The slump in price at the end of last year can partly be attributed to a natural market correction, a readjustment after years of inflation. The rise of other top brands on the Chinese market and a glut of counterfeit Lafite also contributed to the slump.

Overall though, the outlook is still rosy for wine investment in China. The volume consumed continues to increase year on year and this should continue as wine drinking spreads from its base in the south eastern coastal cities throughout the rest of the country. Fine wine would still seem to be a first rate alternative investment.

Released a year later than other wines from the region (D.R.C. are only now releasing their 2009 vintage) the latest batch has yielded 538 cases of D.R.C. at a cost £5250 for three bottles, in bond and therefore exclusive of VAT, and 1828 of La Tache which will sell for £3250 for six bottles, in bond.
The La Tache 2009 has been described as being superbly perfumed, with hints of Darjeeling tea, rose, cloves and mace. The D.R.C. has more minerality and is a little more guarded but will gradually open up with age.

Christie’s staff have been hard-pressed to find translations that were acceptable to the Chateaux but have succeeded with only Cos d’Estournel refusing to take a Chinese name.
A poster will be released for the 2012 En Primeur week containing a list of all the Chinese names agreed upon. The posters will be distributed to Chinese clients and journalist to ensure consistency throughout the week. It is expected the new translations will become standard throughout the whole of the Chinese speaking world.

Christie’s intend to provide the same service for Sauternes, the Bordeaux right bank and Burgundy in the future.

The majority also expressed a belief that Bordeaux had harmed its image with consumers over the last few years and significant price reductions would have to be forthcoming in order for the region to repair the damage done. Most European respondents believed a 20% fall was needed whereas most Asians surveyed thought 10% would be adequate.

Despite a poor en primeur campaign in 2011, it is expected it will be the top Bordeaux estates that will be taking the lion’s share of the growth for 2012. There is a strong belief that some sectors of the market have been oversold and there should, therefore, be some promising opportunities available to investors over the coming year.

It is estimated that the wine investment market is worth a total of £2.5 billion a year.

Peter V Kwok is a perfect example of this new breed of Chinese oenophile. Kwok, managing director of USI Partners Ltd- a Hong Kong holding company, has recently acquired the deeds to all 17 hectares of Chateau Tour Saint-Christophe in St Emilion, Bordeaux. While Kwok was educated in the US and eventually returned to China to forge his career, he was raised in Saigon, Vietnam, so had an appreciation for French culture from a young age. Now 63, Kwok is throwing all his considerable energy behind his new project.

Kwok is keeping to the current trend of Chinese investors picking up mid-range properties, usually little-known and often struggling, and respectfully modernising and improving the wines produced. The Chinese are yet to acquire a property included in the 1855 classifications, which define the top wines of the region, but it is surely only a matter of time.

The Chinese now consume over 20% of Bordeaux’s total output every year making it the largest importer of Bordeaux by volume, and many of the wines produced by Chinese vintners are destined to be sold in Hong Kong and mainland China. Many of Kwok’s wines will end up in the hotels he owns in China and Tibet. Kwok has also bought vineyards in Pomerol and Lalande de Pomerol. His Haut-Brisson La Reserve 2006 will fetch around £140 in his hotels, Four Points by Sheraton and St Regis in Lhasa in Tibet.

Becoming directly involved in wine production allows Kwok to be on the forefront of the growing luxury goods market in China. In France, for example, per capita wine consumption has been falling year on year for the past three decades, while in China, however, it continuing to rise. The decline of wine drinking in France is accounting for the difficulties of many lesser known Chateaux around Bordeaux. This slump in fortunes has allowed Chinese investors to get in on the ground floor and rescue otherwise doomed businesses. What the French may no longer want, the Chinese will take, especially if the Chinese producers of these wines understand the market back home.
Haiyen Cheng, for example, has managed to reverse the fortunes of Chateaux Latour-Laguens after she took over the reins in 2008. She has renovated the estate, added a plush tasting room, a huge kitchen and provides catering for Chinese tourists and wedding parties. The vineyards have been replanted and there has been a large investment in high quality oak barrels in an attempt to improve a once indifferent brand. The wines are becoming smoother and less tannic in order to better appeal to the Chinese palate; the wines will then be sold in wine shops in China owned by the same company and will fetch between £25 and £300 a bottle, wines once sold in France for about £12. Cheng is keen to show the wines at European wine fairs as she believes that having a wine on the shelves in Paris increases its prestige back home in China.

So, how long before the Chinese start to pick up the top Bordeaux estates? Namely those featured in the 1855 classification? In July Chateaux Lascombes, a second growth in Margaux sold for £165 million. The losing bidder was Chinese.

