20
the world, accounting for some 29%
of the global luxury spend, according
to consultants Bain & Altagamma.
43
Add to this the fact that the
consumption of wine has been growing
in China by 20% a year, and that the
Chinese have been large buyers of
fine wine, pushing up prices
44
, and
the importance of China and Asia as a
market is clear. As a result, this market
played a significant role in the slump
which has been evident since mid 2011
when the Liv-ex 100 Index dropped
19% in the 12 months to September
2012, mainly as a result of the steep
drop in the price of Château Lafite. It
was the brand of choice for Chinese
buyers and they and other buyers drove
prices up to unsustainable levels.
41
Consequently, the Chinese and Asian
markets led a period of much greater
price sensitivity which has been
affected by Chinese consumer taste
now starting to mature; less fixation
on a few big brands such as Lafite;
more muted economic growth and
government officials being instructed
by new Premier Xi Jinping to cease
ostentatious gift accepting and giving.
This has certainly had an effect on
demand for wine in China, with Chinese
growth set to slow to 25% from 2014
to 2018, a drop from 69% over the
period 2009 to 2013, taking its total
to 181 million cases consumed
45
and although this represents a slow
down, it is still an overall increase
and the signs are that China’s wine
market has begun to recover from the
impact of the government’s austerity
measures: Chinese importer ASC Fine
Wines stated in early 2015 that the
imported wine market ‘contracted
for the first eight months of 2014’.
However, in the last few months of
the year, the importer reported an
increase in imports’ and after drops
in 2012 and 2013, imports of fine wine
to Hong Kong rose by 8% in 2014.
46
The potential for further increases
in consumption remains huge, with
the Chinese currently drinking only
1.5% per capita of the volume of
wine drunk by the French and 40%
of wine now consumed in Asia being
drunk outside China, particularly in
South East Asia. Consequently, Cult
Wines feels that, “any further rises
now will be more likely to do with an
increase in Asian consumption, rather
than solely Chinese speculation”.
Cult Wines also links China strongly
with movements in the international
fine wine market, stating that the
bottom of the market was sometime
in June/July of 2014, and seeing the
reason for this as the close association
between the wine market and the
Chinese stock market, albeit with a few
months lag; “when the Chinese market
receives monetary stimulus, the wine
market is a beneficial recipient”.
Whilst the US took over the lead from
Asia in 2014, in terms of market share
of live auctions, Asia remains well
ahead in one statistic: it is still home to
much more expensive lots - at around
$6,000 per lot, around double that in
the US and four times that in Europe.
47
Although in 2014 Hong Kong was down
off its auction peak of 2011/12 after
steep increases following 2008 when
duty rates were slashed and Hong
Kong became the region’s tax free
hub, Jamie Ritchie, head of Sotheby’s
Wine Americas & Asia, points out the
continued importance of this market.
“Let’s bear in mind it’s still 55% of what
we sell globally by value. Hong Kong
bought more than four times any other
Asian region and represented 20% of
what we sold from New York and 40%
of what we sold from London”
48
.
Industry insiders also report that the
Chinese market is rebounding, with
Rodney Birrell, director of the Wine
Investment Fund noting that, “In the last
six months we’ve been selling a lot more
into China; that’s all coming back now,”
“It’s going to consumers rather than just
presents for your boss,” he remarked.
“That gives a lot more longevity – if it’s
consumers then they’re drinking it”
51
.
EUROPE
Europe and the US have
long been the traditional
markets for fine wine investing and
with recent figures showing that
Europe is producing most UNHWIs by
percentage and the US by number, the
capacity for wealthy collectors is strong.
Indeed, Europe held onto the top
spot with the most new entrants into
the ultra-wealthy bracket over 2014.
Consequently, Europe is an established
market, where both new and old wealth
have the spending power to drive
prices in competition with the newer
wealth powerhouses like China. The
tradition of fine wine in Europe also
suggests a store of knowledge and
expertise which adds to the attraction.
The head of Sotheby’s Wine Americas
& Asia believes the three fine wine
auction hubs of London, New York
and Hong Kong are equally important.
In 2014, Sotheby’s sale totals were
US$28.8 million in Hong Kong, up
13% on the previous year, followed
by US$21.1m in London (+6%) and
New York on US$15.4m (+23%)
48
.
In the UK, wine consumption is set
to increase by 5.5% in the next four
years, after being in decline since 2009,
according to The IWSR and Vinexpo.
This forecast is partly based on
the assumption that duty tax will
not rise so steeply in the next few
years, following the government’s
decision to scrap automatic
increases in its annual Budget.
50
Currency considerations are also
favourable for UK investors, if not so
much for those in the Euro zone: At
the end of February 2015, sterling had
strengthened to give a gain of around
10% against the euro from the last
en primeur in May 2014. This should
stimulate interest in the UK – still one
of the principle buyers of en primeur,
and undoubtedly the biggest when it
comes to private collectors, according
to Liv-ex director Justin Gibbs.
53
In fact, 5 of the top 10 wine consuming
nations in the world are currently
European – France, Italy, Germany, UK
PREFERRED
COLLECTIONS
42
2013
2012
2011
34%
44%
57%
WATCHES
32%
31%
19%
CHINESE
CLASSICAL
ART
29%
23%
17%
WINES
