This is a difficult year for the art trade. Christie’s reported global sales of $3.2bn for the first six months of 2023, 23% down on the same period last year. Sotheby’s declined to release its own half-year figures in July, suggesting its sales had also taken a downward turn.

“After two exceptional years, Christie’s adapted to a different market in the first half of 2023, as a consequence of the more challenging macro-environment,” says Guillaume Cerutti, Christie’s chief executive, commenting on his company’s half-year results.

Crucially, back in May, the Christie’s, Sotheby’s and Phillips marquee auctions of Modern and contemporary art in New York were noticeably underpowered. Spooked by a combination of rising inflation and hiked interest rates, owners were reluctant to put their trophies up for sale. The three houses grossed an aggregate $1.4bn (with fees), significantly lower than the $2.5bn achieved the previous May, according to data provided by Pi-eX, the London-based art auction analysis firm.

And then in London in June, the froth was skimmed off what has been an extra-hot resale auction market for “flipped” young art. In May 2022 in New York, Sotheby’s The Now sale of 23 recent works by coveted, hard-to-source names had been a bidding frenzy that raised $72.9m. Just over a year later, Sotheby’s 14-lot London version of The Now format took £8.7m ($11m) this June. Demand was far more measured here, and Sotheby’s padded out its sale with some older pieces by established figures, like a 2007 abstract by Günther Förg. Having died a decade ago at the age of 62, Förg is surely more “then” than “now”.

“At the tail end of a bull run, people speculate more and more. The most speculative bits of the art market suffer first in a recession,” says Robert Read, the head of art and private clients at the London-based specialist insurer Hiscox, which actively collects contemporary art.

Hiscox, in collaboration with Art Tactic, a market analytics firm, recently released a report on the auction market for “wet paint” works resold within two years of being made. In 2022 Christie’s, Sotheby’s and Phillips combined to sell 1,033 such lots, a 116% increase on the previous year, according to the report.

“The more that’s being flipped, the more overheated the market is,” Read says. “It’s a barometer. At some point the market is going to feel the chill.”

Evidently, sales in both the speculative “red chip” and established “blue chip” markets have been subject to a correction. But one-off highlights have maintained a surface sheen. London’s June season of auctions was given a lift when Gustav Klimt’s portrait Dame mit Fächer (Lady with a fan, 1917-18) sold to a Hong Kong collector at Sotheby’s for £85.3m, an auction high for any work sold in Europe.

‘People don’t sell in a falling market’

As Read and others point out, it is unlikely that this overall dip in sales will turn into anything resembling a crash, at least at the top end. “It’s like the housing market,” Read says. “People don’t like to sell in a falling market. Suddenly the supply becomes more limited.”

High interest rates might have flushed some speculators and less affluent buyers out of the system, and general economic jitters may have made some bigger players reluctant to sell. However, the art world’s core cohort of a few hundred ultra-wealthy collectors has simply become less active, rather than suffering any significant diminution of net worth.

As is often said, the art market is not just one market but several. At Art Basel in Basel in June, for instance, press officers for the biggest international “brand” dealerships, such as Hauser & Wirth, Pace, David Zwirner and White Cube, issued their usual laundry lists of sold inventory, apparently confirming the 2023 Art Basel & UBS Art Market report’s finding that “dealers operating at the higher end” register “significantly better sales… [than] their peers in the lowest tiers”.

Wealthy art owners seemed willing to offer major-name trophies in the more discreet context of a fair stand. Pace, for example, managed to sell the 1963 Girolata Triptych by Joan Mitchell, marked at $14m, on consignment from a private collection.

But other exhibitors were simply grateful to cover their costs, with several bemoaning a lack of American buyers, according to Michael Short, a Berlin-based adviser. “The mid-tier galleries thought it was OK. The younger galleries were relying on Americans for ‘specu-collecting’,” Short says. It seems that for long-haul visitors planning just one trip to Europe in a year, Art Basel’s sister fair Paris+, in October, is becoming an increasingly attractive alternative.

The sense that mega-galleries and smaller dealerships operate in different markets was underlined in July when the Mayfair-based Simon Lee Gallery, a stalwart exhibitor at Art Basel, entered administration. Meanwhile, Hauser & Wirth, whose UK-based operation made a post-tax profit of £13.2m on a turnover of £93.3m in 2021, according to its latest filings with Companies House, has announced its autumn programme of selling shows at its West Hollywood, New York, downtown Los Angeles, Monaco, Zurich, London, Paris and Somerset galleries.

“A process of industrialisation is going on,” says Alain Servais, a Brussels-based collector, referring to the expansion and consolidation of the art world’s most prominent businesses. “There’s been a massive inflow of consumers and money. It’s only a question of building a large enough bucket to collect the rain coming down.”

The Paris dealer Emmanuel Perrotin certainly believes in big buckets, having announced in June that he is in the process of selling a 60% stake in his business to the French investment company Colony IM to grow an operation that already boasts ten galleries worldwide.

But in our current consumer culture, is selling art, like selling luxury goods, as much about the strength of a brand as the size of the bucket, particularly when a newcomer has to spend a substantial five- or six-figure sum to have credible skin in this particular game?

Buyers driven by brand

“Brand is central,” says Clayton Press, a New Jersey-based collector and writer, who emphasises that buyers are taking a financial risk when they buy a piece of contemporary art. “They want a reliable brand,” he adds. “They’re comfortable with known entities, with things that have been successful in the past, even the recent past.”

Noah Horowitz, Art Basel’s chief executive, said in a recent interview with The New York Times that people “are ever more driven by brand”, and that they buy from galleries at Art Basel “because we’re a brand”. Rival fair organiser Frieze, which has just enlarged its own bucket by agreeing to acquire New York’s Armory Show and Expo Chicago, is also a brand. Established artists such as Yayoi Kusama, Damien Hirst, KAWS, Anish Kapoor and even Ai Weiwei have become brands. Mega-galleries like Hauser & Wirth and Gagosian (which has recruited Delphine Arnault, a member of the LVMH luxury group’s executive committee, to its revamped board) have the power to quickly turn rising-star artists like Christina Quarles and Jadé Fadojutimi into trusted—and expensive—international brands.

“Branding is the future of the art market. It’s the inevitable conclusion,” says Michael Short, the Berlin-based adviser. “It’s easy reassurance. Branding replaces the cultural conversation.”

Significantly, the main bright spot in Christie’s first-half results was the luxury category, where sales jumped to $590m, a 43% increase over the equivalent period of 2022 and the company’s highest ever first-half total in this sector. Asian clients, renowned for their enthusiasm for Western luxury brands, were the biggest contributors, supplying 38% of luxury-auction sales revenue, despite slowing growth in the Chinese economy.

True, inflation has been falling in many countries. The S&P 500 gained 20% over the first seven months of 2023. The marquee sales series in New York this November may yet attract some AAA-quality collections.

But for all the talk of an influx of new buyers into the global art market, since 2011, estimated annual sales have stayed between $68bn and $63bn, according to the Art Basel & UBS Art Market report. Last year, LVMH, the world’s leading luxury goods group, achieved revenue of $85.9bn, an increase of 23% on 2021.

The fact that a single luxury company turned over more in a year than the entire global art market and achieved double-digit growth puts things into perspective. Clearly, it is now all about big brands and big buckets.