MBA Thesis: Wine Auction in Asia and Brand Equity


Published on

Explaining the Phenomenon of Wine Auctions in Asia by Luxury Brand
Concept: Identify the Potential and Risk on Brand Equity of Fine Wine

Keywords: fine wines, Bordeaux top growth, wine auctions, Asian market, luxury
brand, wine merchants, French wines, German Wine Auction

*Full version can be provided on request.

1 Like
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

MBA Thesis: Wine Auction in Asia and Brand Equity

  1. 1. APPLIED RESEARCH DISSERTATION Presented and defended by Shelley Chi Wah LAM 17th December 2010 Wine Auctions in Asia and Luxury Brand Concept:The Potential and Risk on Brand Equity of Fine Wine Merchants Master 2, Luxury Brand ManagementBusiness name: MillesimaWork placement tutor: Gerard SpataforaDissertation tutor: Paul Dawson Page 1
  2. 2. AcknowledgementI am heartily thankful to my Lecturer, Paul Dawson, whose encouragement,guidance and support from the initial to the final level enabled me to develop anunderstanding of the luxury brand management.In addition, I offer my regards and blessings to all of those who supported me inany respect during the completion of the project, including Mr. Richard Sutton,London Fine Wine Merchants- Armit, Mr. Richard Brierly, London WineMerchant Vanquish, the Ex- Wine Auction expert, Mr. Richard Bampfield MW,professional wine expertise specializes in wine appreciation and commercialconsultancy on wine trade, Mr. Phillip Wittmann, Weingut Wittmann, Westhofen,Mr. Bengel, the wine maker of Staatsweingüter Kloster Eberbach in bei KlosterEberbach, Export Sales Manager, Jochen Becker-Köhn of Weingut Robert Weil,Rheingau, Mr and Mrs. Diel, Schlossgut Diel, Rümmelsheim, Hilke Nagel, Pressand Communication from VDP German.I also extend my heartfelt thanks to my family and well wishers. Shelley LAM Page 2
  3. 3. Table of ContentAcknowledgementIntroduction 5Section 1. Methodology 6 1.1 Objective of the Dissertation & Limitation of the study 9Section 2. Fine Wines as Luxury Products 10 2.1 Defining Fine Wines 10 2.2 Fine Wines- the Luxurious Status 13 2.3 Business Model for Bordeaux fine wines 13 2.4 Bordeaux Distribution System 15 2.5 Fine Wines and En Primeur 16 2.6 Bordeaux Classifications 16 2.7 Wine Investment 18 2.8 The HNWI Consumers 20Section 3. Wine Auction – An Specialized Distribution Channel on Wine Selling 21 3.1 Wine Auction History- Who set the trend, how & why 21 3.2 Michael Broadbent MW- an important person in Wine Auction History 22 3.3 Type of Wine Auction 22 3.4 Case Study: German Wine Auctioneer VDP. Die Prädikatsweingute 23Section 4: Chinese market- the emerging interest in Auctions 26 4.1 Strong interest in Auction, but not only on wine auction 28 4.2 Luxury Brands in Chin 30 4.3 Twenty-first Century Deluxe Report 200 30 4.4 Case Study: Richemont and its Presence & Development in China 32 Page 3
  4. 4. Section 5. Brand equity: Why it is important for fine wine merchants & Chateaux? 38 5.1 The difference of Luxury Brand Management and General Marketing 40 5.2 Branding Case Study: Lafite Rothschild & Mouton Rothschild 40 5.3 The Ex-Cellar Effect 43 5.4 Branding and Wine Label with Localized Culture 45 5.5 Case Study on Krug Champagne: The Rapid Changing Consumer Behaviour and 46 Preference 5.6 The Importance to Build Up Luxury Brand Equity for Fine Wine Merchants 47 Section 6: Wine Auction in Hong Kong - a Luxury Branding Tool for Fine Wine 50 Merchants? 6.1 The Wine Auction Market 50 6.2 How Branding Affect the prices for Fine Wines 51 6.3 Release Price trends of 22 Cru Classé Bordeaux 51 6.4 Average current price by vintage (22 top chateaux) 52 6.5 First Wine and Second Wines 53 6.6 Luxury Branding- Why it is important for the fine wine merchants 54 6.7 How Wine Auction Assists Fine Wine Merchants to Build the Luxury Image? 55 6.8 Is Brand Manager Necessary for Fine Wine Merchant? 58Section 7: Understanding The Risk on Wine Auctioning 59Conclusion 64Bibliography 66Glossary 69Appendix- Management Presentation Jun 2010: Millesima Business Plan 2010-2012 70 Page 4
  5. 5. Explaining the Phenomenon of Wine Auctions in Asia by Luxury BrandConcept: Identify the Potential and Risk on Brand Equity of Fine WineMerchantsKeywords: fine wines, Bordeaux top growth, wine auctions, Asian market, luxurybrand, wine merchants, French wines, German Wine AuctionIntroductionOn 29th October, 2010, En Primeur 2009 Lafite was sold at 294% of trade price inSotheby’s wine auction in Hong Kong. With the boom in wine auction andincreasing interest in fine wines in Asia market, especially on the blue chipBordeaux and some of the well-known burgundy, fine wine merchants and Chateauxowners have recognized the potential to sell their wines to Asia market through wineauctions in Hong Kong. The primary reason to sell wines through wine auction is thefinancial earning when catching the right target audiences who are demanding forfine wines. The secondary reason is to reach the new market with a minimal start upcost, and target to build up their luxury status by cooperating with various renownedauction