Wine at Auction Review 2010 – 2011

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China is dominating the action of wine at auction -- this a review which spans 12 months to April 2011

Table 1: Recent world records
As if to underline the importance of Hong Kong in both acquiring and also in setting prices, some recent world records bear this out:

? At Acker Merrall & Condit (Hong Kong), the top-selling lot in March 2011 was a rare full case of 1978 Jayer Richebourg, which sold well above the pre-sale estimate for US$211,154 (£130,772)

? Château Lafite 1869 was sold for US$232,692 by Sotheby’s Hong Kong in October 2010, setting a new world record for a single standard sized bottle at auction. The sale was composed entirely of bottles direct from the cellars of Domaines Baron de Rothschild

? Three centuries of Château d’Yquem (128 bottles and 40 magnums) sold for US$1,032,336 by Christie’s Hong Kong in May 2010, making it the most valuable wine lot ever sold at any auction in Asia

? Even Champagne isn’t immune: one bottle (75cl) of Krug Collection 1928 was sold for HK$164,560 (£13,105) by Acker, Merrall & Condit Hong Kong in March 2009

? In May 2010 a vertical of Dom Pérignon Rosé OEnothèque, a world premiere release from its reserve cellar, achieved HK$1,331,000 (US$170,554) and was the first HK$1 million lot of wine Sotheby’s sold in Hong Kong

THE WINE auction market Note 1All tables are based on auction data from the houses specified for the period 1/5/2010 to 30/4/2011 (unless indicated otherwise). The data file used in the preparation of this article for this period excluding mixed/verticals consists of more than 50,000 individual lots has been turned on its head by the new wave of wine buyers coming from China (including Hong Kong).

It’s not just wine. In 2010, China accounted for 33% of the global fine art market versus 30% in the US and a mere 19% in the UK. More than half of the 2010 global top 10 of contemporary artists as measured by auction revenues are Chinese compared with just three Americans (Basquiat, Koons, and Prince) Note 2artprice.com. It’s not really surprising when one looks at the growth in the number of millionaires in China. According to an annual wealth report recently released, the mainland has 960,000 millionaires with personal wealth of 10 million yuan(£0.95m) or more, up 9.7% year on year. Of the 960,000 millionaires, 60,000 have been identified as China’s super-rich with 100m yuan or more in wealth, up 9% year on year. The report’s author also noted that: “For most luxury brands, the Chinese luxury consumers are now number one, either representing the biggest market share or the fastestgrowing.” Of particular interest are the demographics: Chinese millionaires are on average 39 years old, a full 15 years younger than theirWestern counterparts Note 3GroupM Knowledge – HurunWealth Report 2011. That 30% of the millionaires are women bears out the apparently strong interest shown by women in wine.

FOR MOST LUXURY BRANDS, CHINESE CONSUMERS ARE NOW NUMBER ONE

Not just wine values, but wine consumption too in China is on the increase. Vinexpo’s report on the state of the global wine market shows that percapita wine consumption in Hong Kong is up to 4.5 litres a year, the highest in Asia, ahead of Japan’s 2.4 litres, and Singapore with 2.1 litres. It also forecasts an increase of 57% in wine consumption between 2010 and 2014, with average per capita annual consumption rising to 6.5 litres.

Table 2: Auction totals worldwide
May 2010-April 2011
Source: Fabian Cobb
House Location Auction value Value by house Av. % Lots sold
Acker Merrall & Condit Hong Kong £23,092,346 99%
New York £20,805,340 £43,897,686 96%
Christies’s Hong Kong £19,157,295 88%
London £6,468,656 95%
New York £8,543,759 £34,169,710 89%
Hart Davis Hart Chicago £26,614,658 £26,614,658 100%
Sotheby’s Hong Kong £45,558,225 100%
London £14,554,278 97%
New York £8,633,680 £68,746,183 98%
Zachys Hong Kong £18,298,739 99%
New York £24,064,264 £42,363,003 98%
City breakdown
Hong Kong £106,106,605
New York £62,047,043
Chicago £26,614,658
London £21,022,943
Total £215,791,240

Summary of the year
The FWA Index of 50 Bordeaux wines traded at auction shows an increase between May 2010 and April 2011 of some 16%, although the FWAI50 peaked in October 2010. Table 2 summarises the data for the main auction houses Note 4Sotheby’s London, Hong Kong and New York; Christie’s London, Hong Kong and New York; Zachys Los Angeles, Hong Kong and New York; Hart Davis Hart Chicago and Acker Merrall & Condit New York and Hong Kong and their turnover and location. Hong Kong is now, by far, the premier location for selling wines in the world – not quite double the revenue of New York. The best performing auction houses, as determined by percentage of lots sold, have been Sotheby’s Hong Kong and Hart Davis Hart (Chicago) – both with unbroken records of “white glove” sales.

