Definition: Asia (wine in)

In May 2006, before boarding a jet to attend Vinexpo Asia Pacific in Hong Kong, Christian Seely, an Englishman who runs Millésimes AXA, noted with a laugh: "The owners of Bordeaux châteaux and their administrators meet much more often in Hong Kong, Shanghai and Singapore than on the estates themselves. Needless to say, Christian Seely, who manages several famous Bordeaux estates, was in good company at this trade fair. In addition to the French Ministers of Trade and Agriculture, more than 70 of his fellow owners and administrators were present, including personalities such as Pierre Lurton of Cheval Blanc and Yquem, Jean-Guillaume Prats of Cos d'Estournel, Baroness Philippine de Rothschild of Mouton-Rothschild and Count Stephan von Neipperg of La Mondotte.
You don't need to be Hercule Poirot to figure out why half of the exhibitors at Vinexpo were French, and mostly from Bordeaux. France currently dominates the lucrative Asian wine market with a 40% market share and has every intention of increasing that figure. "Bordeaux is an export market," says Stephan von Neipperg, "it always goes where the money is. " Not only is Asia's business elite flush with cash at the moment, but the region as a whole is spending more and more on wine. According to the latest figures from Vinexpo, wine consumption in Asia is expected to increase to double the global average over the next two years, with sales reaching $5 billion in 2008, including more than $1.78 billion in China alone.
Meanwhile, signs of a new wine culture in Asia are becoming increasingly visible. Japan boasts more than 200 wineries and several thousand certified sommeliers. It is also one of the world's largest and most sophisticated markets for fine Burgundy wines and prestigious champagnes. As for China, major Western wine groups such as Castel and Constellation are flocking there, while local production has grown so dramatically that it has placed the country among the world's top ten producers. A new wine museum has opened near Beijing, and wine refrigerators are standard in chic Shanghai apartments. Even in South Korea, wine consumption has increased by more than 150% over the past five years, prompting the prestigious Union des Grands Crus de Bordeaux to organise a tasting in Seoul for the first time in November this year.
Extraordinary wine cellars:
At the same time, in the more mature markets of Hong Kong and Singapore, exclusive wine clubs are all the rage, as are wine-themed dinners, private wine schools and a whole range of wine magazines. To ride this wave, Decanter magazine recently launched a Chinese edition published in Taiwan, Singapore, Malaysia and Hong Kong. "We are increasingly becoming a nation of wine lovers here," says its editor, Frank Ong.
Ultimately, it is clear that the region has quickly become one of the best places on earth to enjoy good food and wine. Stanley Ho's Lisboa Hotel in Macau, for example, is home not only to the renowned Robuchon à Galera restaurant but also to the most extraordinary wine cellar in the region for high-rolling casino customers. Filled to the ceiling with bottles of Latour, Yquem and probably more 1961 Palmer than anywhere else in the world, it recently left a London wine merchant virtually speechless. "I haven't seen some of these wines on a list for years," he stammered. "Some of them are simply impossible to find in the UK."
These days, however, the Lisboa Hotel's impressive 96-page wine list faces much stiffer competition from similar establishments, including Caprice, Petrus and Gaddi's in Hong Kong, Les Amis, Iggy's and Blu in Singapore, and the Okura Hotel in Tokyo. The best wine list in Shanghai for wine by the glass or bottle is at the Shangri-La Hotel's Jade on 36 restaurant, but there are others, such as Three on the Bund and Club Whampoa. Similarly, in Beijing, lawyer and entrepreneur Handel Lee, a wine enthusiast, is actively revitalising the restaurant sector. Keep an eye out for the upcoming opening of his new Enoteca Pinchiorri, boasting a cellar of 30,000 bottles. However, as Louis-Fabrice Latour of Burgundy producer Maison Louis Latour points out, there is a lot going on in the world of fine wines beyond trendy international restaurants. Louis-Fabrice Latour points to growing consumer demand, which has led to an explosion in retail sales in recent years despite considerable import taxes in the region. Initially, the pioneers of this trade were British merchants such as Berry Bros and Rudd, Corney and Barrow, and Farr Vintners. Their efforts have been richly rewarded: Asia is now the most important foreign market for Farr, for example. At the same time, the market has changed and evolved at an unprecedented rate. When Berry Bros. and Rudd opened its first shop in Hong Kong in 1999, almost three-quarters of its customers were European expatriates. Now, 75% of its customers are Hong Kong Chinese. This also explains why a number of local fine wine merchants have followed suit, eager to capitalise on the region's residents' thirst for fine wines. Among the best are Altaya, Watsons and Ponti in Hong Kong, Vinum in Singapore, Kuala Lumpur and Bangkok, Eswin in Taiwan, ASC in China, The Shingdong Wine Company in South Korea and Enoteca in Japan. Enoteca, for example, now has thirteen stores across Japan, and its Hiroo branch has an impressive collection of Bordeaux grands crus classés that are already mature, according to London or New York standards.
