Ditton Wine Traders’ fine wine blog

If you are a non-merchant stock holder of wine, it’s not so straightforward to sell your wine. Presuming you have bought wine that is of interest to investors/the trade, how do you go about selling it? A lot of people I talk to don’t really know and feel highly uncomfortable about it.

The good news is there are far more options than a few years ago, thus improving competition and therefore your achievable price . There are a number of auction houses (Christies, Sotheby’s, Bonhams to name a few) and there are also wine merchants that offer live, online buying prices (Bordeaux Index and, in a few months time, Berry Brothers & Rudd amongst others) to private customers.

The bad news is that you are still likely to relinquish a high percentage of the value of the wine to whomever you sell it to.

Traditionally, private stock holders of wine wanting to sell turn to the auctions houses as their first point of call. That will immediately cost you on average 15% ex VAT of the market value of the wine. Also, the time between consigning the wine and receiving the funds in your bank account will be around 3 months minimum. The upside is that auction houses do get large numbers of interested buyers so, provided you have something to sell that buyers are willing to enter into a bidding war for, chances are you will achieve a fair "hammer price". On the whole though, this alternative will not maximize your return.

A better "route to market" for private owners of fine wine is to approach wine merchants. Often, the company that sold you the wine in the first place is the first to be contacted when you want to sell. Especially when this company is holding your wine in their own warehouse or in your "private reserve account" in a commercial bonded warehouse. Indeed, this wine merchant might contact you to ask whether you want to sell. This is an attractive way to offload excess stock, as you’re dealing with a trusted business partner and you avoid the downsides of the auction houses. 

This is also a very interesting business model for wine merchants. Imagine you’re a wine trader and you have sold wine to your customers for some years. Each sale you will have recorded in your database, showing what you sold, to whom at which price. After a few years, you’ll have potential access to a significant amount of wine. Wine that you might be able to buy back or broke on behalf of your customer. Brilliant, as it gives the merchant access to stock to sell – ensuring supply – and they can make a profit on the same case twice!

I think this is the best way to buy and sell your wine, both for merchants and individuals. For the merchant, it’s nice and easy as the "provenance" of the wine is cristal clear and there is a relationship of some sorts with the seller. For individuals (presuming you want to sell and not drink), it’s very comforting to deal with the same merchant you bought from. Hopefully, your wine will have increased in price and you can sell, not having to worry about credentials of your buyer and whether or not you will get your money.

I do think this is the most efficient and pleasant way for the "market" to work. But, there’s a big catch. Private sellers do run the risk of being ripped off. There’s always the temptation for a wine merchant to offer low prices, hoping you’re not aware of the market value or hoping you don’t have alternative buyers at hand. It’s a free market and nothing ventured, nothing gained, right?

Wrong. The only proper way to be successful in business – I passionate believe – is to treat your customers well. Always. Even is there’s a quick buck to be made. Especially when there’s a quick buck to be made. Sure, wine merchants are in it to make a profit, but at the same time, they have to give their customers the best deal possible.

And that’s exactly what Ditton Wine Traders are about. We sell at the lowest possible prices and we buy at the highest possible prices. Yes, that does decrease our margins, but more importantly, it increases the number of people we deal with and thefore, it generates sustainable turnover and profit.

The average wine merchant works on a 12%-18% margin, depending on the "tradability" of the wine. This is a figure dictated by the costs of running the business on the one hand and turnover on the other hand. Fancy offices, marketing expenditures and lots of staff might result in higher turnover, but it also necessitates a higher gross margin – i.e. the difference between the price you receive for your wine and what the merchant sells it for.

We work on 6% – 9%.