A Beginners guide to collecting and investing in Whisky – Part 2

In this instalment we’ll consider the scenario that you’ve made a conscious decision to start collecting or investing in whisky. You’ve already made decisions about what whiskies, distilleries, vintages that you’d like to feature in your portfolio. You’ve also registered with auctioneers and are primed and ready to enter the bidding – so what comes next?

FAQs

Familiarise yourself with the Frequently Asked Questions (FAQs) regarding bidding that should be available from each auctioneer. Now, we’re not talking about the charges, which we covered in the first instalment. No, what needs further consideration is the type of bidding software utilised by the auctioneer.

BIDDING FORMAT

Take for instance you’re first in with a bid, all anxious and wanting to get things underway. The bottle has no reserve and bidding starts at £5. You’re prepared to pay £100. Now with some auctioneers the winning bid will show as £5 and you’ll have the safety net of being able to sit back and automatically bid right up until £100 is breached. This is known as proxy bidding software and is featured on some auction websites including here at Just-Whisky Auctions (JWA). A different approach is also utilised by some auctioneers whereby your maximum bid is immediately taken and displayed. In this scenario the bid would immediately show at £100, meaning to secure this bottle you may have bid again.

There are pros and cons to both methods so being aware of what format bids are taken in advance is advisable. My own personal preference is the proxy format as a bidder and regardless of what method the auctioneer features, in this day and age you should be informed almost immediately by email if you’ve been outbid or you can access the auction via your mobile phone.

Some may bid when the bottles are just made available knowing they’ll be outbid at some point. The reasoning behind this is to create a watch list against their account that can be easily checked if the website doesn’t feature a watch lot option.

RESERVES

Lots may have a reserve price and these are set by the seller in advance. A good auctioneer will discuss reserves with their client and set an expectation whether what they are looking for is realistic. The reserve is there to protect the seller who will only part with the bottle when a minimum price is met. Of course there is nothing to stop the seller going against the auctioneer and setting their own reserve ignoring any advice. Hence why the auctioneer will charge a reserve fee to cover the entry of the lot in the auction; otherwise it’s a free listing for something that might not sell.

If a reserve has been set on a lot then it should be highlighted as part of the lot description. Unfortunately some auctioneers do not highlight this so your bidding may be in vain even if you place the highest offer. In these situations the auctioneer may act as a negotiator between you and the seller after the auction has ended. Personally I have acquired bottles through such discussions and here at JWA the lot will highlight when a reserve is placed and when it has been met.

Another method is to open the auction at the reserve level. For instance the seller will not part with the bottle unless his minimum price of £800 is bid. Therefore the auction bidding starts at £800 rather than £5.  While this method protects the seller it can dissuade others from bidding until the very last minute or at all. On the flipside at least you know what you have to bid to remove the reserve.

CLOSING AUCTIONS

Just hold on for a moment as you’re almost ready to bid! Another aspect to consider is how auctions close. Every auction has a closing time stated but auctioneers can adopt different methods prior to closing a lot. Again, it is worth being aware of what you will be dealing with in advance.

Some auctions will close at the specifically advertised time although this isn’t as common as you think. Other sites may keep an auction running as a complete whole entity until the bids dry up. This can be annoying to a certain extent, as you’re faced with babysitting a bottle to ensure you are successful. Literally you can be sitting online several hours after the auction should have ended.

Another approach is one utilised here at JWA and we believe this is fairer to buyers and sellers alike. If a lot receives a bid within the last 5 minutes then a time extension will appear. This means that if a lot doesn’t receive a bid within those dying moments then you’ll have won the lot when the auction is supposed to end. However say if a bid does come in then a 15-minute countdown for that specific lot appears. If no further bids are entered within this set period, the highest bid wins.  

EXAMINING THE LOT

Now we’re almost ready. You’ve ticked all the boxes and know what is expected of you as a bidder in the auction. You’ve identified a bottle and before bidding please read the description carefully and review the photographs. Look for anything that may affect the value and for older bottles the auctioneer should comment if the fill level is below the norm – this could suggest poor storage or a weaker seal. The importance of provenance is only going to increase in the coming years. Each bottle in my personal collection is documented and recorded as to where the bottle was purchased, when, the price and the original receipt/invoice is archived.

If you have any concerns or questions regarding a lot or a more detailed photograph then contact the auctioneer before bidding. Good customer service should apply to sellers and prospective buyers alike.

If you follow all of these steps then you’ll be better prepared to participate in a whisky auction and remember it can be an enjoyable experience! In the third part of this feature we’ll look at some tactics and the importance of not getting carried away during an auction.

Part 1 can be found here