However, this needs to be put into the context of the prices achieved – see Table 3: Top prices by location. Nonetheless, average sell through percentages from all of the auction houses are remarkable. The largest turnover of any of the auction houses has been Sotheby’s, followed closely by Acker Merrall & Condit and Zachys, then Christie’s and Hart Davis Hart. Above (Table 5: Top auction houses) is an ordered list of the top auction houses with reference to the number of lots sold at auction.

Top sellers

Certain wines occur more frequently than others in lots sold at auction (see Table 4: Top wines sold at auction). If this were a system for classifying wines according to cru status then the original Classification of 1855 was not wrong. The top 50 places are occupied by premier crus from Bordeaux of differing vintages, with the obvious exceptions which join these, Léoville Las Cases, Cheval Blanc, Pétrus, and Lynch Bages. Only Yquem (1990) features as the sole white wine amid a sea of red.

Table 3: Top prices by location
Source: Fabian Cobb
Wine Vintage Location av. bt. price # auction records Top location
Lafite 1982 Chicago £3,156 87
Hong Kong £3,951 161 Hong Kong
London £2,730 38
New York £3,103 114
Ausone 2003 Chicago £1,078 8
Hong Kong £1,050 41
New York £1,309 14 New York
Dominus Estate 1994 Chicago £253 11
Hong Kong £182 6
New York £259 37 New York
La Mission Haut Brion 1989 Chicago £767 20 Chicago
Hong Kong £672 29
London £847 9
New York £632 24
La Tache Domaine de la Romanée Conti 2007 Chicago £909 2
Hong Kong £708 8
London £650 1
New York £1,174 7 New York
Mouton Rothschild 2004 Chicago £200 13
Hong Kong £296 35
London £306 21 London
New York £249 9
Yquem 1983 Chicago £205 7
Hong Kong £247 11
London £314 6
New York £360 25 New York
Haut Brion 2003 Chicago £268 23
Hong Kong £345 101 Hong Kong
London £264 9
New York £206 26
While Hong Kong tends to take top honours these days for most Bordeaux and even premium Californian and Burgundian wines, it is not always a clean sweep. The auction market is now a global marketing arena with bidders registering for any sale from all around the world. Prices are significantly affected by provenance.

Top performing wines
While the calculations may be fraught with difficulty (some wines are so scarce that they may appear only a few times during the year and their prices may fluctuate considerably as a result), it is still quite interesting to view a list while considering eligibility for inclusion. However, bear in mind that prices may have peaked earlier in the year for some of these wines, or that a particular sale in HK has skewed the result for that month.

Formats and lot sizes
As you would imagine the market is dominated by 75cl formats sold in the most common configuration, a 12-bottle case, see Table 6: Format frequency. Very few larger formats were sold, for example only 30 or so of Salmanazar (nine-litre) and Melchior (18-litre). See Table 8 for lot size distribution, in other words, the configuration of the lot in terms of the number of bottles. Surprisingly perhaps, the lot size does not always impact on the prices achieved in the way one might imagine. In other words odd lot sizes don’t always sell for less in terms of an average bottle price.

Table 7: Top six most popular vintages in terms of auction records – broken down by location

1. Vintage 2000 | Total 5,201
Hong Kong | 1,848
New York | 1,540
Chicago | 1,007
London | 806
2. Vintage 2005 | 3,923
New York | 1,472
Hong Kong | 1,299
London | 655
Chicago | 497
3. Vintage 1996 | 3,747
New York | 1,329
Hong Kong | 1,324
London | 552
Chicago | 542
4. Vintage 2003 | 3,459
Hong Kong | 1,206
New York | 1,061
Chicago | 633
London | 559
5. Vintage 1990 | 3,249
New York | 1,235
Hong Kong | 1,085
Chicago | 488
London | 441
6. Vintage 1982 | 2,972
New York | 1,127
Hong Kong | 1,108
Chicago | 393
London | 344

Table 4: Top wines sold at auction by reference to the number of lots sold

1. Mouton Rothschild 1982
2. Lafite Rothschild 1996
3. Mouton Rothschild 1986
4. Lafite Rothschild 1982
5. Mouton Rothschild 1995
6. Lafite Rothschild 2000
7. Mouton Rothschild 2000
8. Latour 1996
9. Mouton Rothschild 1996
10. Lafite Rothschild 1986

Table 5: Top auction houses with reference to the number of lots sold

1. Zachys New York
2. Hart Davis Hart (Chicago)
3. Sotheby’s London
4. Acker Merrall & Condit New York
5. Sotheby’s Hong Kong
6. Acker Merrall & Condit Hong Kong
7. Zachys Hong Kong
8. Christie’s New York
9. Sotheby’s New York
10. Christie’s London
11. Christie’s Hong Kong

