Commercial Online Wine Auctions Come to Canada

by John Szabo, MS

In more good news for Canadian wine lovers, the details of a new online wine auction platform based in Alberta reached WineAlign headquarters, yet another digital retailing shift arising from the COVID-19 era and rapidly changing liquor distribution laws. Iron Gate Auctions promises to offer Canadian consumers coast to coast much easier access (or access, period) to fine and rare wines. Where wine lovers in countries like the US and the UK have long enjoyed a robust wine auction scene, Canadians have had precious few to choose from to either buy or sell, just a limited handful of government-licensed auctions and charity auctions. What has changed to allow Iron Gate to legally operate a national online wine auction, so that you can buy wine in Alberta have it shipped to your Ontario address?

New Online Auctions: The wine industry’s shift to digital offers Canadian consumers new access to fine and rare wines

The Covid-19 pandemic has accelerated the wine industry’s shift to the digital world, with virtually all retailers and wineries around the globe reporting large increases in online sales in 2020, including international auction houses. Just this past Wednesday March 10th, The Drinks Business reported that Liv-ex (The London International Vintners Exchange), a global marketplace for the wine trade with a membership of 500 wine businesses from 40+ countries worldwide, almost doubled online wine trading by value this February compared to February 2020. All three of the company’s benchmark indices – Liv-ex 50, Liv-ex 100 and Liv-ex 1000 – are up on a year-on-year basis with a growing string of positive months.

Online wine sales in Canada are no exception, and the landscape in Ontario continues to evolve rapidly, with restaurant takeout and private import mixed cases, now permanent changes, adding to consumer choice. But so far, that choice has been almost exclusively restricted to primary retail sales – the latest releases of current vintages from wineries around the world. Access to older vintages of collectible wines through provincial liquor boards has remained extremely limited. Even younger vintages of collectible wines are often mysteriously allocated, as through the LCBO’s Classics Catalogue. One WineAlign reader recently emailed me wondering how it was possible that the entire allocation of Tignanello in the most recent Classics Catalogue was sold out, even before official release. “When I went into the Vintages/LCBO website at exactly 8:30:00 [on the day of release at the opening hour], it showed the product as already being sold out”, he writes. It’s a frequently heard story and source of frustration for wine lovers. The problem is, that’s likely your one and only chance to buy this vintage of Tignanello, unless another shipment arrives. Secondary, or “grey market” sales are, of course, illegal.

Canadian wine collectors have thus been forced to look elsewhere, into the US, UK and Asian markets to find and purchase the most sought-after vintages and secondary market wines, often older wines resold from private wine collections via auction. Many collections are cellared offshore, and painstakingly repatriated over time.

But Warren Porter, Founder and President of IronGateAuctions.com, aims to change all of this with the launch of Canada’s first national wine auction. Porter hopes to capitalize on changing consumers habits embracing online liquor sales, while providing Canadians broader access to vintage wines and rare spirits from collections sourced across the country and offered for sale.

Although Porter started looking into the creation of a commercial online auction platform as early as late 2019, it was really the COVID-catalyzed changes in Ontario legislation allowing online charity auctions to take place that drove the development of the platform. Porter recognized a need and an opportunity to serve charities like Cystic Fibrosis and the Toronto Symphony Orchestra by helping with the transition to online wine auctions, which until 2020 could only legally take place as live, in-person events. These auctions have been critical to support such organizations.

Porter successfully launched IronGate’s first online charity auction for the Toronto Symphony Orchestra in November 2020. He quickly realized that commercial (non-charity) auctions might also be possible using the platform he had already built. “I’m not really sure why it hadn’t occurred to me earlier”, says Porter. “I suppose I just figured that some legal hurdle would come up.”

After a little market research, Porter landed in Alberta, historically the most open market in Canada for alcohol sales. Alberta, it seems, is indeed open for auction business. “The AGLC [Alberta Gaming, Liquor and Cannabis] were a dream to deal with. They made everything happen in no time,” Porter continues.

