John Hart, owner of three different Chicago-based fine wine businesses over the past 40 years, retired as chairman of the retailer and auction house Hart Davis Hart Wine Co. (HDH) on July 1st. Hart now serves as chairman emeritus of HDH and will continue to consult with the firm, which he cofounded 12 years ago with partners Paul Hart (no relation) and Michael Davis. John Hart originally entered the auction world in 1973 with partner Philip Tenenbaum. Together they founded Chicago Wine Co., the first full-time wine auction business in the United States. Hart sold his stake to Tenenbaum in the late 1980s and served as senior wine consultant for Christie’s for a few years. In 1993, he launched John Hart Fine Wine, a boutique retailer catering to elite collectors, and then jumped back into auctions by forming HDH in 2004. Hart recently spoke to Market Watch about the state of the auction business.
Market Watch: At Hart Davis Hart, how do you decide whether a wine belongs on the auction or the retail side?
Hart: Sometimes we can predict that individual bottles or broken cases will do better at retail. A fourth- or fifth-growth Bordeaux from a less-than-great vintage is likely to do better at retail, for example. Also, we don’t have as much of a French bias on the retail side, where wines like Argentine Malbecs sell quite well. Our company had $50 million in overall sales last year, and the retail division accounted for about $12 million of that.
MW: HDH has a reputation for being very conservative in deciding what bottles it will accept for sale. Would you say that’s well earned?
Hart: Forty years ago, I don’t recall ever encountering a fraudulent wine in the auction business. But I went to a tasting in the late 1980s where a bottle of 1985 Domaine de la Romaneé-Conti La Tâche was opened. It had a perfect label, but I knew it wasn’t the real thing. My antennae have been raised ever since, and now we’re all very cautious. Our head of inspections, Allan Frischman, is superb at analyzing wines. If we have any doubt, we send the wine back to the consignor—either because we think it’s counterfeit or the condition is subpar. We know counterfeiters can duplicate bottles and even labels, but one thing they can’t duplicate is corks. If we’re in doubt, we’ll call the owner and ask permission to slip off the capsule and even taste the wine to make sure it’s the real thing. We refuse about two out of every 50 bottles presented to us. Sometimes those wines end up at other auction houses, but our reputation for impeccable quality has been of paramount importance.
MW: The 2015 Bordeaux en primeur campaign has been heating up. Are you buying?
Hart: We had three people in France tasting the vintage this spring. We’re buying, but with prices so high, we’re doing so selectively. We hadn’t bought many futures since the 2010 vintage. I was in France in 1983 tasting Bordeaux and advising clients to buy the ’82 vintage. People who invested in first growths in that vintage got an 18-fold return by the year 2000. Those who bought Mouton Rothschild en primeur from the 2000 vintage got a 400-percent return by 2007 and a 750-percent gain by 2010. That’s a lot better than the stock market. I’m focused on first growths, with the occasional exception being a wine like Château Pichon Longueville Comtesse de Lalande in a good vintage. There’s worldwide recognition of first growths, but a second growth like Château Pichon Longueville Baron is not as well understood. Lesser growths won’t get you the same returns.
MW: What are some of the best deals that you can remember?
Hart: You could buy the 1982 Château Pétrus for $19.95 a bottle at retail in Chicago in the mid-1980s. At those prices, I was buying a lot.