LCB has appointed two new general managers. Michael Stone, who has been with the company for 11 years, has been promoted from commercial manager to general manager at Tilbury. Hugo Wymer will take up the same role at Barking having left his previous position at EHD.

Wine in China is seen as a symbol of a desirable and sophisticated urban lifestyle and is, at the top of the Chinese social hierarchy, a key status symbol. As the Chinese economy continued to boom between 2009 and 2010, China’s wine imports increased to 125.1 million cases, an increase of 34% in just a single year. In the fine wine market at present, it appears that it is the East that is buying while the West is investing. Approximately 50% of all fine wine purchased in the UK will be exported to China.

One of the reasons for the success of fine wine as an investment is its relative imperviousness to depreciation. A case of fine, first growth Bordeaux will hold its value even if the value of the sterling used to purchase it tumbles against the dollar or the yuan. Fine wine has on average offered a year on year return to investors of 13% with less susceptibility to fluctuation than equities. In the 2008 crisis, wine lost 20% of its value compared to a 25% drop in the price of oil and a 50% drop in equities.

Global wine consumption is expected to increase over the next few years and fine wine will make up about a quarter of the value of this consumption. Investors should generally limit themselves to wines with limited production capacity such as Bordeaux and Burgundy. Supply in these areas simply cannot rise to meet increased demand and therefore will continue to appreciate in value.

The practice started with Philippe Jullian’s “V” for victory label following the end of the Second World War. Since then, artists have chiefly concerned themselves with the subject matter of plant life and growth, vines and the leaping ram, the symbol of the Mouton Rothschild estate. The artist is not paid for his commission but is rather rewarded with a case of “his” particular vintage.

The choice of artist has proved increasingly important in recent years, such was the case with the 2008 vintage, the label being produced by the Chinese artist Xu Lei. The hype surrounding the selection of a Chinese artist drove up prices in a shrewd move said to have been inspired by Lafite’s “lucky 8” Chinese character label from the same year.

Kapoor was born in 1954 in Bombay and is a well known figure within the contemporary art world as well as having a relatively high profile with the general public having won the Turner Prize is 1991. His abstract design is described in a press release as being “At once austere and flamboyant, the gouache he has created for Mouton Rothschild 2009 expresses the fertile thrust of plant life, the result of an intense encounter between matter and light.”

LCB will see the announcement as a major coup due to the growth of wine sales in Hong Kong and China. Hong Kong is now one of the leading hubs in the world for fine wine investment, behind only New York and London.

A little background
For a wine to carry the Champagne label, it must be a sparkling wine from the Champagne region in northern France. Champagne is traditionally a blend of two or three grape varieties: pinot meunier, pinot noir and chardonnay.

Sales of Champagne have increased six-fold from the 1970s and most producers are working at full capacity to fulfill demand. Champagne has a long tradition of holding back part of each vintage to be used to make blends at later dates. A particularly rich year, for example, may be blended with a vintage considered to be overly astringent to produce a more balanced final product. Increased demand, however, has led to producers releasing various portions from these stores. Moet Chandon, for example, released 11 cases of its 1911 vintage, each case being released to a different market. The first case was auctioned in Shanghai and raised over £75,000 for charity. The harvest limit, the amount of grapes per hectare the region’s trade body, the Comite Interprofessional du Vin de Champagne, allows producers to harvest, has also been raised year on year to help supply match demand.

A top consideration in Champagne investment, more so than in other fine wine, is the importance of branding. Top labels such as Dom Perignon, vintage Krug and Louis Roederer Cristal are usually considered the safest and potentially the most lucrative investments. A case of Dom Perignon 1996, for example, would have cost roughly £500 in 2004. The same case would now be worth £1800; an increase of 260%.

Vintage is another important factor to keep in mind. The aforementioned mentioned 1996 is second only to the 2002 in terms of desirability followed by 1988, 1989 and 1990. One must keep in mind that Champagne, unlike other medium and long term investments, is there to be consumed and every time a bottle is opened, that vintage becomes rarer and the value of the remaining bottles will rise. Champagne can last for up to twenty years in the bottle but, unlike other investment wines such as those from Bordeaux, they can be drunk at anytime without any loss of quality.

Storage can be an important factor with Champagne to a greater extent than even Bordeaux. It should be kept on its side, in the dark, at a temperature of about 45-55 Fahrenheit. The ambient temperature should remain relatively stable with only minor seasonal fluctuations. The cost of care and storage should be kept in mind by potential investors.