FineWineCollector.com, a leading e-commerce merchant of rare and fine wine based in San Jose, CA, today reported that 25% of 2010 sales went to buyers in China and another 7% to buyers in other Asian markets. FineWIneCollector.com saw Asian sales increase 46% over 2009, and 106% over 2008.
Overall wine consumption in Asia is expected to increase by 25% over the next five years, according to WineChina.com. During that period, wine consumption in China, already the 8th largest global wine marketplace, will grow five times faster than the rest of the world. The high-end market can grow even more dramatically.

“The demand for fine wine in the Far East, and particularly in China, is growing rapidly,” explained Edward Mackauf, founder and president of FineWineCollector.com. “There is an intense demand for premium labels and vintages, including Chateau Lafite-Rothschild, Margaux, Latour, Mouton-Rothschild, and Domaine de la Romanee Conti.”

As much as the increase in sales to Far East buyers helped FineWineCollector.com flourish in a sluggish U.S. economy, the trend also signals the growing importance of the preferences and tastes of a whole new class of high net-worth buyers on fine wine makers, markets, and merchants.

According to Mackauf, “Top California wines, especially from Napa Valley are highly sought after. And the Chinese demand for Ch. Lafite-Rothschild has reached an almost fetish level.”

Founded in 2002, FineWineCollector.com (FWC), located in San Jose, CA, is an Internet business that sells “The Finest Wines at the Finest Prices.” The company specializes in California cult wines, First and Second Growth Bordeaux, Sauternes, and Vintage Port. FWC also acquires and sells the best wines of Burgundy, Rhone, Italy, Australia, and Oregon. FWC buys wine collections from collectors in the U.S. and guarantees rigorous inspection and proper storage to ensure provenance. All FWC wines are sold online or by phone. Visit http://www.finewinecollector.com

Source: http://www.benzinga.com/press-releases/10/12/p655605/finewinecollector-com-defies-recession-as-it-reports-46-increase-in-onl

Although several of the top chateaux have released some initial prices, including Lafite and Mouton, the quantities have still remained quite small, leaving many merchants to wonder what their actual allocations will be and how much they will ultimately cost. In fact, many industry experts have noted that it can be a challenge to procure a significant quantity of the first growths, a fact that has caused much attention to fall on the second tranches, which will be offered in the very near future.

This fact alone has been enough to make some industry leaders note that it seems as though the high prices of the Bordeaux 2009 first tranche were little more than a publicity stunt, and may not provide much of a real indication about the actual final prices. Still, since May of 2010, Liv-ex has already sold 16 cases of Lafite 2009 for €10,000 – €13,232 per case, and a case of Latour sold recently for €10,213.

Regardless, many top merchants will not publicize prices for the First Growths until they have observed the prices and quantities of both the second and third tranches. This will allow them to get a real feel for their true cost averages, and in some cases it could even provide an indication of future availability and its possible effects. In addition, it is important to note that allocations of First Growths have been declining for years, regardless of demand by consumers and investors.

This year, many merchants are reporting steady sales and most expect to have little trouble selling Bordeaux 2009. So far, other expensive wines have experienced robust sales in many markets, leading merchants to believe that Bordeaux 2009 will be no exception.

The wines on offer all came from the leading vineyards and vintages of Bordeaux and was carried out by the Beijing Poly International Auction Co – who used the services of well known French fine wine authority Claude Maratier for the selection of wines.

There were 131 lots in total, highlights among which were two single bottle of Chateau Lafite Rothschild from the fabled 1982 vintage, which achieved a sale price of nearly £6,750, quadrupling their estimate.

Also available were a presentation case consisting of two bottles each of Chateau Pétrus, Chateau Latour, Chateau Margaux and Chateau Haut-Brion, all from the classic 2000 vintage. Incredibly this had been estimated to fetch approximately £1,650 but actually sold for £18,500 approx.

Xinhua, the Chinese state-sponsored news agency, reported that M. Maratier was ‘very satisfied’ with the outcome and would be happy to work with Poly on further fine wine auctions.

According to Ma Zhefei, who oversaw the auction on behalf of Poly, almost all the buyers at auction have stated they wish to drink the purchased wines and were not buying for investment.

The view here at Provenance is that this would appear to be true by the very nature of the fact that most of the wines on offer seemed to be presentation cases or odd bottles of choice wines; certainly not a large presence “standard lot sizes” i.e. 12 bottle, unbvroken original wooden cases.

If Chinese interest is mainly driven by drinkers, this may have a significant impact on the demand put upon the world’s leading investment-calibre wines, but it is too early just yet to tell exactly the scale of such impact on fine wine pricing.

The abolition of high import taxes in Hong Kong has led the increasing number of domestic Chinese fine wine enthusiasts to leave the mainland to extend their collections.

Poly intend to organise further auctions in their Spring/Summer auction seasons because quite simply, once more according to Ma Zhefei, “The demand is there.”

James Reed, a director in Sotheby’s fine wine department is quoted as saying: “We have had two sales this year in February and March and both were roaring successes. It is not just a case of 98-99per cent selling; often the hammer price was towards the top or even above top estimate. Both times the sale room was very busy with active bidders, often new bidders.”

The article goes on to explain his view that ‘…wine is still seen as an attractive alternative investment that is less volatile than other markets; sterling is weak although optimists believe it will gain against the euro soon; people want to buy at the bottom of the market’ and, according to James Reed: “there is a shortage of stock, so people jump on what there is”.’

‘But although the credit crunch was slow to hit the wine market, it did hit, and between October and December there was a sharp fall in fine wine prices. Which might explain why buyers are returning to the market quicker than sellers. Justin Gibbs, a co-founder of Liv-ex.com, the fine wine exchange, says that the market fell 22.4per cent between June and December last year. However it has now risen 1.2 per cent with prices for top vintages, from 2000 and 2005, up 5 to 10 per cent this year.

The fine wine investment market tends to focus on the top vintages (2005, 2000, 1996, 1990 and 1982) of the five first growths (premier crus) from Bordeaux: Château Latour, Château Lafite Rothschild, Château Margaux, Château Haut-Brion and Château Mouton Rothschild and a few Burgundies, particularly Domaine de la Romanee Conti.

Over the medium to long term, the price of these wines tends to rise as supplies are depleted and demand increases – as more people from places such as Russia, China and India develop a taste for wine. For instance, a case of 1990 Château Lynch-Bages from Bordeaux cost £120 when it was released but is valued at £1,400 today.

Simon Staples, the sales and marketing director at Berry Bros & Rudd, the wine merchant, says that investors can still make money from wine but warns that newcomers need at least £10,000 “to register on the wine merchants’ radars”. As an added incentive as long as the wine stays in the warehouse it is exempt from duty and VAT; it is also exempt from capital gains tax.

But if you are tempted to start investing in these liquid assets you will find you are not alone. Mr Staples says: “Usually I would expect 20 new buyers a month to sign up to direct debt plans [cellar plans] to invest in wine but in February this figure rose to 101 and in March there were 52 new investors. The credit crunch means people don’t know what else to do with their money. They are interested in alternatives and looking to diversify.”’