Far East Influence

In June 2010, China strengthened its image as a rapid evolving wine market during Vinexpo Asia-Pacific in Hong Kong. This was a huge jump from just two years ago,when industry members were still exploring how to get their feet wet in the Chinese market. The 2010 expo has seen a gold rush atmosphere, with everyone looking to get a piece of the action, especially sales of the 2009 Bordeaux futures.

The Chinese focus on brands, rather than vintages, has also changed the investment side of the market. Now, more and more newcomers, especially from mainland China, are eager to bid in Hong Kong. Asia’s appetite for Lafite over the past three years is strongly indicative of the impact the region will have on the fine wine market as a whole. Due to the greater actual physical consumption in China of the various released Lafite vintages, the supply of Lafite stock for these vintages is decreasing faster than that of its peers.The Chinese love affair with the brand is decreasing the length of time an investor needs to hold the wine before increasing scarcity value becomes relevant. The 1996 and 2000 vintages, which are not due to be consumed for at least another 10 years, are already being consumed now.

Other brands are following suit. These include Lynch Bages, Mouton Rothschild, Haut Brion, Latour, and Margaux. In time the whole market will benefit from the growing culture of fine wine appreciation in the Far East, predominantly represented by the grand cru classé reds of Bordeaux.

U.K. merchants used to sell some 40 percent of their stock to U.S. trade and private customers; now those sales have shifted to buyers in Hong Kong. Those merchants sold $80 million of still wine to Hong Kong’s five top importers in the first seven months of 2009 - more than in all of 2008 and nine times what was sold in 2006. Recent years had seen positive indications of greater interest in En Primeur wine among Asian investors. In all of 2009, during the 2008 Bordeaux vintage campaign, Asian sales of 2008 Bordeaux exceeded those in the UK for the first time ever. Hong Kong has become an auction hub that rivals London and New York. Five major houses now hold regular sales, and they’re pulling in record prices for the hottest labels.

What pushed this vibrant city into the wine big league was its decision to abolish all taxes on wine, on February 27, 2008. Sotheby’s combined April and October sales last year brought in more than $14 million, including a record-breaking price for an imperial of 1982 Chateau Petrus (which holds as much wine as eight regular-sized bottles): $93,077.

Sophisticated Hong Kong has long had highly knowledgeable Bordeaux lovers with extensive cellars, such as Henry Tang, the city’s chief secretary. Most of them made their purchases in the U.S. and the U.K. and kept their wines there to avoid paying taxes. In the past few years, an increasing number of Asian buyers have regularly snapped up many of the most expensive lots.

Now, more and more newcomers, especially from mainland China, are eager to bid in Hong Kong. They start with the best; it’s like buying a Lamborghini as your first car.