Liquid asset
Hong Kong's investment wine market has been on fire the past three years, with record-setting auctions and trade volumes that have been flowing like bottles of uncorked champagne on New Year's Eve. Last year, Hong Kong passed New York as the world's top wine auction market, with sales totalling a staggering US$165 million, an impressive 157 per cent above the 2009 total.
Industry experts agree however that, despite its overall size and volume, the Hong Kong market lacks diversity. 'We sell a very diverse group of wines in London and New York, but we sell a relatively narrow range of wines in Hong Kong,' said Robert Sleigh, Head of Wine in Asia for auction giant Sotheby's. According to Sleigh, Sotheby's Asia wine unit focuses its attention on bringing the rarest and most sought-after estates and vintages to auction. 'There's not very much value in bringing mid-range wines to Hong Kong,' said Sleigh.
Auctions here often feature some of the most expensive wines in the world, including the iconic five first growths, a premiere group of Bordeaux wines that rank among the world's most coveted bottles. 'Despite some people saying that Bordeaux is becoming a little pass?now and that people are diversifying into other areas, the first-growth estates are still seeing incredibly strong growth,' said Greg De'eb, Managing Director of local wine storage facility Crown Wine Cellars.
In October 2010, Sotheby's sold three bottles of one such first-growth wine, Ch?teau Lafite-Rothschild 1869, for HK$1,815,000 each, breaking the record for the world's most expensive wine sold at auction.
Ch?teau Lafite-Rothschild (Lafite), which is traditionally the most expensive of the first-growth estates, and one that Sleigh calls 'probably the only household wine name in China,' might have peaked however with last year's record-setting sale.
'Lafite has certainly stabilised. Everybody focuses on Lafite because its the icon wine in China,' said John Kapon, CEO of the world's biggest wine auction house Acker, Merrall & Condit. 'It can't go up 100 per cent every year. Its just not feasibly possible.'
Although prices for Lafite this year have not matched last year's record-breaking auction, some of its Bordeaux peers are gaining traction. 'You did have this huge discrepancy between Lafite and the rest of the first growth, but that's closing now. Margaux and Haut-Brion made a big, big jump this year,' said Sleigh, referring to two other first-growth estates.
Other high-value investment wines such as Burgundies are also witnessing increased interest in the local market. These wines can fetch prices equivalent to, if not higher than, the first-growth wines on the auction block. In fact, one of the most expensive wines sold at auction so far in 2011 in Hong Kong was a single bottle of 1990 Roman?e Conti by Domaine de la Roman?e Conti (DRC) sold by Acker, Merrall & Condit at a March auction for HK$154,793.60
Many experts also believe that one of the next areas to see development in Asia will be the second- through fifth-growth wines. Kapon noted that for the price of one bottle of first-growth wine you can buy up to six second-growth wines. For collectors who don't have the capital to invest in top-tier first-growth wines, these wines offer an excellent alternative.
'I've really seen some lovely growth in values of second- to fifth-growth wines this year. In monetary terms it doesn't seem like much, but percentage wise, these wines are seeing some bloody good returns,' said De'eb. 'Many times you find people prefer drinking second- to fifth-growth wines. Not only because there is less guilt, and its more socially acceptable and financially easier, but also because they're interesting wines.'
