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Delhi Wine Club
Hong Kong King of Wine Auctions

Posted: Tuesday, 21 September 2010 11:00

Hong Kong King of Wine Auctions

Due to the unprecedented surge in demand by the Chinese buyers for top quality French wines, Hong Kong is fast becoming the capital of global wine auctions, with the 2-day  event last weekend by Acker Merrall & Condit, fetching $ 8.8 million and Christie’s netting US $ 6.2 million during the same weekend, both selling every bottle on offer.

The very first auction in May 2008 after wine sprang out of the shackles of taxes due to the prudent decision by the Hong Kong government, fetched Acker $ 8.2 million showing the pent up demand, with the total collection for the two actions in the first year being $14.9 million.

The auction in 2009 brought Acker $20.7 million despite the reeling world recession. But the current year’s performance seems to have opened the flood gates with $ 43.3 million worth of wine auctioned by this company alone-including the figures for the last weekend. With two more auctions scheduled for November and December, the leading auctioneer might well post a growth of 300% over last year, with the total auction amount flirting with $60 million.

The previous Acker auction in May 2010 fetching $19.5 million was the largest wine auction ever held in Asia and the second biggest wine auction of all time worldwide. Their US $8.8 million auction last weekend titled East Meets West, was the second biggest wine auction ever held in Asia.

Highlighting the penchant of Chinese buyers for top chateaux wines from Bordeaux Acker’s CEO John Kapon says, “The continued and increasing strength of our sales here in Asia highlight the increasingly sophisticated taste of wine collectors in Asia. The vitality and persistent strength of the growing economy in Hong Kong and China cannot be ignored.’

Serena Sutcliffe MW, head of the wine department at Sotheby’s reportedly explains the phenomenon as ‘partly aspirational as wine is part of the luxury western lifestyle and Asians feel they’ve missed out. They’re also passionate about food, and wine is an obvious follow-on. It’s also become an important part of the culture of business entertaining.’

Sotheby’s, Christie’s and Acker Merrall & Condit, the top three wine  auctioneers expect that the global wine sales through auction may clock a record $200 million in 2010, which would be more than twice that of last year, due primarily to the increase in sales of the top quality French wines to the Chinese bidders.

If one were to link the state of global recession with the auction sales, the slump that started a couple of years ago is way beyond being over and is into a boom period. The primary reason is the pent up demand from Chinese clients with a huge disposable income, who have become so important for the auctions that Chinese speaking staff is being increasingly being deployed to take the bids from the Chinese.

The main reason for the boom in the Asia auction market is the elimination of duties in Hong Kong. The strength of the En Primeur 2009 has been also a big factor in the increased interest. The common perception about the fine collectable wine demand in China and India has borne result in Hong Kong. Unfortunately, the high duties in India preclude satisfying the potential demand and trigger sales that could be even higher than in Hong Kong because of the bigger investment potential, the volatility and increasing volumes of the stock markets are a reliable indicator.

It may be a conjecture but if the Indian government kept duties for high priced wines (say higher than $500 a bottle- or Rs.20,000 a bottle) at a nominal 20%, there could be a conservatively estimated  potential market of more than a $100 million of investment grade wines in auctions alone, resulting in additional duties recovery of $20 million. Add to that the one time VAT of 20% and a sum of $40 million will be added to the government kitty- and some of the liquid gold would move to our vaults-oops wine cellars!

And it would do wonders to the wine consumption and quality upgrade of palates.

Subhash Arora


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