Hong Kong and other Far Eastern markets as import duties on wine have been relaxed. As such, the advancement in age of the wine-loving baby boomer generation is a key factor contributing to the strength of today’s market.

Mortality is another factor driving today’s market rates, as evidenced by the case of American businessman Aubrey K. McClendon. During his lifetime, Mr. McClendon was one of the largest buyers of classified growth Bordeaux in the world, amassing what was surely one of the most important wine collections in a generation. In March 2016, Mr. Mclendon lost his life in a car accident a day after being indicted by a federal grand jury on conspiracy charges, and shortly thereafter, his estate elected to liquidate his entire collection. His wines were presented at an auction held by Hart Davis Hart in September 2016, and in addition to achieving a rare 100% sell-through rate, that event was one of the largest grossing auctions of the year at US $8.4M. Clearly, the allure of that auction went beyond the specific labels and vintages for sale, and speaks to the appeal of owning wine from a previously sealed single-owner cellar.