At any price:
"What's exciting is that many customers only want the finest and rarest products, and are happy to pay any price to get them," says Nick Pegna, director of Berry Bros and Rudd in Hong Kong. Farr's director, Stephen Browett, agrees: "They only buy the very top of the range, mainly Bordeaux premier and second growths and Domaine de la Romanée-Conti (DRC), and in large quantities."
Of course, it's all about status and prestige, mixed with a touch of conspicuous consumption. According to Lee Crymble of Vinum, "Here, lifestyles revolve entirely around brands and luxury. Once you have the house, the car and the watch, a cellar stocked with fine wines is the logical next step. " In this area, Asia has overtaken the West in exactly the same way as it has with Louis Vuitton, Bulgari and Gucci. Yet there are significant differences between Asian and European collectors. One is that Asian consumers are quick to open their best bottles rather than waiting too long. "They are much more hedonistic, open-minded and less traditional than the British, more in the vein of the great American collectors," says Serena Sutcliffe, head of Sotheby's international wine department.
Exceptional collections:
This vast region can certainly boast an increasing number of industrialists, developers and financiers who have built up exceptional, world-class collections, such as those of Alan Ho (Stanley Ho's nephew), George Wong, John Koo, Robert Kwok and Handel Lee, mentioned above. However, the greatest collector in Asia is probably Henry Tang, Hong Kong's Secretary for Finance. His personal cellar is reputed to contain around 12,000 cases of top-quality wine, which he stores in Hong Kong, the United Kingdom and the United States. Wine and cigar merchant Thomas Bohrer once described Henry Tang as "in a class of his own. He doesn't need to visit châteaux or wine merchants. They come to him."
With their enormous purchasing power and willingness to spend, there is no denying that major Asian buyers are already beginning to have a dramatic effect on the balance of power at the top of the international wine market. For example, at Christie's sales last June, Asian buyers took seven of the top ten lots, while last year in London 24 of the top 100 wine lots at Sotheby's went to private Asian buyers. According to Serena Sutcliffe, five of these were Petrus, four were Romanée-Conti and three were Latour. "If Asians were to temporarily stop buying Romanée-Conti, would prices fall slightly?" she adds.
Almost a decade ago, in 1997, some of the most notable Asian buyers temporarily withdrew from the fine wine auction market after the Asian stock market crash. Not only did the market for fine wines collapse by 40%, but many of the most speculative Asian buyers got badly burned and simply stopped buying – at least for a while. (A few serious market players, however, also cleverly took advantage of the downturn to find even more exceptional wines at very good prices).
A stronger market:
Fortunately, the market corrections by the Hang Seng and Nikkei did not have the same effect as they did ten years ago. Firstly, because the falls were not as steep. Secondly, because wine is now much more a part of Asian culture. "Today's market is stronger and more difficult to satisfy," notes Enoteca president Yasuhisa Hirose. "The crazy 1990s, when people bought based on the label, are over. Today, the market tends to be more conservative, and people buy after tasting the wine."
It is not surprising that Asia has discovered a genuine love for wine, which was highly prized by the dynasties ruling China for over a millennium, until the 14th century. Furthermore, as Ch'ng Poh Tiong, publisher of wine magazines and guides, points out, "Asian cuisine is based on finesse and nuance, so Asian palates are naturally accustomed to the subtlety of fine wines." Recent studies even suggest that Asians are better tasters than Caucasians.
Informed consumers:
Robert Joseph, a journalist and author specialising in wine, has noted "a remarkable subculture of wine knowledge, particularly in places like Japan, which goes far beyond anything I have seen in London or New York". In Singapore, Mark Walford of Richards Walford, the Romanée-Conti agent in China, distinctly remembers meeting a few knowledgeable collectors on his first trip there several years ago. "I remember them grilling me on the respective merits of François Jobard, Coche-Dury and Comtes Lafon. So there is a very high level of knowledge coupled with considerable purchasing power."