Table 6: Format size frequency (number of bottles)

Format | frequency
75cl | 452,958
Magnums (1.5l) | 20,454
37.5cl | 11,590
Double magnums (3l) | 2,331
Imperials (6l) and above | 1,802
Jeroboams (5l and 3l) | 728

Table 6a: Top 20 performing wines by year based on their FWAI50 individual index

Ausone 1982 | 97%
Latour 1985 | 85%
Ausone 1990 | 58%
Margaux 1989 | 58%
Mouton Rothschild 1985 | 53%
Latour 1989 | 51%
Margaux 1985 | 50%
Mouton Rothschild 1998 | 49%
Lafite 1989 | 44%
Lafite 1998 | 42%
Lafite 1985 | 39%
Latour 1998 | 34%
Mouton Rothschild 1990 | 33%
Yquem 1990 | 31%
Margaux 1998 | 27%
Lafite 1990 | 26%
Pétrus 1989 | 25%
Margaux 1990 | 23%
Margaux 1986 | 22%
Lafleur 1989 | 21%

Table 6b: Bottom six performing wines by year based on their FWAI50 individual index

Latour 1982 | -7%
Lafleur 1998 | -9%
Lafleur 1990 | -14%
Cheval Blanc 1989 | -15%
Lafleur 1985 | -15%
Yquem 1983 | -20%

Vintage popularity

Certain vintages that have been offered at auction are more popular than others. It’s not hard to understand why – see Table 8, where the top performing vintages include 2000, 2005 and 1996.

Chateau Lafite Rothschild
Many of the headlines in the press relating to wine auction prices refer to this wine alone and the key data is rather remarkable. Lafite occupies the top 10 places for the most expensive bottles sold at auction. Lafite made up nearly 23% of all wine traded around the world (8% by lot number), 34% of all Bordeaux red (15%
by number of lots) and 61% of all Bordeaux red sold in Hong Kong.

By Fabian Cobb

This article was first published in the Drinks Business, June 2011

Table 8: Distribution lot sizes

Number of bottles | Frequency
1 | 6,088
2 | 2,339
3 | 3,801
4 | 1,271
5 | 996
6 | 8,780
7 | 317
8 | 627
9 | 642
10 | 1,011
11 | 612
12 | 27,758
13 | 16
14 | 27
15 | 16
16 | 38
17 | 19
18 | 110
19 | 13
20 | 20

The wine auction market has been turned on its head by the new wave of wine buyer coming from China (including Hong Kong). It's not really surprising when one looks at the growth in the number of millionaires in China. According to an annual wealth report recently released, the mainland has 960,000 millionaires with personal wealth of 10 million yuan ($1.5 million) or more, up 9.7 percent year-on-year. Of the 960,000 millionaires, 60,000 have been identified as China's super rich with 100 million yuan or more in wealth, up 9 percent year-on-year. The report's author also noted that "For most luxury brands, the Chinese luxury consumers are now No 1: either representing the biggest market share or the fastest-growing." Of particular interest are the demographics: Chinese millionaires are on average 39 years old, a full 15 years younger than their Western counterparts. (note 3) That thirty percent of the millionaires are women bears out the apparently strong interest shown by women in wine.../...

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The wine auction market has been turned on its head by the new wave of wine buyer coming from China (including Hong Kong). It's not really surprising when one looks at the growth in the number of millionaires in China. According to an annual wealth report recently released, the mainland has 960,000 millionaires with personal wealth of 10 million yuan ($1.5 million) or more, up 9.7 percent year-on-year. Of the 960,000 millionaires, 60,000 have been identified as China's super rich with 100 million yuan or more in wealth, up 9 percent year-on-year. The report's author also noted that "For most luxury brands, the Chinese luxury consumers are now No 1: either representing the biggest market share or the fastest-growing." Of particular interest are the demographics: Chinese millionaires are on average 39 years old, a full 15 years younger than their Western counterparts. (note 3) That thirty percent of the millionaires are women bears out the apparently strong interest shown by women in wine.../...

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References   [ + ]

1. All tables are based on auction data from the houses specified for the period 1/5/2010 to 30/4/2011 (unless indicated otherwise). The data file used in the preparation of this article for this period excluding mixed/verticals consists of more than 50,000 individual lots
2. artprice.com
3. GroupM Knowledge – HurunWealth Report 2011
4. Sotheby’s London, Hong Kong and New York; Christie’s London, Hong Kong and New York; Zachys Los Angeles, Hong Kong and New York; Hart Davis Hart Chicago and Acker Merrall & Condit New York and Hong Kong

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