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China’s Wine Funds

Reuters is reporting that China’s booming economy is launching a new crop of sophisticated wine investors. The Chinese now not only relish top Bordeaux, they’ve started buying into wine funds that showcase top French Vintages. The Chairman of Crown Worldwide Holdings, James E Thompson, is quoted as saying: “We’re seeing a lot of people who are establishing wine investment funds where you buy into it, and they will buy the wine and it’s got appreciation value.” Crown Worldwide Holdings is head quartered in Hong Kong and provides transportation, relocation services, logistics and storage services for wine from offices in 55 countries. (It is the world’s largest privately-held group of international moving companies.)

Thompson has seen his cellar’s collection of fine wines grow four-fold, since Hong Kong scrapped taxes on fine wines in 2008. The tax-free benefit turned Hong Kong into a prime place for wine storage, auction and trading.

CMG (Chateau Management Group) launched the first ever Asia wine fund in 2002 and has offices in Hong Kong, Tokyo and Bordeaux . Its first two wine funds – topped by the ’82 Latour and ’86 Lafite – turned in annual returns of 15 to 17 percent. Its fund size has since grown eight times over, now worth over $7.1 million. Some of CMG’s finest wines are stored in Hong Kong, at a former British war bunker that houses the world’s priciest vintages. The most expensive resident wine in their underground cellars is a 75cl bottle of 1869 Chateau Lafite worth $234,000. There are only two bottles of it in the world – and both of them are stored in Hong Kong.

Back in October 2010 Societe Generale Ltd, a leading French financial institution, announced plans to launch a wine fund in China. It will be the first overseas financial group to issue a Bordeaux wine fund on the Chinese mainland. Societe Generale received approval to start wine funds on the mainland under the qualified domestic institutional investor (QDII) scheme. The Societe Generale Bordeaux wine fund is privately offered. Investors tend to be high-end clients of the private banking business. They can choose when to invest and authorize Societe Generale to sell their wine at auction at a time of their choosing. Societe Generale was one of the first foreign banks to launch its activities in China, when it entered the Mainland in 1981. It now has branches in Beijing, Shanghai, Guangzhou, Wuhan, Tianjin and Hangzhou. At the end of 2006, Chinese financial markets fully opened to Societe Generale group, registered as a local corporation in 2008 and became the first French bank providing individual banking services in China.

Earlier in the month I blogged about the Shanghai Wine Exchange – China’s own version of Li-vex. The Shanghai International Wine Exchange is an internet platform dealing in fine wines. The China Construction Bank Corporation (CCBC), is working together with brokers to offer packages of wines to high net worth individuals, those with assets of RMB5-10m (around USD$1.5m).The membership only website is open to international investors across the world and the government, via insurers, will underwrite the wines.

Doubtless we will see more and more interest in fine wine coming from mainland China . . . I’ll keep you posted.

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2 Responses to China’s Wine Funds

  1. China’s booming economy is ripe to launch a new crop of investors this is a wine to celebrate things, he is our basis for rapid economic development, to grasp the opportunity oh

  2. Nick says:

    Agreed! Celebration and gift giving are one of the areas that a lot of fine wines are bought for in China . . . Chinese New Year in particular