However, not every Asian billionaire is obsessed with the complex details of vintage, terroir and typicity. According to one of the world's leading collectors and connoisseurs, Singaporean NK Yong, there are still some in Taipei, Hong Kong, Shanghai and Singapore who only buy based on the label: "These people limit themselves to drinking famous, prestigious wines, those that Parker gives 100 points to. I know someone whose everyday wine is Petrus."
Serena Sutcliffe suggests two common reasons why this type of novice Asian collector does not venture into unknown territory. "First, they tend to stick to brand names they can pronounce. Second, there is the fear of losing face, that venerable tradition. This means that if they serve anything other than one of the best bottles in the world, their host will not be honoured and may take offence."
Risks of counterfeiting:
This ancient form of propriety invariably leads to the consumption of even rarer, older and fabulously expensive wines by the Asian elite. Unfortunately, this also has an undesirable consequence: counterfeiting. "Fraudsters target less sophisticated collectors by passing off fake bottles as fine wines. I am very concerned about this situation," says Serena Sutcliffe. "The problem is that some people have no means of comparison: they have never tasted a Mouton 45 or a Latour 61. So they have absolutely no idea that they are not drinking an authentic wine, because it looks good and tastes pleasant. Ironically, even if these people did notice something, their host would prefer to ignore it or make fun of it, because otherwise they would lose face."
Over the last two or three years, the most profound change in Asian purchasing habits has undoubtedly been the emerging trend towards buying new Bordeaux vintages en primeur. In the past, Asia limited itself to buying mature wines that were ready to drink. But the propensity to buy young wines is already beginning to cause significant upheaval. Last year, Berry Bros & Rudd Hong Kong accounted for 25% of its global forward profits. This year, that figure has risen further as Asian money has pushed first growth prices to unprecedented levels of up to £6,000 (around CHF 14,000) per case.
European collectors sidelined:
Several British merchants received some staggering orders from Asia for 2005 first growths, accompanied by blank cheques. "Many of our customers were willing to pay any price to get their hands on as many 2005 bottles as possible," reports Nick Pegna. For more traditional collectors, the consequences give pause for thought. If Asian billionaires continue to pay top dollar for very fine wines, both young and old, they will inevitably oust more and more European collectors who are unable or unwilling to compete. Adam Brett-Smith, director of Corney and Barrow, believes that "more traditional markets will view 2005 and previous great vintages as the last opportunity of the 'golden age' of wine buying, particularly for Bordeaux grands crus classés".
In Asia, demand at the top end of the market remains incredibly strong. "Over the past year, prices have risen significantly and this has had absolutely no impact on demand," notes Jo Purcell, director of Farr Vintners. More worrying for European collectors is that while some markets, such as Hong Kong and Singapore, are relatively established, others, such as China and India, are only just beginning to take off. From a commercial perspective, these emerging markets could eventually absorb the entire global wine production. But the limited supply is already under severe strain. That is why the massive amounts of cash being poured into wine by China's newly wealthy will only increase the already enormous pressure on prices.
In Hong Kong, Nick Pegna continues to receive more and more initial enquiries from China, some of which are for speculative purposes. "A while ago, a new client from mainland China asked me to offer him five different portfolios, each worth £300,000 (around CHF 705,000). I expected him to choose one," says Pegna, "but in fact he bought all five." Perhaps the most difficult thing to grasp is just how embryonic the Chinese market is at present. "It's a sleeping giant," says Stephen Williams, director of The Antique Wine Company, which has been selling wines to collectors and hotel groups in the region for over ten years. Its long-term potential is almost beyond comprehension. For me, there is no doubt that when it comes to fine wines, China is the leader in Asia, and perhaps even the world. I think it could even eclipse the United States in the long term."
China is already the third largest luxury market in the world. According to the 2005 World Wealth Report published by Merrill Lynch and Cap Gemini SA, no fewer than 300,000 millionaires are driving its surprising growth rate.
This has not gone unnoticed in Bordeaux. Owners such as Stefan von Neipperg have doubled the number of their annual trips to China. "Before, I only went to Shanghai. Now I visit four or five cities," explains von Neipperg. "The Chinese believe that the most expensive wine is the best. It's a very interesting market for doing business."
Special supplement in the daily newspaper Le Temps: Asia is thirsty for wine.
Date of publication: Wednesday, 6 December 2006
Author: John Stimfig, translation: Pilar Salgado
This article first appeared in English in the September supplement "How to spend it" of the Financial Times.
© Le Temps. All rights reserved.