The Cave, a bunker-like complex near the border of Hong Kong
Since the lifting of wine import duties in 2008, Hong Kong has quickly emerged as one of the world's top wine markets. With imports surging to US$858 million last year, Sotheby's holding a string of 15 sell-out wine auctions in a row, and Christie's predicting that the astronomical spending of Chinese wine lovers will help Asia dominate the wine market for the next 20 years, it's not surprising that demand for bunker-like wine storage facilities has boomed in Hong Kong in recent years. From Bloomberg:
Fergus Fung swipes his card across a sensor and waits as his face is scanned by a computer to match his profile. A steel door opens and the Hong Kong entrepreneur enters a vault that holds his treasure of Bordeaux and Burgundy.
This is the Hong Kong Wine Vault, one of more than 15 repositories that have been set up in the past three years in the Chinese city as it overtook London and New York as the world’s biggest auction market for top wine labels like Chateau Lafite, Domaine Romanée-Conti and Krug. The temperature is a constant 13 Celsius and humidity is 75 percent, protected by 4 inches of insulation on the walls, ceiling and floors.
“[The Hong Kong wine market has] exploded, and you need logistics to support that,” said Robert Sleigh, who runs Sotheby’s Asia wine business. “Now there are world-class wine storage facilities in Hong Kong.”
The city needs them. Temperatures can soar to 35 degrees Celsius, with relative humidity near 100 percent, factors that could render a $75,000 bottle of Chateau d’Yquem undrinkable. Moreover, few collectors have room for cellars, with 99 percent of the population living in apartments.
Interestingly enough, as the article notes, some of the most free-spending wine buyers in Hong Kong are not locals at all, but come from the Chinese mainland. As we've seen over the past two years in particular, mainland Chinese collectors have no compunction about going well above estimates to bring a particularly prized bottle back home from a Sotheby's or Christie's auction across the border, often presenting these bottles as gifts or, as with art or gold, stashing them away as hedges against growing inflation. Looking to tap the trend of mainland Chinese spending millions on wine in Hong Kong, some enterprising wine storage companies -- such as The Cave -- have opened up near the Hong Kong border.
This story brings up interesting questions, and addresses an opportunity in mainland China that has yet to be fully developed. Mainland Chinese wine collectors can't expect to store their hard-won auction prizes in sub-par conditions, yet the standards for the wine storage facilities that do exist in China have not been established to the same level as those in Hong Kong or Europe, meaning truly world-class facilities are few and far between. As Torsten Stocker of the Monitor Group recently told Jing Daily, one trend he expects to see exploited by entrepreneurs in China over the next few years hinges on personalized cottage industries such as "wine storage, driver training or yacht interior design and maintenance," aimed squarely at the country's new rich, who are less well-versed in these services than their counterparts in Hong Kong.
So are we likely to see the bunker-like storage facilities seen in Hong Kong, with their facial recognition "gimmicks" and precise temperature control, show up in the Mainland as well? While they're already appearing, albeit slowly, in the form of Chateau Guiraud's spanking-new Shenzhen facility and a handful of facilities in top-tier cities, they are few and far between. However, the wine business is booming and Chinese buyers are increasing by the day, so it's unlikely that we won't see the wine storage industry blossom in mainland China. At least, that's if mainland Chinese wine collectors are truly serious about protecting the value of their investments.