This year marks the 10th anniversary of wine auctions in New York. Only in 1994 did the State Legislature legalize wine auctions. In less than a decade, New York has surpassed London as the seat of the wine world. About $65 million is auctioned each year in New York – a significant chunk of the $100 million worldwide total.

Whereas London auctions cater to wine merchants, in New York private collectors dominate buying. And while Sotheby’s and Christie’s rule the roost in London, in the past couple seasons in New York, the venerable auctioneers have been bumped from the top spots by aggressive retailers fighting for a slice of the auction pie. In fact, New York’s byzantine liquor laws force Christie’s and Sotheby’s to join with retailers to hold auctions.

In addition to Sotheby’s and Christie’s, the New York market now sees Zachys, Acker Merrall & Condit, and Morrell & Company all auctioning wines on a regular basis. Morrell was the first firm to hold wine auctions in New York, in 1994. Like the other wine retailers in the auction business, it sees auctions as a way to build customer loyalty for its retail outposts (which provide them much larger profit margins). Auctions are also a way to expand sales: New York’s liquor laws prohibit wine sellers from owning more than one store location. Morrell’s operates two wine bars, as well as a retail shop at Rockefeller Center.

Morrell has carved out a niche with its smaller wine sales, which total around $1 million a sale. It holds four live sales at the Bloomberg headquarters on Park Avenue, as well as six Internet auctions. Indeed, it is the only auctioneer with live Internet bidding, which the firm says can account for up to 30% of bids during a sale. Its strategy has been to continue holding auctions, but not to fight to the death for market share. Nikos Antonakeas sees auctions as another service Morrell can provide, just like wine storage, appraisals, or tasting events. “It’s not a big enough market for anyone to make serious money,” he said.

But other wine merchants disagree, seeing the auction business as a serious revenue source. The two firms vying for the top spot in the city are Scarsdale-based Zachys and the Upper West Side’s Acker Merrall & Condit. In 2003, Zachys grossed $15.2 million, taking the top spot in New York. Acker held sales in New York, Los Angeles, the Hamptons, and online, which totaled $16 million and made them the top company in the United States. Zachys holds sales at Restaurant Daniel, while Acker sets up shop at the Four Seasons.

Zachys originally partnered with Christie’s to auction wines. The joint venture lasted seven years, and when the companies split, Zachys opted to continue in the auction business alone. According to industry lore, the break-up was so acrimonious, both companies hosted parties celebrating the divorce.

Whatever the case, there is no doubt that Zachys’s aggressive foray into the auction sphere has taken business away from Christie’s. In 2002, Christie’s New York and Los Angeles sales totaled $15.6 million. Last year, with Zachys competing for business, Christie’s total plunged further, to $9.8 million. “We felt what we want ed to do was to bring excitement back to wine auctions,” said the president of Zachys Wine Auctions, Jeff Zacharia. “We’re redefining commercial wine auctions.” Zachys has also hired two former Christie’s wine auctioneers, and will be holding its first sale in Los Angeles at the Peninsula Hotel, on October 8 and 9.

As with art auctions, wine auctions are only as great as the goods on offer. This makes attracting consignments a critical part of winning the game. Acker Merrall & Condit and Morrell’s have decided to go for broke and offer zero percent commission for sellers (Sotheby’s starts at 10%, Zachys at 10%, and Christie’s at 15%).

All this heady competition doesn’t mean that Christie’s or Sotheby’s will be throwing in the towel. Sotheby’s focuses on the high end of the market, according to senior vice president, Jamie Ritchie. Its average lot value is around $1,800 (as compared to Acker Merrall & Condit’s of $1,000). Mr. Ritchie said Sotheby’s is in the wine business to make a profit.

But while wine departments don’t make substantive contributions to the auction houses’ bottom line, there are long traditions at stake – not to mention important consignments. Many estates sold by the houses have paintings on the walls as well as bottles of Bordeaux in the basement. This spring Christie’s sold property from the late Doris Duke. The legendary heiress had diamonds, chandeliers, Chinese relics, and a cellar full of dusty bottles – which yielded $3.75 million on the block. And the prestige houses still tend to get many of the prestige collections, as they can offer an international clientele of buyers (Asians and South America being areas of particular importance).

For its December sale, Sotheby’s (in conjunction with Aulden Cellars) has lined up wines direct from the Domaine Clarence Dillon, a family that owns the blue-chip Chateaux Haut Brion and La Mission Haut Brion. These will include cases of wine in the $15,000 to $25,000 range. The house started off the fall season strong, totaling $3.35 million for the September 17-18 sale, with an unprecedented 15% of them new buyers.

Christie’s is also aggressively chasing down the rare imbibable, fielding six sales this fall. Part of the bounty includes 25,000 bottles, formerly part of the wine cellar at the Hermitage Inn in Vermont. The rarest 13,000 bottles began selling yesterday, but the sale continues through today. And half the trove will be sold October 4 as part of the lesser-priced house sale, with bottles going for $15 to $25 each, with no reserve. It’s clearly the best way to stock up for the holiday party season.

For wine experts such as Richard Brierley, head of Christie’s New York wine department, helping clients buy and sell is everyday stuff, and poking around in old wine cellars is about as good as it gets. Sometimes they come across collectors who just didn’t know when to stop – who bought more than was drinkable in a single lifetime. Mr. Brierley knows how to handle the situation. “You have a problem,” he tells the collector, “and perhaps we can help.”