Even in these unsettling economic times, when I speak with the heads of various wine auction houses, the message is always upbeat and positive, although they are no longer achieving 100 per cent sales.
Since Hong Kong's elimination of wine duties in February 2008, the growth of the auction market in Hong Kong has been phenomenal. Auctions here now account for more than two-thirds of total revenue for most major auction houses. The markets in London and New York not only look small, but their future also looks dismal. No wonder more senior wine auction professionals are being sent to Hong Kong and are settling here.
Looking back over the past 3 1/2 exciting years in the wine auction market, the peak has to be the Sotheby's sale of Chateau Lafite Rothschild in October 2010. Nearly 2,000 bottles direct from Chateau Lafite's cellar went under the hammer in Hong Kong to a frenzied bidding audience. Estimates for the 1869 Lafite were between US$5,000 and US$8,000, but the final sale price was just under US$234,000 per bottle! Needless to say, nearly every Lafite bottle was sold at above the high estimates, and all bottles found buyers.
As we, in the local wine commentators' seats, watched with our jaws open and wondered whether we should be selling the few bottles of Lafite stashed in our own cellars, more and more Lafite bottles appeared on the market in a seemingly never-ending supply. Lafite's status is confirmed even in less ebullient times, and as recently as last month at the Christie's auction, a 300-lot collection of Lafite sold for US$539,250, setting the world record for the highest amount paid for a single lot.
However, there are signs that both the Lafite madness as well as the overall wine auction market is softening. Sotheby's, which has enjoyed a reputation for selling 100 per cent of its lots, failed to sell all the wines on auction in its sale this month, including Chateau Lafite from various vintages. Hundreds of bottles of Lafite went unsold. What Sotheby's did sell was mainly at the low estimates. A Hong Kong collector who put his Lafite wines up for auction with Acker Merrall & Condit recently said he felt the market was softening, as most of his wines were sold at the lower estimates, far below the prices achieved a year ago.
With the financial markets on a roller-coaster ride at the moment, the auction market is showing signs of slowing. Given that the prices of the top Bordeaux reds have not just doubled, but tripled, in a short time, this is a welcome move for most consumers. Speaking with both wine enthusiasts as well as the wine trade in China over the past month, I believe it's clear that the days of the Bordeaux madness may finally be over. Even in the recent 2010 en primeur campaign, when young Bordeaux was sold as futures, the demand was far lower than for the 2009 vintage sold last year. The golden halo surrounding the top 15 to 20 chateaux still exists, but many buyers are tiring of the constant increase in prices and hype surrounding each vintage.
Savvy buyers in Hong Kong are turning to Burgundy, a fact that is reflected in the lots being offered at auction. Last month, a case of 1990 Domaine de la Romanee-Conti's Romanee-Conti sold for nearly US$300,000 at Acker Merrall & Condit 's auction. Spectrum, a new player in the wine auction market, realised nearly US$6 million at its September sale with the leader of the two-day auction being Domaine de la Romanee-Conti. A total of 80 lots of Domaine de la Romanee-Conti estimated at US$830,000 sold for more than US$1 million.
The trend toward Burgundy is undeniable over this past year. John Kapon, CEO of Acker Merrall & Condit, says: 'Our Asian customers are very knowledgeable and sophisticated. Their passion for the great wines of Bordeaux has grabbed numerous headlines over the years and this autumn it is going to be all about Burgundy. The passion and interest in Burgundy is growing rapidly in every new sale, and the mainland is just starting to discover the greatness of the region.' All eyes will be on Acker's November 4 and 5 sale, which will focus on the collection of Don Stott, one of the largest collectors of Burgundy.
Prices and the market may be softening, but auction activities continue unabated. Last month alone, Hong Kong held five major auctions by Christie's, Sotheby's, Acker, Spectrum and Zachys. The rest of the autumn calendar looks equally busy. All are still betting on Asia and Chinese buyers to sustain the auction enthusiasm.
We are due for a price correction, and the auction market is the best barometer for fine wine buyers' sentiments. It is also a relief that buyers are going beyond Bordeaux and discovering that wonderful collectables exist everywhere in the world. After taking a break from attending wine auctions, I will participate in some this autumn in the hopes of picking up a few bargains.