Fine Wine Investment and Auction Trends 2011

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Jeannie Cho Lee MW shares her insights on fine wine investment and auction trends for a Hong Kong audience in 2011. Powerpoint includes buying tips and undervalued picks identified by Jeannie Cho Lee MW.

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Fine Wine Investment and Auction Trends 2011

  1. 1. Fine Wine Investment and Auction Trends November 2011 Suite 2A, L1, 222 Queen’s Road Central, Hong Kong SAR, China Tel: (852) 2815 2908 Fax: (852) 2815 2013 www.asianpalate.com
  2. 2.  A comparison of 10 most recent physical vintages of the 5 Bordeaux First Growth versus 100 of the most sought-after fine wines Key finding: Investment in blue chip wines is still worthwhile despite recent dip Prices have now corrected to June 2010 levels but are still double Jan 2007 levels Source: Liv-Ex.com
  3. 3.  An overview of the most recent physical vintages of commonly traded wines from Bordeaux, Burgundy, the Rhone, Champagne, Port, Italy and the New World Key finding:  13.23% year on year indicating that not only Bordeaux but fine wines from rest of the world are also experiencing upward price movements Source: Liv-Ex.com
  4. 4. Index Summary as of October 31 2011Index MOM YTD 1yr 5yrLiv-ex Fine Wine 50 -5.8% -9.3% -1.0% 135.2%Liv-ex Fine Wine 100 -4.5% -8.4% -2.4% 86.2%Liv-ex Claret Chip -5.9% -12.2% -5.9% 107.0%Liv-ex Fine Wine 500 -3.6% 7.4% 13.2% 96.2%Liv-ex Fine Wine -4.3% -4.2% 2.2% 105.7%Investables Over the past five years Bordeaux first-growth wines (10 most recent vintages) have experienced the highest price growth compared to other wines Recent YTD price movements confirm trend toward price correction as a reaction to extremely high pricing of Bordeaux en primeur over the past 2 years and their subsequent boosting of prices for bottled vintages Overall, global fine wines are still at an upward price movement over the past 5 years Source: Liv-Ex.com
  5. 5. Top 10: Average price per case on merchant’s price list for last five vintages (HK$) Record-breaking prices Record-breaking pricesDomaine Romanee Conti 273,868Pétrus 262,289 Bloomberg (Sep 2011): Bloomberg (Sep 2011): A case of Romanee-Conti 1990 A case of Romanee-Conti 1990Le Pin 167,689 Domaine de la Romanee-Conti sold Domaine de la Romanee-Conti soldLeroy 154,668 for around HK$193,000 per bottle in for around HK$193,000 per bottle in Acker, Merrall & Condit Acker, Merrall & ConditLafite 127,685Ausone 108,324 Decanter (Oct 2010): Decanter (Oct 2010): 33bottles of 1869 Lafite Rothschild bottles of 1869 Lafite RothschildLatour 102,986 became the world’s most expensive became the world’s most expensiveLafleur 84,423 wine sold at auction, fetching wine sold at auction, fetchingMouton Rothschild 75,280 HK$1.81 million each HK$1.81 million eachHaut-Brion Blanc 73,221 Source: Bloomberg.com; Decanter.com Drinks Business November 2011
  6. 6. Biggest Risers in top 50 Biggest Fallers in top 50Label Rank Last Year Move Label Rank Last Move YearPichon Baron 22 69 47 Le Pin 49 22 -27Vega Sicilia 36 68 32 Palmer 40 14 -26Lascombes 43 70 27 Ausone 23 9 -14Leflaive 28 54 26 Eglise Clinet 47 35 -12Léoville Poyferre 26 49 23 Yquem 24 13 -11Pichon Lalande 30 50 20 Krug 34 24 -10Cheval Blanc 7 20 13 Sassicaia 27 21 -6Clarence Haut 44 57 13Brion Rayas 45 39 -6Ducru 14 25 11 Salon Mesnil 31 26 -5Beaucaillou Haut-Brion 37 33 -4Opus One 25 36 11 Blanc Source: Drinks Business November 2011
  7. 7. Hong Kong: top auction houses’ sales and revenueAuction house No. of HK sales No. of HK sales No. of HK sales 2010 Revenue HK$ 2010 2011 planned 2012Acker Merrall & 6 6 6 493mConditBonhams 2 2 2 25mChristie’s 3 6 6 169mSotheby’s 8 6 TBD 410mZachys 3 5 5 150m Source: Drinks Business November 2011
  8. 8.  Lafite’s dominance has been reduced but it is still the world’s most powerful fine wine brand China (to some extent in coastal cities) and Hong Kong tastes have broadened over the past few years beyond Bordeaux Most promising wines to watch are still in France, mostly in Bordeaux, but Burgundy is also growing, especially noticeable in auctions in 2011 For most international fine wine brokers and auction houses, Asia now makes up more than 50% of their revenue More & more mainland Chinese are buying wine but sticking to the top 20-25 chateaux & iconic producers like DRC
  9. 9.  For investment purposes, go for left bank Medoc wines; if branching out to other regions/styles, consider Burgundy; outside of France, Italy and the US are the top countries for iconic wines with strong secondary market trading records Look for up and coming Look for up and coming For drinking purposes, in the near term, go for Cru superstars that are still under- superstars that are still under- Bourgeois level reds or St Emilion Grand Cru wines from valued such as: valued such as: good vintages that were under-rated such as 1999 or 2001 For long term drinking purposes, many petit chateaux from 2005 and 2009 made excellent wine that will be Beychevelle, Duhart Milon, Beychevelle, Duhart Milon, ready to drink in about 5-8 years time Pontet Canet, Gruaud Larose, Pontet Canet, Gruaud Larose, Rauzan Segla, Leoville Poyferre, Rauzan Segla, Leoville Poyferre, With the wine auction markets softening, early 2012 may be the time to pick up some bargains; alternatively, try Alter Ego, Grand Puy Lacoste, Alter Ego, Grand Puy Lacoste, fax/phone bidding in NYC or London auctions where Leoville Las Cases, Montrose, Leoville Las Cases, Montrose, final hammer prices are lower Pichon Baron Pichon Baron Consider cost of shipping, transport and handling when buying fine wine and most importantly, do your homework before you buy!

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