Auction Houses Upbeat About Prospects For Hong Kong, Mainland China Wine Market#
Last year, Hong Kong was the undisputed champion of the wine auction market, as growing demand from wealthy mainland Chinese and seasoned Hong Kong collectors emboldened auction houses to hold 30 wine sales in 2009. As we wrote in our 2009 Wrap-Up, though many wine industry experts expect the market to slow down somewhat in 2010, all eyes were on the first wine auction of this year, the fourth installment of the wildly popular Sotheby's "Great American" collection. Though notable for the quality of the wines up for grabs, this auction is also noteworthy for being the first-ever standalone Sotheby's wine auction to be held in Hong Kong.
As expected, the results of this auction were exceptional, with sales of HK $52.9 million (US $6.8 million) far exceeding the high estimates of HK$40.8 million (US$5.2 million). As Luxury Insider pointed out, this is the highest revenue ever generated from a single day of Sotheby's wine sales, with auctioneers even having to take bids from a secondary sale room to cope with the unprecedented level of demand.
The 10-hour sale yesterday of more than 800 lots tallied HK$52.9 million, beating host Sotheby’s own forecast of HK$40 million. Bidders at the Mandarin Oriental Hotel drank glasses of Louis Roederer Blanc de Blanc 2003 and Haut Brion 1998 as they competed with online bidders for choice items, such as twin 1.5- liter bottles of Chateau Petrus 1982 that fetched HK$435,600, against the lot’s top estimate of HK$130,000. Estimates don’t include commission.
As economies such as China show signs of inflation while the government increases spending to sustain growth, some buyers are converting their currency into assets such as fine wine to protect their wealth, said Agnes Hon, a private-equity investor and wine collector who bought several lots at the sale. Others buy simply to enjoy their purchases, said Kevin Ching, Sotheby’s Asia chief executive. That’s especially true of mainland Chinese buyers, who won at least a quarter of the bids at the auction, he said in a telephone interview.
“Many Chinese buy to drink, entertain and impress,” said Ching. “That’s good, because it means they would have to replenish their stock and buy more often.”
The "Great American" series has been a great success for Sotheby's. As China-Wines noted, "all four of Sotheby’s Hong Kong wine auctions have been 100% sold and the prices achieved have been above the high estimate." Clearly, the predominantly Chinese collectors at these Hong Kong auctions, whether they buy as a hedge against inflation or intend to drink the wine, know what they want and are willing to get it at any price -- always a good sign for auction prospects. Although it's unlikely that the Hong Kong wine auction market will be able to sustain the intensity there that we've seen since the Hong Kong government scrapped wine tariffs (the primary action that opened the wine floodgates, so to speak) in 2008 indefinitely, as long as auction houses can continue putting together sales of high-quality, rare wines, it looks like there will be no shortage of willing buyers in Hong Kong any time soon.
Keep an eye on upcoming Sotheby’s wine auctions in Hong Kong, set to take place on April 3 & 4.