He Wei Qi, a businessman from eastern China's Zhejiang province, says he routinely pays more than 30,000 yuan ($US4,500) for a bottle of wine to entertain guests.
“A price tag of more than a million yuan a bottle - that does more than show off your wealth, it shows you have good taste,” He, 38, said while attending a three-day Hong Kong wine and spirits exhibition that drew about 700 companies from 29 countries and regions. “We don't care how outrageously expensive the wines are.
Wine sales in the city by Sotheby's and Christie's International will raise more than in New York and London combined this year, the top two auction houses said, with vintage Chateau Lafite selling in excess of $US200,000 a bottle. Sales at Hong Kong's auctions have more than quadrupled since the city cut duties to zero two years ago.
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“What we've seen emerging in the last year are people paying virtually any price for wine,” said David Elswood, Christie's London-based head of wine. “That's not investment. That is just uncontrolled spending.”
Buyers from China, where the number of billionaires rose more than 60 percent from last year, may double auction sales in Hong Kong next year, he said.
“Red wine is better than stocks,” wine merchant Alex Yu said while touting a HK$80,000 ($US10,321) 5-litre bottle of Chateau Mouton Rothschild. “Chinese wine lovers are pushing up prices.”
Vintage Lafite
Three bottles of Chateau Lafite's 1869 vintage sold for a record $US230,000 each on October 29, 28 times Sotheby's top estimate before the auction.
Chinese collectors in Hong Kong, China and Taiwan hold about one in four bottles of fine or rare vintage wine globally, according to Crown Wine Cellars, which stores about HK$1 billion of wine in a network of converted ammunition bunkers in Hong Kong. Total consumption has doubled in China in the past five years, with red wine accounting for 75 percent of demand, according to a March report by Citigroup.
Wine isn't the only product Chinese buyers are mopping up. The fastest growth of any major economy and an appreciating currency have led them to pick up properties in London and artwork in New York. In Hong Kong, mainland Chinese demand drove luxury property prices past the 1997 peak, spurring the government to warn of an asset bubble.
1,400 Percent Markup
Asia's wine market will expand four times faster than the rest of the world, said Robert Beynat, chief executive of wine exhibition organiser Vinexpo Asia Pacific. Much of the growth will come from China, which is the final destination of a “large part” of the wine imported into Hong Kong, he said.
Liu Xue Biao, a wine merchant from Shenzhen, said that wine he buys in Hong Kong for about $US3 a bottle can be sold in mainland China for 300 yuan, a 1,400 percent markup. “They are willing to pay just about any price,” said Liu, accompanied by two female assistants carrying suitcases for their purchases.
Imports by Hong Kong merchants jumped to $US600 million in the first nine months, more than the whole of last year. The value of auctions reached $US120 million this year, almost double the $US64 million in 2009, according to the government.
Sotheby's had to issue tickets for the first time for its October 29 wine auction at the Mandarin Oriental, when it offered almost 2,000 bottles of Lafite shipped directly from the Bordeaux chateau's cellars.
No Catching Up
The sale beat the auction record for a single bottle set in 1985 in London, when publisher Malcolm Forbes paid 105,000 pounds ($US169,000) for a 1787 vintage.
“New York and London aren't going to catch up,” said Richard Sleigh, who moved to Hong Kong from New York in August to run Sotheby's Asia wine business. “People like the fact that the wine is here in Hong Kong. You just go and pick it up.”
Sotheby's sold $US52 million of wine in eight auctions this year in Hong Kong compared with a combined $US24 million so far in New York and London, previously the world's biggest- and second-largest markets. The New York-based company had 11 consecutive sold-out wine auctions in the Chinese city.
The Hong Kong sales are an indication of how far mainland Chinese buyers have come since the 1990s, when they would drink Coca-Cola with wine and merchants hawked unwanted vintages to them, said Gregory De'Eb, general manager of Crown Wine Cellars.
“Through their own aggressive tasting, they have built a better knowledge of what suits their palettes,” De'Eb said. 'Inflating a Bubble' While the Chinese are the ninth-largest consumers of wine globally, the spirit accounts for only 2 percent of alcohol drunk in the country, according to Citigroup analysts.
That's changing as wine starts to win favour compared with the traditional Baijiu and Maotai liquor. In 2008, Domaines Barons de Rothschild (Lafite) agreed to develop more than 25 hectares of vines in Shandong province with Citic Group, China's biggest state-owned investment company.
The burgeoning wealth is “inflating a bubble” in wine, said Christie's Elswood. “When you're paying four, five times or even more than the reference price then you have to seriously question the market knowledge of that buyer.”
At Sotheby's April 3 auction in Hong Kong, a 12-bottle lot of Chateau Latour 1982 fetched HK$338,800 or $US43,649. About two weeks later, New York-based Tribeca Wine Merchants ran a newspaper advertisement offering the same for $US2,250 a bottle.
“Westerners drink wine slowly as a way of enjoying life,” said He, strolling around the Hong Kong exhibition holding a glass of wine. “Just look around you. Mainland Chinese tilt the glass and pour it straight down the throat.”
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