Charity wine auctions not so robust now

For the last couple of springs, the North American Foundation for the Cure of Diabetes has held a charity wine auction in Newport Beach. It’s an elegant affair -- the grape juice is choice and the local Ferrari owners’ club decorates with vintage sports cars -- but this was not, as they say, a good year.

Half of the auction lots sold for less than expected. Nine vintners who had poured for free the prior year sent their regrets. Screaming Eagle, the cult Cabernet without which no serious wine fund-raiser seems complete now, declined to repeat the three-bottle donation that in 2002 had fetched $10,000. Scrambling, one of the organizers put his own bottle of Screaming Eagle on the block, only to see it go for a disappointing $2,000.

“It’s the economy,” said Jerry Stefani, an Orange County businessman who founded the benefit to fund diabetes research. Though an uptick in attendance helped keep the proceeds from falling below last year’s, Stefani said he’ll be hedging his auction with free vacations and spa days when he pulls together the lots for 2004.

“We had a 1997 BV Private Reserve that came in for like $400, and it should have brought twice that,” Stefani said. “Wine alone just isn’t enough anymore.”

Charitable wine auctions were the hot sport of the 1990s. From Napa Valley to Nantucket, they proliferated like dot-com millionaires. No spectacle so summed up the decade as a room full of new money bidding on fine wine in the name of good karma; in gowns and tuxes, in white linen under white tents, the prosperous bid frenziedly on obscure Cabernets and etched bottles, fueling a fad that generated millions of tax-deductible dollars.

Charities liked the events because they attracted the well-off and educated; vintners liked them because they lent prestige to a label, established a venue for customer contact and, occasionally, turned an unknown wine into a cult sensation. Then the ‘90s came to an end.

Now both the economy and the wine industry are struggling to emerge from a protracted downturn. Cheap vintages, domestic and imported, have flooded the market, thanks to the weakened dollar and the domestic grape glut. The tech sector is showing glimmers of life and economists predict better times later this year, but jobless rates remain painful. The rich may still be rich but feel poorer, and in any case, flaunting wealth is considered bad form, at least for the moment. The cult wine on the tip of everyone’s tongue is Charles Shaw’s Two-Buck Chuck.

Consequently, charitable giving at wine auctions has become much less a sure bet, with some winemakers curbing donations or quietly buying back their lots rather than watching their brands sell for lackluster bids. Not that the auctions are entirely passe: Some annual wine benefits set records this year, and several have constituencies whose devotion and wealth transcend economic cycles.

“But my sense is that the wine-auction motif has crested,” said veteran Napa Valley vintner Robin Lail of Lail Vineyards. “It has been a brilliant idea for fund-raising, but now I think it’s too much.”

Benefit wine auctions have been around for as long as the world has had charities and wine collectors, but the tech boom of the 1990s turned them into a phenomenon. The granddaddy of California wine benefits, the Napa Valley Wine Auction, was a relatively local affair when it was launched in 1981; by the late 1990s, it was an annual scene that inspired scores of imitators.

“The bidding starts at $10,000,” the auctioneers exhort even now, and “Don’t be afraid of six figures!” There are black-tie dinners in wine caves and pre-benefit galas and celebrities who fly in from New York and L.A. just to hang out at tastings with jet-setters on great, green lawns.

Eric V. Orange, who runs LocalWineEvents.com, an online calendar for wine aficionados, says charity wine auction listings on his site now span every state and run into the thousands. Wine Spectator magazine, which tends to focus more on benefits with broad regional or national attendance, listed 127 in 2002.

Some have been wildly successful and remain so, economic cycles notwithstanding. The Naples Winter Wine Festival in Naples, Fla., raised $3.75 million this year for underprivileged Florida children, thanks largely to strong ties between California winemakers and wealthy wine collectors in that state. In the Bay Area, the V Foundation Wine Celebration, regularly breaks the $2-million mark and has leaped into the top tier of charity wine auctions.

“They make an enormous amount of money,” said one veteran auctioneer on the charity circuit. “In a lot of ways these auctions are guy things, and most of the time you can’t do too much heartstring-pulling. But when they get these coaches up there giving come-to-Jesus speeches ... there isn’t a guy in the seats who won’t get up and give.”

Most organizations, however, lack such secret weapons, and auctioneers report that on average wine auction proceeds are down 10% to 20%.

“Our sense is that 2002 was generally slower than 2001,” said Thomas Matthews, executive editor of Wine Spectator, which tracks the better-known charity wine auctions. By the Spectator’s tally, for instance, the live-auction portion of the Napa Valley Wine Auction raised almost a quarter-million dollars less than last year. The annual wine auction to benefit the High Museum in Atlanta fell short of last year’s live auction total by nearly $100,000.