houses.Wine auction is a complicated topic which in all dimensions- consumers behaviour,branding, provenance, distribution, auctioneers’ pricing strategy, communication,etc. Wine Auction is usually held within a fixed time frame, for example, eight hourstime slot every quarter year. Every element in the chain can affect the outcome andthe resulted prices. Particularly in Asia, where the burgeoning interest starts toevolve, market situation is volatile and thus it very difficult to predict the outcome ofwine auctions. On the same wine brands, instead of having booming prices throughwine auctions, some of the auction houses are actually getting price results that aremore close to the trade price. The objective of this study is to give a holisticapproach to understand the potential return and risk of selling wines through wineauctions in Hong Kong, and it’s effect on the brand equity of the fine winemerchants. Page 5
  6. 6. This study will examine the wine auction situation three aspects, with a focus onAsia market. First of all, the Asian consumer behaviour in auctions will be studied.Secondly, a detail analysis on the current wine auction strategy will be examined,through analyzing the numerous wine auctions in Hong Kong from 2009 to 2010, onpricing, provenances, participates, and how the auctioneers’ decisions on lotarrangement co-related to the price results for this specific market. Finally, besidesthe monetary benefits from wine auction, this study will also give an idea on howwine auction can help to build up the luxury brand equity in new market, which is anessential element for sustainable business development, that can be built up fromtime to time, and have less influence by the market situation.Section 1. MethodologyThis applied research theme was developed during the internship in a fine winemerchant Millesima. As a fine wine merchant with more than two millions bottles offine and rare wines in the private cellar, Millesima is developing a strategy to expandto Asia market, first to Hong Kong. Consider that there would be a concern on costissue when expanding the market to Asia, instead of investing substantial amount onthe fixed cost such as office set up, retail store opening, the management ofMillesima has identified that wine auction could be a way to extend their wineselling to Asia market.After the tax and duties on imported wines uplifted in 2008, there is a trend ofincreasing imported wines to Hong Kong 1. Some of the wines are consumed in HongKong, and most of the wines are further transported to China. Due to the restrictedlaw of wine importing and the strict regulation on the wines label and descriptions,usually wine merchants deliver the wines to Hong Kong, and the sector of Hong1 CN Wine News 2010 Page 6
  7. 7. Kong to China will be on the own arrangement of the Chinese specialists 2. Thus,Hong Kong is benefited to function as a wine hub, wine trade amount is expected togo further up.In terms of wine auctions, there are more than thirty wine auctions organized by fivemajor auctioneers in Hong Kong during the beginning of 2009 to end 2010. Withstrong demand on fine wines in the Asia market, these auctioneers achieve recordbreaking sales prices on Lafite, and other various well-known top growth ofBordeaux and Burgundies. It is expected that by the end of 2010, Hong Kong willsurpass the US market and become the first wine auction destination in the world3.Although the market shows a good sign and positive prospect, the demand driven bythe high interest of Chinese is still considered to be unstable. According to Christie’sElswood, the burgeoning wealth brings out a serious question on the marketknowledge when the wines are sold four to five times more than the reference pricein the auctions. In order to understand how the wine auction can work best for thefine wine merchants to sell their wines to Asia, this study is carried out.The research methodology includes both primary and secondary research. Forprimary research, numbers of interviews were conducted with wine expertise andwine merchants in London. In addition, knowing that Germany has a long history onwine auctions, a field study was conducted in Rheingau and Rheinhessen, andinterview was conducted with the wine makers, vineyard owners and VDPpersonnel, who are actively participants in each year’s auction. List of interviewconducted is shown as below:  Mr. Richard Sutton, London Fine Wine Merchants- Armit2 XiuHua 20103 CN Wine News (2010) Page 7
