Sotheby's sales reinforce Hong Kong's position as fine wine hub

The fine wine auction boom in Asia has hit a new high after two Sotheby’s sales at the weekend raised more than HK$100m (US$13m).

The two auctions – including the cellar of collector Marcus D Hiles and the sixth instalment of the cellar of an unnamed ‘Great American collector’ – sold out in their entirety.

That means that nine consecutive Sotheby’s Hong Kong fine wine auctions have been 100% sold in the last 18 months, with the vast majority of items in the last two sales exceeding their high estimates.

‘Prices during the last two days of sales were exceptionally buoyant, linked to the stupendous quality and condition of these two great private collections,’ said Serena Sutcliffe MW, Sotheby’s worldwide head of wine.

‘Pétrus today was on fire! All the First Growths, in all vintages, fetched astonishing prices, with the saleroom and the telephones going into battle for the amazing large formats.’

The sixth part of The Classic Cellar from A Great American Collector raised HK$57.3m, taking the cumulative total fetched by the collection to HK$266m.

Pétrus led the charge at the weekend sale, accounting for the eight most expensive lots, led by three double magnums of 1989 at HK$726,000, nearly double their high estimate.

Top-end Burgundy led the highlights from the Hiles cellar, with a case of 2005 Romanée-Conti 2005 fetching the highest price of HK$1.8m, 50% above its high estimate.

Other DRC wines, including older vintages of Romanée-Conti and La Tâche 1999 and 2005, made up the remainder of the top ten.

Next on the Sotheby’s Hong Kong calendar is a sale of Lafite vintages from 1869 to 2009 direct from the château on 29 October, followed by another Bordeaux sale from SK Networks on 30 October.

Source: Decanter.com

The Evolution Of the California Wine Industry

The association of the California style of wine with deep flavors, forward fruits, high alcohol and a hint of oak, is a thing of the past. However, its a common belief that America witnessed an increase in the revenue of the wine industry, in recent times. The U.S. and Canada were previously accused of favoring beer and spirits over wine, till the magical effects of wine were discovered by the present generation. The burgeoning California wine industry has an origin, prior to the Prohibition in the 1920s. Over 140 wineries had sprouted all over the Napa Valley alone, in 1889.

The Spanish government banned wine grape cultivation in Mexico after the wine industry started competing with Spanish imports, in the late 16th century. The effects of the prohibition were evident in Mexico till the 20th century. The California missions, throughout the 18th and 19th centuries, needed wine on a regular basis. Fr. Junipero Serra at the Mission San Diego de Alcala planted the first vineyard of California in 1769. Fr. Serra brought the Mission grape to California, supposedly from cuttings brought from South America. Though, initially this grape was not considered to be ideal as a table wine, by the mid nineteenth century over 4,000 acres were cultivated around the missions.

Immediately after the Santa Cruz Mission, in 1804, vineyards were planted throughout California. Owing to the deforestation by the lumber industry, vineyards sprouted up on the Santa Cruz Mountains in the following years. Padre Jose Altimira planted several thousand grape vines at the northernmost mission, twenty years after that. Los Angeles had its first European table grape varietals plantation cultivated by Jean-Louis Vignes, in 1833. Richard Henry Dana discussed the wine of early California in his historic account of life on the California coast, in 1934. George Calvert Yount planted the first vineyard in Napa Valley, in 1836.

In the mid nineteenth century, most of the table wines consumed in California were Portuguese imports. Portuguese red wine, cooked in the sun on sailing ships and inadvertently oxidized, was made palatable by sweetening them. This led to the commercialization of Madeira wines, one of the most preferred wines in America. Till date, whenever wines take on a tinge of brown because of being old or due to poor cellaring, they are said to be maderized.

However, consumerism has played a significant role in determining the quality, quantity and even the process involved in wine making. The English designed a rating system for French wines in the eighteenth century and also created Sherry and Madeira. Consumerism steered the California wine industry and later the market determined that the wines should be a little sweet and smooth on the palate. In addition, the market demanded that the acid level should be low. Thus, owing to these requirements, the wine industry had to turn grapes used for making table wines for processing several base wines.

Unlike cheese lovers, wine lovers have better options, as they can find good wines in the supermarkets, provided they know which ones to choose. The market is the most powerful factor that determines not only which varietals will sink or swim, but also which ones will thrive.

NZ Wine sales to Hong Kong Jump

New Zealand's wine exports to Hong Kong grew 30 per cent in the six months to June, despite the global gloom, and the region has huge potential for further growth, says a Hong Kong trade executive.

"Even last year, when everywhere was suffering from the financial crisis, New Zealand wine exports to Hong Kong rose 8 per cent amounting to US$5.4 million (NZ$7.4m)," said Benjamin Chau, deputy executive director of the Hong Kong Trade Development Council.