Porter acquired all the necessary licenses and set up Iron Gate Auctions’ commercial division in Calgary in a matter of a few months. Among the other benefits to bidders of being headquartered in Alberta is the low sales tax, just 5%, the lowest in Canada (Ontario, you’ll know, has a 13% sales tax, and Québec even higher at 15%), as well as the Alberta government’s more modest take on the buyer’s premium (the percentage winning bidders pay on top of the hammer price), allowing Porter to charge a modest 17.5% buyers’ premium, below the auction industry standard of 20% to 22.5%.

You may be wondering how it is legal for residents outside of Alberta to legally purchase though IronGate’s online auction, and have it shipped to their homes in other provinces. It hinges on a technicality: once the auction closes and purchase are finalized, IronGateAuctions transfers “title” of the wine to each successful bidder – they become legal owners of the wine physically cellared in Alberta, where they pay the necessary provincial sales tax.

After that, they are contacted by a shipping company who will make arrangements on the bidder’s behalf to have the wines sent anywhere in Canada. “A number of shipping companies regularly ship wines across Canada, like ATS Healthcare. Even Canada Post will ship,” says Porter. He also points out that wines purchased through the annual LCBO-licensed auction, and the SAQ-licensed auctions in Québec, are also regularly shipped to out of province Canadian citizens. Porter himself has bought wines at Québec auctions and had them shipped to his home in Toronto, actually paying less tax than if he drove to Québec to pick them up. So there’s nothing radically new, just the recognition that there had never been anything standing in the way of a national wine auction in the first place.

IronGate’s inaugural auction, which runs from March 23 at 1 p.m. E.S.T. to March 30 between 8 p.m. and 10 p.m. E.S.T., will offer a deep cache of rare, vintage wines sourced from private collections across Canada. Some of the rare wines for sale include lots from DRC, Roumier, and Comte de Vogüé in Burgundy, multiple first-growth Bordeaux, Chave, Guigal and Rayas from the Rhône, Australia’s Grange, and Napa’s Harlan Estate, among many more.

But Porter is also quick to point out that it’s not all high-end wine. The auction will also feature multiple lots for drinkers at all price ranges, from a couple of hundred dollars and up, and not just wines to buy and cellar decades, but also ready-to-drink lots of mature wines.

“Historically, live auctions have held a rarefied image and attracted an exclusive wine buying pool,” says Porter. “With the advent of online auctions in Canada, a broader audience of collectors and first-time buyers have the chance to find vintage wines rarely available in Canada.”

And, importantly for premium collectors, all the wines on offer come with guaranteed provenance, a critical factor in the value calculation. “The relatively limited movement of private wine collections in Canada to date means that there is huge opportunity right now to find wines with provenance and bottles in fantastic condition”, says Porter.

The other advantage for Canadian collectors is that there is now a commercial option to liquidate their vinous assets, until now possible only via charity auctions for a tax receipt, or the limited, in-person LCBO and SAQ-licensed commercial auctions. “For some big collectors in Canada, wine is a genuine asset class”, says Porter. “When circumstances change, say, an illness, a reduction in consumption, whatever, collectors have often been forced into the grey market to unload their investment. Now there’s another option.”

Porter has several more commercial auctions planned for 2021, but will also continue to facilitate charity auctions. Already on the books for this year are wine auctions for the Vancouver International Wine Festival, the Cystic Fibrosis Foundation, JazzFM and the Canadian Opera Company.

Register at IronGateAuctions.com to receive updates and detailed information and early access to the inaugural auction catalogue beginning on March 13, as well as notifications of all upcoming auctions.

And for those new to the auction scene, Iron Gate Auctions is hosting a useful Demystifying Wine Auctions free webinar on Sunday, March 21 at 8 p.m. E.S.T. / 5 p.m. P.S.T. featuring Stephen Ranger, Canada’s foremost wine auctioneer and Director of Ranger Wine Inc. Participants will learn how an online auction works, get buying strategies for success and hear expert analysis of hot commodities and smart buys before the first online auction opens for bids. Anyone interested in attending this free webinar can register at www.irongateauctions.com/webinar.

Cheers to more choice in Canada.

John Szabo, MS

Don’t forget to follow us on Instagram for the latest WineAlign recommendations, tips and other interesting wine information.