  8. 8.  Mr. Richard Brierly, London Wine Merchant Vanquish, the Ex- Wine Auction expert  Mr. Richard Bampfield MW, professional wine expertise specializes in wine appreciation and commercial consultancy on wine trade  Mr. Phillip Wittmann, Weingut Wittmann, Westhofen  Mr. Bengel, the wine maker of Staatsweingüter Kloster Eberbach in bei Kloster Eberbach  Export Sales Manager, Jochen Becker-Köhn of Weingut Robert Weil, Rheingau  Mr and Mrs. Diel, Schlossgut Diel, Rümmelsheim  Hilke Nagel, Press and Communication from VDP GermanyBesides the qualitative research on wine auction market and wine trade to Asia,secondary research on existing literature 4 , analysis and news are conducted.However, there is limited research on fine wine and the luxury brand concept, andthere is only one literature study on wine auctioning, which specified on the co-relations of vintage lot arrange and sale prices. Obviously, there is a large gap onresearch study on wine auction and brand equity, which also indicate that theresearch on these areas are far behind the market trend. Thus, this study will focuson the market situation of wine auctions in Asia, and start a conceptual research toexamine how wine auction can affect the brand equity.4 Jones, G. V. and K.-H. Storchmann (2001), Jan Bentzen and Valdemar Smith (1995) Page 8
  9. 9. 1.1 Objective of the DissertationDuring June 2010, a business plan presentation was developed for Millesima(Appendix), to advise on their business development in Hong Kong. Due to thestrong their interest on the selling wines through wine auctions, and the booming ofwine auction in Asia, this dissertation further studies the opportunity and risk onselling fine wines through wine auctions in Hong Kong, and examine how wineauctions can help to develop the luxury status for fine wine merchants likeMillesima.Limitation of the studyThis dissertation focus on the fine wines and wine auction as selling channel. All thebusiness model and strategies are specially catered for the fine wine merchants, whointend to expand their market to China. Page 9
  10. 10. Section 2. Fine Wines as Luxury Products2.1 Defining Fine WinesThere is no absolute definition on fine wines. However, to qualify as fine wines, thefollowing criteria are all essential:  The potential to improve in bottle and appreciate in value: The aging potential defines the quality of the wines. The higher aging potential, the higher quality of the fine wines as aging can provide the fine wines with more balance and smoothness, which are highly appreciated by the wine connoisseurs.  Heritage, brand names and reputation: in additional to the wine quality, brand name and heritage definitely represent the personality of wine. Wine appreciation is subjective, and consumers usually form connection with the wine if the brand image are communicated in the right way. However, branding should not overwhelm the wine quality and be over-addressed.  Storage condition Fine wines are fragile, especially after a few years of aging. To keep the wines in perfect condition for future drinking, the storage is very important. Fine wines are always stored in temperature controlled warehouses with minimal movement.  Provenance: provenance means the origin. Fine wines are limited in quantity and highly sought after. Due to the high demand on fine wines in different markets, some of the fine wines are travelled around, e.g. shipped from France to North America, then transfer to new market such as Hong Kong and China. Page 10
  11. 11. The transport of the fine wines will increase the risk of bottle-shock, due to the trauma and volatility of the bottle.  An active secondary market: fine wines are usually with high demand. As the quantity are limited and are drunk every year, fine wines that has aged for a long time are usually highly sought-after. An very active secondary market encourages the transaction of fine wines and create the return in wine investment.  Track records on investment value Wines can be seen as a commodity for drinking. However, for fine wine, it is more than a commodity. The trading and investment on fine wines have raised the need for price analysis. All the well-known fine wines with investment value usually analyzed with tracked records, done by some exchange company in United Kingdom, e.g. London International Vintners Exchange (Liv-ex).2.2 Fine Wines- the Luxurious StatusFine wines should be marketed as luxury products, based on the followingcharacteristics:  Limited production Although there is no definite definition on fine wines, to be considered as fine wines, it must have the quality, such as fruit concentrations, good balance, complexity of the aromatic characteristics, good structure and long finish. To qualified as fine wines, the wine making must be very precise, and wine must not be made under mass production. The mass production on the grapes will decrease the concentration of the fruit. Without concentration of the fruitness, wines can never achieve the quality standard of fine wines. Thus, quantity of the production are always under strict controlled, produced in low quantity, to ensure the wine produced from the best grapes, with the Page 11
