To the delight of a growing number of Chinese wine enthusiasts, the year 2008 saw a range of major auction houses hold successful wine auctions in Hong Kong. In May the US firm Acker, Merrall & Condit’s first Hong Kong auction fetched HK$64 million (US$8.2 million), a record for any wine auction held in Asia at that time. Others followed, including Christie's which in November held its first wine auction in Hong Kong since 2001.
Fine Wine as a Liquid Asset
Wine has not escaped the effects of the financial crisis, but it has held up better than other forms of investment. In October, the London International Vintners Exchange (Liv-ex), the London-based electronic exchange for fine wine, was down 7.6 percent on the year to date, in contrast with the 50 percent fall recorded by Hong Kong’s Hang Seng Index.
After a period of rapidly increasing prices, the credit crunch has provided a corrective, with reserve prices at auctions coming down from their previous highs, heralding more of a buyer's market. However, Greg De’eb, general manager of wine storage company Crown Wine Cellars, told Hong Kong’s Sunday Morning Post reporter Hazel Parry that while there has been a correction in prices, fine wines “have been holding their value very well in the current climate.”
Acker, Merrall & Condit’s second auction, held in November, fetched a relatively modest HK$52 million ($6.7 million). Auction director John Kapon remained optimistic, telling Hazel Parry in the South China Morning Post, “There wasn’t the magic we had in May, but it went very well and I think everyone was pleased given the doom and gloom out there.”
Christie’s November auction fetched HK$31.54 million ($4.07 million), topping the pre-sale estimate of $3.2 million, with 94 percent of lots sold. The auction included a rare collection of vintages from Chateau Latour’s reserve cellars, including the last magnum of the 1900 vintage, which sold for HK$192,000 ($24,886).
A 12-bottle case of the 1961 vintage, considered one of Chateau Latour's greatest wines, fetched HK$1.32 million, a world record price at auction for that particular vintage, said Christie's. A 12-bottle case of the 1959 vintage reached a record HK$900,000.
Wine as a Long-term Investment
While wine investments are experiencing some turbulence, trade experts maintain that wine proves its worth over the long run, and that it always bounces back after similar falls in past recessions, such as the Asian financial crisis of 1997. According to John Kapon, “Wine has always held its value. In my 10 years in business, it has gone only one way, and that’s up. It’s just a question of buying from the right producers and the right vintages.”
Given the facts of the finite supply of fine wines and increasing demand, such industry observers believe wine values will resume their upward trajectory once the current financial crisis evens out.
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