Are you already paying higher prices for fine wine in the U.S because of demand from Hong Kong and mainland China? Absolutely. And if you're a first growth Bordeaux drinker, don't expect relief any time soon.
Consider the following:
- Virtually all major auction houses have gone from zero Hong Kong auctions (as of March 2008) to having a high percentage of their global sales being achieved in Hong Kong since then (when the import duty was cut to zero). In total, by the end of this month, there will have been 19 wine auctions held in Hong Kong since the duty cut.
- Almost all of the wine sold in Hong Kong is coming from the U.S. and Europe and would have otherwise been sold in those locations (with lower Asian buyer participation).
- Last week, I was in the UK and met with several major fine wine players who told me from 40%-60% (!) of their total sales is now generated from Asia.
- We're launching our own Hong Kong ecommerce site next month (see earlier post) and I just received an email today that Acker Merrill just launched their first Hong Kong Internet-only auction (both in HK$).
- The Hong Kong International Wine & Spirits Fair is coming up November 4-6, and the exhibitor list is more than double that of last year's event.
- Chateau Margaux is making its first ever visit to Asia next month for a wine dinner anyone can attend for about US$550. There are more producers than you might think who are at a very early stage of developing their brands in Asia.
- According to a story in yesterday's Wall Street Journal titled China's Taste for Luxury, "robust Asian demand almost entirely offset falling sales [elsewhere] of brandy, champagne, jewelry and watches."
- Three days ago, the WSJ's Wealth Report blog had a post titled Only China Can Save Luxury Sales in which it mentions that Bain & Co. estimates luxury-goods sales in mainland China will jump 12% this year whereas the U.S. will be down 16%, Japan will be down 10%, and Europe will be down 8%.
- The same Wealth Report blog had an interesting post on October 13 titled Chinese are the New Kings of Bling. The post notes that China is the world's second largest luxury goods market (after Japan) per a Goldman Sachs report.
Bottom line: The Chinese wine collector is already making an impact on global fine wine prices and I fully expect that they will capture an increasing share of the high end of the fine wine market, driving up prices for others in the process. The good news is that savvy collectors have plenty of alternatives to the most well known producers. Or, you can read these "tea leaves" and conclude fine wine is an interesting investment class to pursue, even if only for financing your drinking.