  12. 12. best aging potential. In Bordeaux wines, only the very top end is concerned with less than 0.1% of the overall wine production. Scarcity Wines are commodities for drinking pleasure, regardless the price. Even the most high priced wines are always for future drinking, although the drinking period may last for decade. Since only fixed quantity is produced each year, when the time goes by, the fine wines will be consumed and availability will only go down. Therefore, some good vintage fine wines are always highly sought-after. As the quantity is rare, investors can always set higher re-sell price to achieve better return. In simple term, the fine wine prices are driven by a small group of leading brands, and the quantities diminishes over time when wine is consumed. Complexity Fine wines are like the hand-crafted luxury goods. The quality of the fine wines highly linked to the personality of the wine maker, and the land. Fine wines do not have fixed formula on production, every wine is highly tailor made according to the climate and environmental situation. Besides, fine wines have the complexity to show the characters. Based on difference brand names, producers, appellation, classification, vintage quality, fine wines can show the dynamic nature, which attract wine lovers attention to understand more and to find out the background behind the fine wines. Heritage Fine wines are always attached with the stories behind the brands, especially for Bordeaux wines. The history, the owner, the wine makers, and the land, all contribute to the heritage of the fine wines, which help to express the wine personality and indirectly help to form personal linkage with the wine lovers. Page 12
  13. 13. 2.3 Business Model for Bordeaux fine winesBordeaux is known as the capital of fine wines. Compared to total seven hundredmillion bottles of production each year, fine wines only occupy around thirtymillions bottles, with estimated yearly turnover over two billion euro (CIVB, 2009).However, although Bordeaux is the biggest producers on wines, the fine wineportion with high investment value are less than 10% of the total quantity. The winetrading in Bordeaux is very unique and complicated. It involves various partieswhich play different roles to contribute the success to the market5.2.4 Bordeaux Distribution SystemBordeaux has a specific mechanism to sell their wines. Usually, after wine is made,it will be stored in barrels for eighteen to twenty four month before bottling andselling to the market. In this stage, producers already start selling their wines whenthe wines are still in barrels. En primeur, or wine future, is the name for this form ofselling. Basicially, en primeur offers the customer an opportunity to invest in aparticular wine before it is bottled. And on the other hand, Chateaux owners orproducers can get their cash in advance, so as to invest again in next vintage winemaking, such as preparing the equipment for next vintage, or hiring newprofessionals for improving the wine making process.For producer, they can be benefited from the advanced cash flow system and have aguarantee on certain sale level of the product. For consumer, buying en primeurgives them the opportunity to secure the rare wines which are highly sought after infuture. The purchase price of en primeur is usually lower than the price of the winesafter bottled in two years time. One wine investment, en primeur has an veryimportant role as it has the highest potential return based on the relatively lowerpurchase price before the wines are aged. However, due to the unknown evolution infine wine itself when aging, buying en primeur for investment also has the highestpotential risk, and thus requires professional advice before investment.5 Jane Anson (2007) Page 13
  14. 14. In terms of the distribution, Bordeaux has an unique system with several key partieshandling specific roles and duties. It can be simplified as below:  Vineyard / Estate owners or wine producers: This is the most important party on the success of the fine wines. It involves professional experience on grapes planting, wine making, blending of wine, storage and aging, etc. Besides, it is believed that the land itself- the terrior, plays an crucial role on the wine characteristic. All of these elements have to be a prefect match to produce the fine wines. Once wines are produced, the producers will decide their allocation to the courtier, according to historical sales figures and performance of courtiers.  Courtier: traditionally, the wine makers or Chateaux owners seldom involve in sales and marketing. It is the major role for courtiers to locate the market, further distribute the wine allocation to more wine merchants. Courtier also has a role to monitor the market performance, to ensure the wines are distributed to the right market and marketed in an appropriate way. Courtier usually has good relationship with Chateaux and has a responsibility to give feedback from the market to the Chateaux, to ensure the producers know about the market response and further improve their quality.  Negociant: the nature of negociants is very similar to courtier, but in a smaller scale in terms of quantity. Once allocations are distributed to negociants, negociants will further distribute the allocations to various wine merchants. The report back on sales and market feedback are all similar as above. Besides, it is also the negociants responsibility to export the wines to external market, and to negotiate the prices and marketing direction with overseas distributors. Page 14
