CLUBHOUSE | LIQUID ASSETS
Sign of the Times
Hong Kong-based wine auctions are flourishing, but they’re not the place to find bargains, writes Robin Lynam.
W
hen Hong Kong’s wine import tax was reduced to zero in 2008, the theoretical justification was that it would establish the city as “Asia’s wine hub”.
AFP
It was never clearly stated what exactly the Government imagined a “wine hub” to be, nor any evidence presented that Asia had any need of one. Five years on though the role that we have assumed in the global wine trade is clear. In revenue terms Hong Kong is the wine auction centre not just of Asia, but of the world. That has not been the only consequence of the tax policy of course. The wholesale and retail wine trade have each expanded exponentially, although that has been a mixed The auction houses blessing. The wine storage and logistics business have cashed in since Hong Kong’s wine has also mushroomed. Low-end wines are cheaper in supermarkets, import tax was reduced to zero although savings made from the removal of the tax have generally not been passed on to customers by fine wine retailers, or by the bar and restaurant trade. Without any doubt though the principal beneficiaries have been the auction houses – most notably British auctioneers Bonhams, Christie’s, and Sotheby’s, and US wine auction specialists Zachy’s and Acker, Merrall and Condit (AMC). It was Bonhams that held the first auction after the removal of tax, but like Christies’s and Sotheby’s, while is has a strong fine wines department its business is auctions in general rather than wine in particular. Those three auction houses have realized significant multiples of millions of dollars from sales of fine wines and spirits in Hong Kong over the past five years, but they have auctions of art, antiques and other collectibles to present as well. Acker Merrall and Condit however does sales of fine wines, spirits and cigars exclusively, and in terms of revenue has been the most successful wine auction firm in the world for six of the last seven years. More than half of its profits are now made in Hong Kong and its auctions here have set world records for prices paid for fine wines with almost monotonous regularity. In November last year auctioneer and AMC CEO John Kapon brought the hammer down on sales of HK$46.8 million in a two-day auction, dominated, interestingly, not by first growth Bordeaux as would have been the case until recently, but by rare highend Burgundy. One 12-bottle case of the 1988 Romanée-Conti sold for HK$1,033,200, and three bottles of 2005 Romanée-Conti fetched HK$541,200, establishing new world auction records per bottle for both vintages of the wine. Although Bordeaux dominated the more spectacular auction results until quite recently, some disillusionment with Lafite, Latour et al seems to have set in among Mainland buyers, partly because of the proliferation of fake bottles in circulation in China and elsewhere. Interest has shifted not just to Burgundy, but also to the wines of the Rhone Valley, Piedmont and Tuscany.
We can expect many more wine auctions this year from AMC and its competitors – but is all the attention being paid to second-hand wine changing hands for preposterous sums of money necessarily a good thing? Fine wine retailers on the whole tend to think not, arguing that auction rooms are emotional places, and that extravagant bids inflate the notional value of wines that would not sell at equivalent prices through other channels. They also argue that wines sold at auction are not always of impeccable provenance. Certainly some have been the subject of law suits. Some may be fakes. Others may have been less than impeccably stored – although increasingly wines sold at auction are exchateau, or come from the cellars of serious collectors known to have looked after them properly. Auction results probably also encourage the owners of top chateaux to inflate the prices they ask for their wines en primeur. Are the prices currently being paid a bubble waiting, if not to burst, at least to somewhat deflate? One of the reasons for the intensity of auction activity in Hong Kong may be a suspicion on the part of the auction houses that the business they are currently enjoying is too good to last. Certainly the Mainland money is showing signs of getting smarter. Record prices are still being paid, but “white glove” auctions at which every lot sells are now the exception rather than the rule. Prices being paid for top Bordeaux on average are down by about 10 per cent from their peak. Bargains at auction, however, are few and far between. Some rare wines are available through no other channel, but generally speaking auctions are an expensive way to fill a cellar. It is, however, worth tracking which wines are becoming fashionable at auction, with a view to acquiring them from merchants before the auctioneers inflate the price. It’s too late for Bordeaux and Burgundy. Time to look carefully at Italy and the Rhone. Spain will probably be next.
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HK Golfer・FEB 2013
HKGOLFER.COM