Langton’s auction house raises its buyer’s premium thanks to freight and handling costs

Collectors of expensive wine will pay higher fees to Langton’s auction house as it passes on costs such as freight and handling.

Langton's general manager Tamara Grischy with the 65 years of Penfolds Grange sold at an auction.

Langton’s has blamed blowouts in freight, storage and other costs for its almost 10 per cent increase in charges levied against customers of the fine-wine auction house.

Langton’s – owned by Endeavour, the operator of Dan Murphy’s and BWS liquor chains and some 340 pubs across the country, wrote to customers informing them of the lift in the buyer’s premium last week, describing it as a necessity to cover soaring input costs.

The buyer’s premium – paid by buyers at auctions – will rise 1.5 per cent to 18 per cent starting February, while the seller’s commission was lifted to 15 per cent in 2019.

“This decision has not been made lightly,” Langton’s head of auctions Michael Anderson said in an email to customers.

“Over the past several years we have shouldered our increasing operational costs. Implementing this change allows us to continue providing you with the high-quality experience and customer service you’ve come to expect, while ensuring our teams remain fully supported.”

Langton’s general manager Tamara Grischy told The Australian that the auction house, which was founded in 1988 and specialises in auctions of high-end premium wines, was facing significant cost pressures across its business and had reluctantly been forced to pass on some to its customers.

“We are experiencing a range of additional cost pressures. The cost of doing business has increased, and this also impacts our supply chain, which is why we have had to increase our buyer’s premium,” she said.

“This decision has not been made lightly and over recent years we have shouldered these costs, but this increase will ensure we can keep providing the very best experience and service.”

Langton’s buyer’s premium was last increased in 2014.

A Langton's auctioneer with a bottle of 1811 Chateau Lafite.

While there are many contributing factors, the primary driver of Langton’s rising cost base is freight services. As it is only the agent or intermediary in the sale of wines, it says its margins are relatively small.

It has shouldered increasing costs in the past few years that has put downward pressure on margins including collection, storage, authentication, as well as handling each bottle for assessment and photography.

Endeavour does not provide financial performance details for its Langton’s business, but sales grew significantly during the Covid-19 pandemic – up 25 per cent.

The average bottle price increased from about $50 to $80, and the company has said about 40 per cent of sales were for bottles of wine that cost in excess of $180.

In late 2021, Langton’s sold a bottle of Penfolds Grange 1951 for a record price of ore than $157,000 (including buyer’s premium).

In July that year a bottle of the same vintage went under the hammer for $142,000 – a price increase of 10 per cent in six months.

Endeavour last traded at $6.30.