Hong Kong could provide the springboard Kiwi winegrowers needed to significantly boost wine sales in the region, he said in Auckland last month.

Since the Hong Kong government abolished duty on wine in February 2008, its wine imports have risen 80 per cent. That figure includes a sharp rise out of New Zealand.

Central to growing the Kiwi trade has been attendance at the annual Hong Kong International Wine & Spirits Fair. In 2008, eight Kiwi wineries attended; last year that number had grown to 40.

Wine exported to Hong Kong is not just for local consumption – some is re-exported to other Asian countries, particularly China.

"Among all Asian regions and countries, [our] per capita consumption of table wine is highest," Mr Chau said.

"Annually, every person in Hong Kong consumes 3.7 litres of table wine."

By comparison Chinese consumers drink 0.38 litres of wine a year a head, but China is the world's fastest-growing market and every year a further two million people reach middle class levels of disposable income.

"Chinese used to be heavy drinkers – we consumed more beer and strong liquor – but now people are more health conscious and there is exposure to the Western World.

"They would like to adopt the foreign way of life so this is why more table wine is being consumed, particularly red wine." Total wine consumption in China would double within three or four years, Mr Chau predicted.

"For the entire Asian market we expect the market will grow at a rate of 10-20 per cent every year."

New Zealand Winegrowers chief executive Philip Gregan said there had been a lift in total Kiwi wine exports to Asia – increasing from less than $10m annually five years ago to more than $60m today.

"It wouldn't surprise me if they were $100m during year end next year."

Another advantage to selling into Asia was that consumers preferred a slightly different mix to the sauvignon-dominated markets elsewhere.

"We can sell more red wines in there, more pinot noir, more syrah, more merlot, more cabernet sauvignon. It's a great opportunity for some of our other producers."

Romanee-Conti Lifts Sotheby's $13.8 Million Hong Kong Wine Sale

Burgundy’s Domaine de la Romanee- Conti led Sotheby’s two-day wine sale in Hong Kong, where Asian buyers branched out from top Bordeaux labels like Chateau Lafite Rothschild to extend their dominance in the global wine market.

The auctions tallied HK$107 million ($13.8 million) including fees, a record for Sotheby’s in the city, which may overtake New York this year as the world’s biggest wine-auction market. All 1,366 lots were sold, Sotheby’s said. The presale high estimate for the two days was HK$74 million.

“The Asian buyers who are driving the international wine market right now are broadening their horizons,” auctioneer Robert Sleigh, Sotheby’s head of wine for Asia, said in an interview after the sale. “We’ve now had something like 6,000 consecutive lots sold in almost 2 years in Asia. I’ve never seen anything like that” said Sleigh, who has worked in the auction house’s wine department for 14 years.

Romanee-Conti dominated the first day’s sale, from the cellar of Texan property developer Marcus D. Hiles, with the priciest 10 lots all coming from the estate and all being bought by Asian collectors. The top lot was a case of Romanee-Conti 2005 that sold for HK$1,815,000, against a presale high estimate of HK$1.2 million. A case of the same vineyard’s 2002 fetched almost HK$1.1 million, more than double its HK$540,000 high estimate.

The top lot on the second day, from the cellar of an unidentified American collector, was a set of three double magnums of Chateau Petrus 1989 that sold for HK$726,000, compared with a high estimate of HK$400,000. Sale prices include a 21 percent buyer’s premium, Sotheby’s said.

Art to Follow

The wine sales were part of Sotheby’s 3,200-lot Hong Kong auctions this week that the company estimated will raise up to HK$1.6 billion ($210 million). Sessions beginning today include contemporary Asian art; a 6.4 carat pink diamond; antiques; jewelry; and paintings by Chinese masters including abstract artist Zao Wou-ki.

The auctions will show whether rising wealth in China is continuing to drive a recovery in art prices. Sotheby’s said the 7-day event has 800 more lots than its April auction in the city, which took a record HK$2 billion and revived prices in most categories to pre-credit-crisis levels.

The wine sales are part of four wine auctions Sotheby’s is holding in Hong Kong this month, including one from the cellars of Chateau Lafite on Oct. 29 with vintages from 1869 to 2009, followed the next day by a collection of investment-grade Bordeaux from the wine fund of SK Networks, the trading arm of one of South Korea’s largest conglomerates, at the Mandarin Oriental hotel.

Chinese appetite for top Bordeaux and Burgundies such as Lafite, Petrus and Romanee-Conti helped Hong Kong’s wine auctions outperform those in New York in the first half of this year. Sotheby’s said it has sold every lot at its past nine wine auctions in Asia.

Source: Bloomberg