After the Hong Kong government announced that tax on wine had been abolished back in 2008 Hong Kong has seen its wine trade boom. It has surpassed London to be one of the biggest auction markets and is expected to over take New York, becoming the premier market in the world. Sales for the top-three largest auction houses—Sotheby’s, Christie’s and Acker Merrall & Condit—are on track to cross $200 million for the year, double that of 2009.
In May, Acker Merrall & Condit held the largest sale ever held in Asia, selling 19,000 bottles from one of the world’s best-known wine collections, the cellar of Internet entrepreneur Eric Greenberg. The sale raised HK$152 million, or $19.6 million), the second-biggest wine auction ever worldwide.
Ulara Nakagawa, writing for The Diplomat, reported last month that Christie’s generated $6.2 million in sales in its 2-day auction—where an 18-bottle lot of 2000 Lafite alone sold for $54,000. Acker Merrall & Condit’s sale generated an even higher total sales figure: $8.8 million. This month Sotheby’s held a fine-wine auction in Hong Kong on the holiday weekend in October that marks the founding of the People’s Republic of China. This raised $13.7 million and was one of 4 Sotheby’s will hold in Hong Kong during October alone.
So what is selling and who is buying? Lafite is the name on everyone’s lips, prompting President and Auction Director of Acker Merrall & Condit (and also third generation wine merchant), John Kapon to draw the unique comparison: “Lafite gets stronger each month, like a well-fed Godzilla.” The boom in auctions has been centred around the only the very finest wines, typically First Growth Bordeaux and occasional Burgundy wines. France accounted for more than half the wine shipped into Hong Kong last year, Britain was a distant second, mostly because those shipments were French wines that had already been shipped to and stored in London.
With Hong Kong successfully positioned as the hub for Asia, where most nations levy heavy imports on alcohol, there has been a growth of fine wine services. The Hong Kong Quality Assurance Agency set up a new program at the end of last year, the Wine Storage Management Systems Certification Scheme, that has so far approved a dozen companies providing top-class facilities.
Gregory Brossard, a wine buyer at Platinum Wines, has said that “It is now cheaper to drink a fine wine in Hong Kong than in France,” noting that the price of wine in France includes the standard 19.6-percent value-added tax on goods and services. “I have a big collection in France but I have a bigger collection in Hong Kong.”
Although the ranks of speculators are growing, wine experts say most buyers in Hong Kong are consumers first and investors second; buyers are very likely financing their drinking habits by buying five cases with the intent of reserving two for their own use and while selling the other three. This is also happening at En Primeur and Chinese newspaper People’s Daily has reported that buyers are boasting, “Buy two cases of en primeur. Drink one and have another two for free,” in reference to the sharp appreciation in wine values evident across the current market.
With 2010 predicted to be another good vintage it will be interesting to see how China impacts on En Primeur next year.