Fine Wine Market Update

The first wine auctions of the season this September saw intense bidding from buyers all across the globe. All auctions were simply on fire. While Burgundies held their own, the top Bordeaux unanimously stole the show. The latter’s best wines from the greatest vintages saw a sharp increase with most wines moving 10% – 20% above their prices from this past spring. Our clients who sold wines in these first auctions were very pleased with the results.

Buyers in China are still noticeably excited about their newfound wine market. For example, while most US auctions have on average around 60 buyers in the room, in Hong Kong the number is closer to 150. They are also becoming more educated about wines and palates are becoming more discerning. Some regions do still struggle in the Hong Kong market such as Italy and Champagne in particular. We were able to take advantage of this by picking up some legendary wines for discounts such as a case of 1973 Krug for $675 per bottle.

An important distinction we recently observed in Hong Kong is that fine wine is becoming more embedded into the wealthy Chinese culture. This is true not just in Hong Kong where auctions are taking place, but across the mainland. This type of cultural shift shows the staying power the wine market will have in Asia. It seems nearly impossible for it to sustain the growth trajectory it has had the past year, but prices for the finest wines will likely remain high for quite some time.

While the Chinese are clearly a driving force in the market, apparently there were a surprising number of new American bidders that stepped forward this fall. For many of the top wines, it was neck and neck between them and Asian buyers in the US auctions.

While the top First Growth Bordeaux were certainly some of the stars of the auctions, September saw a steep increase in prices for Second Growths as well. It is almost as if the world’s billionaires are driving the prices of the Firsts while the millionaires are pushing the Seconds forward. Items such as 1982 Leoville Las Cases selling for $11,950 per case and 1989 Lynch Bages selling for $4750 per case are not normal occurrences.

The retail market has yet to catch up to the auctions. Some retailers are savvy and immediately raised prices, but others tend to not pay much attention to recent auctions allowing for nice shopping opportunities. Immediately upon our return from Hong Kong the other week we purchased significant quantities of Bordeaux on behalf of our clients looking to invest. Wines such as 1995 Latour for $6000 per case can be considered steals in this market.

The demand for the greatest Bordeaux Chateaux in original wooden cases seems almost insatiable these days. How long the party will last is the big question. In the meantime, for our clients looking to actually drink their wines we have been finding good values in some of the more mature lots in odd bottle quantities. Regardless of market conditions, there are always buying opportunities when one has focus.

We look forward to following the continued development of the fine wine markets and offering our insights.

David Beckwith, Robert Bohr and Ned Benedict

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