Fine Wine Auctions Take Off in Hong Kong

Fine wines under the hammer in Hong Kong as Asia glugs away

Hong Kong was set to hold its first wine auction today since it scrapped duty on the tipple, the latest sign of how Asia's growing thirst for fine vintages is powering the global industry.

International auction house Bonhams will host the southern Chinese city's first wine sale in a decade, as Hong Kong tries to establish itself as Asia's hub for buyers.

It is also the first auction since Hong Kong's Financial Secretary John Tsang removed a 40 percent levy on wine imported into the territory in his February budget.

For many in the industry the move was timely, since China's economic boom, along with new-found interest from Jakarta to New Delhi, means the region has become crucial to the sector's global growth strategy.

"Asian buyers have driven the price of wines through the roof," Frank Martell, Bonhams' international director of fine and rare wines, told Agence France-Presse.

Nicholas Pegna, managing director of dealers Berry Bros and Rudd, said sales at its Asian operation have increased at least 40 percent annually since the company set up in Hong Kong nine years ago.

High demand

"It has been the large growth in new customers coming to the market which has been so impressive. People are going from having no cases of wine to 5,000 cases in two years," he said.

Boris de Vroomen, chairman of the Wine and Spirits Industry Coalition here, said demand was already very high, with as much as 40 percent of fine wines sold and stored in London held by customers from China, Hong Kong and Taiwan.

"We expect the fine wine sector here within a short time to expand from HK$1 billion (US$128 million) to HK$5 billion as a result (of the duty changes)," he said.

Bonhams auction is modest by international standards, but its 246 lots are expected to fetch US$1.5 million when they go on sale at the city's Crown Wine Cellars, located in a former British army explosives bunker.

Highlights include a magnum of 1992 Screaming Eagle cabernet from California, and a double magnum of 1955 Chateau La Mission Haut-Brion, which is expected to fetch HK$160,000 (US$20,500), Martell said.

The sale is the latest of a flurry of activity marking the growing maturity of the Asian market, in particular Hong Kong.

More auctions houses and dealers are operating here, conferences and exhibitions are being held, and Asia is soon expected to have its first holder of the prestigious Asian Master of Wine title, South Korean Jeannie Cho Lee, who is based in Hong Kong.

"The tax of 40 percent was the obstacle. Now this has been removed, Hong Kong will flourish as an international wine center: the hub in Asia," de Vroomen said.

Martell said China's growing interest in wine has been the most important development in the trade in recent years.

"It has had a profound impact on wine for everyone else in the world."

Soaring costs

A case of 1982 Chateau Lafite, one of the world's top wines has risen from about HK$6,000 to HK$30,000 in the past two and half years due to increased Chinese demand, although it is not always simply due to a love of the grape.

"There is a lot of sophistication, but there are also a lot of people where wine is the next place they can claim bragging rights," he said.

Martell cited the example of some Chinese drinkers mixing their exclusive wines with the soft drink 7-Up, a practice that would shock connoisseurs.

There are also concerns the wine boom could breed complacency if it is not managed properly.

"There is a perception throughout the wine trade that 2006 wines were overpriced because it was assumed that Asian market would absorb the increase," Martell said.