The complaint most often levied against wine auctions is that they’ve helped to elevate the price of certain wines to a level above what most consider reasonable. If you’re a Burgundy drinker, you’re nodding. Somewhere along the way, wine was transformed from a beverage into a luxury good, an asset, even an investment vehicle. And now, the same thing is happening with a beverage that traditionally aligns with the opposite set of values: beer. Whether we like it or not, there are now purpose-built “beer cellars,” cult breweries where devotees camp out for a single bottle and beers that are being auctioned off at a profit.
So how, in just a short period of time, did beer go from the frat house to the auction house?
The “microbrewery” movement sprung up in 1979 when Jimmy Carter deregulated beer production and a tidal wave of small brewers were able to enter the market. Eventually, though, the microbrewery movement got too macro (think Samuel Adams which, though valued at $2.8 billion on the NYSE, is still considered “craft”). In reaction, the home brewing movement fermented for a while, as did the microbrewery’s replacement, the “nano brewery.” And then came the real impetus for the rise of high-end beer: “limited edition” beers—brewed either once a year or just one time only, and often released at special brewery events where you have to be in attendance to score a bottle. Once something is “limited edition,” a luxury market is born and with it a secondary market in which beers are sold outside of the usual retail channels, sometimes illegally.
For years, the only way to acquire rare and collectible beers in a public secondary marketplace (i.e. not from the brewery or a retailer) was on eBay, where online auctions inhabited a legal gray area. Selling beer is illegal without a license, so eBay allowed consignors to offer the “collectible bottle.” The small print read, “the container has not been opened, and any incidental contents are not intended for consumption.” Sort of like how those glass pipes at the bodega are for “tobacco use only.”
Regardless, eBay became the place to buy certain rare beers from breweries like Cantillon (the rarest geuzes), Drie Fonteinen (geuze made by blending old and new lambics from other breweries), The Bruery (“Black Tuesday,” an imperial stout aged in bourbon barrels) and The Lost Abbey (“Cable Car Kriek,” a lambic brewed with cherries, which was supposed to be consumed at the brewery upon purchase, but some scofflaws walked out with them). Beers like these improve as they mature, and often people sold older bottles, sometimes decades old.
In October of 2012, Moser decided enough was enough, and brought the gavel down (literally) on a bottle of Utopias for $244, making it the first ever beer sold at a traditional auction. It was in the middle of a Skinner wine auction and the price realized was modest, but Moser decided he was on to something. If he could introduce beer into the world of rare wine auctions he might be able to elevate the collectible status of beer and offer fair pricing in an open and legal marketplace—something that hasn’t existed since beer became collectible.
When eBay banned beer sales, the high-end beer market changed for the worse. No longer was there a public market, so people set their own prices, buyers were taken advantage of and there wasn’t any pricing consistency.
“More or less the closure of the eBay market created the wild west,” says Mike Moser of the Boston-based auction house Skinner. “eBay was illegal, but at least it was public. We knew the price of the beer in the open market.”
Moser’s a specialist in Skinner’s fine wines department. But really, he’s a beer guy. And when eBay closed, he took note of the void, and who filled it. The buying and selling of rare beers at obscene prices didn’t go away, beer collectors merely receded further into the internet to buy and sell beer amongst themselves.
“If you pay someone privately $2,000 for a bottle of beer and they stiff you, you have no recourse,” says Moser.
Yet, with no other options, this is what people did. They’d meet each other on websites like beeradvocate.com—sort of like the Craigslist for beers—take their discussions off the open forum and broker sales. Numerous sites popped up. Mybeercellar.com, for one, offers a “creative” way to sell rare beer: You buy “credits” for a dollar each, and each credit allows you to post one beer for sale. You set the price yourself and buyers pay the seller directly. At the time of writing there are twelve bottles of Samuel Adams’ highly collectible Utopias being offered on the site, ranging in price from $235 to $650, depending on year of release.
In October of 2012, Moser decided enough was enough, and brought the gavel down (literally) on a bottle of Utopias for $244, making it the first ever beer sold at a traditional auction. It was in the middle of a Skinner wine auction and the price realized was modest, but Moser decided he was on to something. If he could introduce beer into the world of rare wine auctions he might be able to elevate the collectible status of beer and offer fair pricing in an open and legal marketplace—something that hasn’t existed since beer became collectible.
In addition to the “limited edition” phenomenon, Mike knew that wine at auction is expensive either because it’s rare, comes from a famous producer, is highly-touted by a critic, improves with age or some combination of the four. The same can be said for beer. By pushing the definition of what beer is, and sometimes hoping it will improve with age like wine, breweries encouraged the secondary market. Samuel Adams Utopias, for example, is a flat, solera-blended, 56-proof concoction packaged in a brew-kettle shaped decanter. It tastes, according to a promotional video by Samuel Adams founder Jim Koch, “somewhere in between a vintage port, a fine sherry and an old cognac.” (All three beverages are sold at auction.) The suggested retail for Utopias is about $200, and “fewer than 15,000” are made, per release.
Since that first auction, Skinner has sold almost 200 lots of beer in seven auctions, and almost half of the value has been different bottlings of Cantillon geuze, some as old as 1978 (that bottle sold for $397). Geuze is a blended lambic that undergoes secondary fermentation in bottle, like Champagne. It’s a “sour beer,” often made with Brettanomyces bruxellensis, a Belgian yeast often considered a flaw when it makes its way into wine. So, like Utopias, Cantillon doesn’t taste like your average IPA. It’s also almost impossible to get through retail channels or at reasonable prices, and all of the expensive bottles are limited release.
For example, a 750ml bottle of Cantillon Loerik, whose secondary fermentation took a decade to carbonate—“Loerik” means “lazy boy” in Flemish—sold for $2583 in April 2014 and became the most expensive beer sold at auction.
“As with most things, it’s supply and demand,” says Moser. “The value comes from a combination of brand power, history and, at the end of the day, a great product. There’s also a little bit of craze, the ‘I gotta have it’ mentality.”
Just like wine. Moser brought the auctions to the public because he saw a niche that needed filling, but also because he believes he’s an advocate for good beer, and that the prices set at auction will eventually trickle into retail, giving certain beers the recognition they deserve.
“Given that we’ve sold several four-figure bottles of beer at this point indicates that there is some major price disparity at the retail level,” he says.
What he means is that since most of the beers sold at auction had an original retail price of less than $25, the auction price can be up to 100 times higher than the release price. This level of disparity doesn’t exist for most wine in the secondary market, especially not wine released a few years ago.
“We needed an auction marketplace,” says Brendan Woodcock, who has bought and consigned in the Skinner auctions, “because now there are published, open market results that collectors can use to appraise their beers.”
Still, there’s a long way to go to make beer auctions viable. At Skinner, the “sell-through rate,” or the percentage of lots offered where the bid meets the reserve, is around 56%, meaning that just under half the beer offered at auction goes unsold and is returned to the consignor. In other words, the buyer base for high-end beer isn’t as large as it is for high-end wine. What’s more, there’s even been a backlash against the idea of aging beer—the very practice that has contributed to the value of most collectible beers.
But the buyers who are willing to raise the paddle at one, two and eventually three thousand dollars, are undoubtedly changing the image of beer as the everyman beverage. The question is whether beer will be able to make the transition. Now is the time to hedge your bets.