  15. 15.  Wine merchants: responsible for the selling of wines to the end customers. It can be done through retail store (wine shops), or private sales. Wine merchants usually have strong distribution network on wholesales as well, in order to provide the most extended coverage to more end customers.There are two major well-developed market place for fine wines- Bordeaux andLondon. Both cities have large scale of fine wine trading, well-equipped storage,tracking, labelling procedures. Most importantly, there are bonded warehouses forduty free storage so investors can exclude from duty and taxes while trading theirfine wines. Based on the various experience on fine wine trading, some of the onlinetrading site are developed successful. Liv-ex is an excellent example to provide thewine trading market place, not only for United Kingdom but also for customersworldwide.Le Conseil Interprofessionnel du Vin de Bordeaux (CIVB)Other than the above entities, there is also a very important organization inBordeaux, named Le Conseil Interprofessionnel du Vin de Bordeaux, or CIVB.Founded in 1948, CIVB serves as a Bordeaux wine Bureau, to group nearly 10,000Bordeaux wine producers and growers, and 400 négociants. It is considered as oneof the most important wine industry body in France. CIVB has a role to promote theinterests of its members via national and international communications channels,conduct research into market trends into both production to distribution. Also, it playa key role in addressing viticulturally technical issues of quality, environmental andheritage concerns.2.5 Fine Wines and En PrimeurAlso known as Wine Futures, En Primeur refers to the process of buying winesbefore they are bottled and released onto the market. Wines are usually delivered 2-3years after the vintage, and can only be purchased by the unmixed case (12 bottles,24 half bottles, 6 magnums). Page 15
  16. 16. The opening En Primeur price is almost always considerably cheaper than the future price of the wine on the open market. En Primeur can also be the only way to secure wines that are available in very limited quantities (some properties produce as little as 200 cases a year). How does En Primeur work?Wines are still Bottled in the Stored in UK, Wines remain in bondedaged in Barrels properties under warehouse until delivery isbefore Bottled (In France) Bottled bonded requested. After 18-24 (in France) wines warehouse (VAT & Duty applied for Months of send to delivery request) aging in 1.En Primeur wines are purchased before they are bottled and released onto the market and while they are still lying abroad. En Primeur wines are bought at In Bond prices - ie exclusive of Duty & Vat. 2.On arrival in the UK the wines will be stored, under bond, on consumer’s behalf in the cellar. 3.Customers will be notified of their arrival and asked for any further delivery instructions. 4.All En Primeur purchases are Ex-Vat and Ex-Duty. If/when customers choose to have the wines delivered (anywhere in the EU) these taxes become payable. 2.6 Bordeaux Classifications Bordeaux classification was developed in 1855, at the request of Emperor Napoleon III. Under this classification, the Bordeaux wines from left bank was ranked in five categories according to price. Not every wines are categorized in the 1855 classification. Since the classification was developed more than a hundred sixty Page 16
  17. 17. years ago and it has not been updated since 1973, it is always a controversial topicwhere it truly includes all the quality fine wines.There are five first growth, four of them are from Médoc and one of them fromPéssac- Leognan. The first growths are:  Château Lafite-Rothschild, Pauillac  Château Margaux, Margaux  Château Latour, Pauillac  Château Haut-Brion, Péssac-Leognan  Château Mouton Rothschild, Pauillac, promoted from second to first growth in 1973.In the same year, the sweet white wines were classified into three categories. InSauternes and Barsac, only Château dYquem being classified as a superior firstgrowth.In the 1855 classification, only left bank wines are ranked. Until 1955, theclassification on St. Émilion was developed, with two Premier Grand Cru Classé A:  Château Ausone  Château Cheval BlancFor rest of the region such as Pomerol, there is no official classification applied.However some Pomerol wines, based on the excellent quality and limited quantity,are often considered as being equivalent to the first growths of the 1855classification. For example, Château Pétrus and Château Le Pin, and often sell foreven higher prices and they are one of the favourite fine wines for winecollectors.Based on the famous brand names, exeptional quantity and rareness, theabove fine wines are very famous in the wine trade, and usually have moreinvestment value. Page 17
