Follow your nose
A former amateur racing driver, Carson Chan Kai-shun enjoys cars. So when an opening came up at Bonhams' local subsidiary 10 years ago, he seized the chance - the auction house was then better known for its sales of vintage cars. But now, as managing director of Bonhams in Hong Kong, Chan finds himself at the forefront of a regional wine boom that has made Barolos and Chateau Rothschilds the focus of his attention rather than Aston Martins and Rolls-Royces.
Traders expected a boost from the government's scrapping of wine tax in 2008, and their hopes have since been fulfilled in impressive style with Hong Kong quickly challenging London's place as the world's second biggest auction market for fine wines after New York.
'I knew the auction scene was going to be big in Hong Kong as soon as the tax was dropped,' says Chan.
Still, it took nifty footwork to catch the wave. 'We had a hunch months in advance that the government was going to lower the wine tax because officials had been talking to people in the wine industry,' Chan says.
Once the tax abolition was announced, he and his team got together and made swift plans. Within two months Bonhams held a wine auction - its first in Hong Kong for over a decade - recording sales of more than HK$11 million.
Other auction houses soon followed, with Sotheby's announcing that Hong Kong has become its most important centre for fine wines after notching up more than HK$111 million from its three sales last year. Its auctions in New York took in US$12.7 million while London booked GBP9.2 million (HK$116 million) from 10 auctions.
'Last year will be remembered as the year Asian collectors overtook the US in the purchase of fine wine at auctions,' says Serena Sutcliffe, head of Sotheby's international wine department. Local and mainland buyers accounted for 40 per cent of Sotheby's total wine sales.
John Kapon, president of international wine merchants Acker Merrall & Condit, reinforces the view. 'Asian buyers in general have been what's driving the sales,' he says. 'Not just in Hong Kong [but also in New York].'
Still, Chan was surprised by how swiftly Hong Kong's auction market had grown following the end of wine tax, attributing it partly to last year's financial meltdown hitting the US harder than Asia as well as a growing thirst among mainland buyers.
The surge was also in reaction to a lack of auctions earlier, says Jamie Ritchie, senior vice president of Sotheby's wine department, who expects the market to stabilise after the initial fervour.
Kapon, however, sees the recent boom as a natural phase in Asia's growing interest in wine.
Bidding in Hong Kong tends to be more lively than in New York or London, Kapon says, and there's a 'friendly, competitive nature here that can't be found elsewhere'.
Recalling an Acker Merrall & Condit auction where he wielded the gavel last year, he says the event at a local hotel had to be moved from one hall to another because bidding went on far longer than expected.
As in many businesses, much of the impetus for growth is coming from the mainland, particularly from wealthy Chinese for whom premium wines have become a status symbol as well as pleasurable pursuit.
Chan attributes the strong Chinese interest in wine auctions partly to cultural mores. 'Chinese people in general really care about face,' he says. 'If I invite a friend to dinner and I open up an expensive bottle of wine, he'll feel the need to top it by opening up a more expensive bottle of wine the next time he invites me to dinner.'
Jack Hui Wai-po, who founded the Hong Kong Fine Wine Auction website with a few friends in November as a way for enthusiasts to make small trades, echoes the view.
'Chinese people, if they can afford it, really like to indulge and spend on the biggest brand names and expensive items, and wine is no exception,' says Hui, who estimates up to 60 per cent of wine traded on his website ends up on the mainland.
The end of wine tax acted like rocket fuel.
'Many mainlanders buy and store their wine in Hong Kong until they need it due to the high tax in China,' says Kapon. 'Hong Kong has become a portal for mainland buyers who want to avoid duties.'
Purchases by mainland wine buffs have opened new opportunities for wine traders to provide storage services.
'We offer storage here at a small percentage fee,' says Hui. 'They place bids online and, after the purchase, they have an option to store the winse with us and pick them up in small batches each time they come to Hong Kong.'
But to keep the wine scene growing, traders and enthusiasts agree novice buyers have to be better educated. 'You can't keep buying something you don't understand,' says wine lover Danny Wong King-wang.
A frequent participant at wine sales, Wong views the auction fever as a fad but he hopes to turn it into sustained interest by helping novices learn more about wines and collecting.
Which is why he opened Vintelligence, a club that provides a venue for members to share experiences and knowledge about wine, as well as to trade.
'Some people look at wine as an investment and I hate that,' Wong says. 'It should be something to be enjoyed.'
Chan also reckons more knowledge is needed to keep up interest among the swelling band of local wine buffs.
'The growth rates in Hong Kong don't just indicate rich buyers willing to spend, but wine drinkers becoming more sophisticated. To sustain this, we've started wine education courses to help spread the culture,' he says.
To attract mainland buyers unable to attend its Hong Kong auction, Sotheby's last year introduced live online bidding, where participants make offers via the internet with video and audio feeds.
'Live bidding was most popular at the Hong Kong auctions, with most of the bidding coming from mainland buyers,' says Ritchie, who plans to further develop online business.
With Asia becoming the prime hub of his international business, New York-based Kapon also expects to spend more time in Hong Kong this year.
Acker Merrall & Condit sold more than HK$165 million worth of wine here last year - the most among the auction houses - and Kapon expects an 80 per cent increase in business this year.
Five auctions are being held, including a major sale next week that will feature a 'super-lot' group of premium Bordeaux valued at about HK$680,000.
'In all my years in the business, the value of wine has only gone up,' Kapon says. 'So it's here to stay regardless of how the economy is.'