“I don’t believe there are significantly fewer auctions or that established auctions are going out of business,” he said. “But people certainly are not as flush as they were.”

That’s part of it, vintners and bidders say, but other factors are involved too. For one thing, wine auctions flaunt wealth, and displays of riches can be awkward when CEOs are being indicted and tens of thousands of skilled workers are unemployed.

“We had one auction in Northern California where one of the main bidders was participating without the knowledge of the rest of the audience,” said David Reynolds, a San Francisco-based auctioneer who has spent 20 years on the charity wine auction circuit. The man, he said, met early with organizers to submit anonymous bids and make a separate donation. “Why? Because the group included employees of his, and families of employees, and he had had to do layoffs this year.”

Some winery owners have pulled out of the showier events, such as the Napa Valley Wine Auction. Others have used the increased demand for donations to discourage ostentatious benefits. Dick Grace, a St. Helena vintner whose Grace Family Vineyards cult Cabernet is virtually impossible to obtain except at wine auctions, refuses to donate to organizations that don’t connect personally enough for him with the disenfranchised.

“If you touch peoples’ hearts, their wallets will open. But I think putting on these Herculean displays of excess gives a bad message to the rest of the world,” said Grace, who has raised millions of dollars for children’s charities worldwide.

Moreover, even as the economy has bids dropping at auctions, it has intensified the demand for donations, and vintners feel besieged. In Napa and Sonoma counties, charity wine auctions to benefit schools are as common now as bake sales. Wine-themed fund-raisers for symphonies, disease research, animal rights and battered women’s shelters vie for weekend benefactors year-round. Winemakers are solicited daily for donated cases and magnums; Lail says that not long ago she received a request “from someone’s uncle’s Moose Club in Virginia.”

Doug Shafer of Shafer Vineyards in the Napa Valley estimates that he gets about 600 requests a year for free wine, and says yes to about a quarter. Jean Phillips of Screaming Eagle says she receives dozens, if not hundreds, of requests each week for some of the 500 cases a year she produces.

“Let’s see,” offered Terry Hall, director of public relations for the Napa Valley’s Trefethan Vineyards, reading down the winery’s list of this year’s donations. “We got the Stanford Law School Bid for Justice auction; the Children’s Fund for Glycogen Storage Disease Research auction; the Taste of Camarillo auction; the Park-Cullough House in Bennington, Vt., Night of Wine and Roses; the Aspen Art Museum auction; the Hearts and Vines Foundation in Medford, Ore.; the Friends of the Santa Ana Zoo; the Meals on Wheels in Chicago; the Wine Fest of Des Moines....”

At least 500 charities received Trefethan’s standard magnum of Cabernet or two-bottle “estate pack” this year, Hall said, “and for every yes, there were probably five no’s. It’s sad, but people forget that when we do this, it’s like pouring money. We’re not a bottomless pit of fine wine, and we’re pretty much maxing out.”

Moreover, some vintners said, putting your product on the auction block can backfire in a down economy. Although the value of a bottle of wine is overwhelmingly about supply and demand and commercial wine auctions, the wine’s cachet can be greatly enhanced by vigorous charity bidding.

“I remember the first time we sold a bottle of Leonetti Cellar for over $10,000,” said charity auctioneer Reynolds, remembering an annual benefit in Sun Valley, Idaho, several years ago. “Literally, the next day you couldn’t find a bottle in town, and people probably haven’t been able to find one since, and that was when people started to say wines from the Northwest were worth looking at.”

But charity hype can cut both ways, and Reynolds and others say vintners can be tempted in down times to prop up the bidding for their lots, either because they’re concerned for the charity or worried about their product’s stature and asking price. “People get shills,” one wine industry veteran confided. “Or, more often, friends bid up lots for each other. Or they’ll tell everybody that they really, really want to be the top lot at the barrel auction, and people indulge them.”

Teri Kuhn, a frequent bidder at large charity wine auctions and the Chicago-based owner of Napa Valley’s Pillar Rock winery, said it can be frustrating to see a contribution undermined by low bidding. She cut back donations by 20% this year because the bids for her lots at some auctions were so lackluster that she felt compelled to buy them back.

“I hate to see the wine stolen,” she said. “If it’s worth $900 and somebody’s picking it up for $100, it causes me concern. These events are there to make money for the charities.”

None of this is to say that charity auctions are over, although most winemakers doubt they’ll soon see the day when some mogul again shells out a half-million dollars for a bottle of wine, as a tech executive did for a bottle of Screaming Eagle three years ago. Still, the indicators have been positive lately and hope springs eternal.

“The big ones are still here,” said Shafer of Shafer Vineyards. “And the collectors are maybe more selective, but they’re still around. I think it’s maybe just that reality check has set in across the board, and that’s a good thing. Because, really, it was getting out of hand.”