  18. 18. It is also important to note that except Bordeaux fine wines, Burgundy wines are alsowith high investment value. In terms of the scarcity, Burgundy Grands Crus onlyrepresents two million bottles per year (about ten percent of Bordeaux fine winequantity), with estimated yearly turnover around hundred million euro. Due to thedifferent classification system and production structure, Burgundy production arefragmented into smaller vineyards with different wine making styles. Thus, forinvestment, Burgundy wines are focused on a few leading producers such asDomaine de la Romanée-Conti.2.7 Wine InvestmentFine wine is an investment product other than traditional investments such as stocks,bonds or cash. Today collectors store more than two billions of fine wines in UKbonded warehouses and hold more than three hundred millions wine funds. Recentfive years, there is a strong demand on fine wine from new markets, such as HongKong and China, which leads to hugh impact on prices, wine trade business modelsand storage. A recent survey conducted by the Private Banking department in Koreashowed that wines was the third matter of interest for the High Net Worth Incomecustomers. The strong demand from Asia, which has totally different drinkingculture compared to European and America, has raised a high concern for the winemerchants and fine wine vineyard owners6.Generally, the reasons for choosing wine investment over other investment productsare:  The prestige image Drinking fine wines is definite a prestige social lifestyle. There is nothing to be compared to enjoy the wines family and friends, and to share the happiness moment. In terms of investment, buying fine wines are always associated with the prestige image, as the fine wines are always rare and6 Ashenfelter, O. (1989) Page 18
  19. 19. difficult to find in the market. Owning a legend vintage of a renowned branded fine wine is usually linked up with the taste of the collectors. Return on investment- low co-relation with other investment Comparing with other investment products, wine investment has a lower co- relation with other investment. Although wine market is always linked to the economy as a whole, it is less likely to have direct linkage with other economic index. Besides, wine investment is not a major investment option. Investors do not use wine investment to dominate their investment portfolio. Wine investment always a secondary choice comparing to other products and customers usually invest in wine only when they have substantial amount of disposable income. Tangible Asset Unlike the stock investment, which highly relies on the investor expectation co-related to the economic environment, wine investment is an investment on tangible asset- the wine itself. Fine wine prices are highly relied on the demand of the secondary market, and have less linkage with the confidence towards the market trend. The tangible asset is rare, and the production, the supply, plays a key role in the market. The less quantity production on the fine wines, the higher the scarcity and thus the more potential for better investment return. Contrast to the stock market which is allowed issue more share to divide the risk and to attract more investors, fine wines are non- dividable. Also, due to the tangible nature of wine investment, the logistics, storage conditions become crucial concern for wine investors. To make it simple for trading and keep prefect conditions on storage, the fine wines for investment are always stored in the bonded warehouses, which temperature controlled and are excluded from tax and duty until the wines are transfer outside of the warehouses. Page 19
  20. 20.  Portfolio diversification Fine wines are very dynamic and prices depend on various aspects- the quality of the grapes and the land (the terroir), the vintage, the wine making skills, the aging potential, the drinkable period, the marketing strategy, the heritage and branding of the vineyard, the export strategies, the geographic locations, the support of government on the fine wines, consumer taste and cultural influence, to name a few. Investing in fine wines is complicated, and thus, the investment portfolio is usually more diversified. The potential and risk of wine portfolio are varied with all the elements above.  Pleasure experience Regardless of the monetary return, investing in wines is always full of pleasure. The wine investors are always the wine lovers, who drink and develop passion in wine appreciation. Without the drinking pleasure, wine investment becomes flat and hard to understand. Besides, the best aspect of wine investment is, even the return is not very substantial, it is always less likely for fine wines to be depreciated in value (expect those which pass the best consmption period). It is always the pleasure to drink the fine wines with or without monetary increment after a few years of investment.2.8 The HNWI ConsumersWine investment can involve large amount of money and it takes time to have asignificant return. Usually wine investment period is encouraged to be five yearsminimum. Therefore, usually wine investment is delicated to the high net worthindividual (HNWI), who has high net worth. In the private banking business, theseindividuals typically are defined as having investable assets (financial assets notincluding primary residence) in excess of US$1 million7.7 Merrill Lynch (2007) Page 20