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

A survey was conducted in order to determine the reputation of various French wines. The survey interviewed more than 6,000 consumers across seven European countries. Some wine regions, like Bordeaux, were found to have a very high reputation. This great reputation attracts many new consumers, and as a result members can increase their prices due to the perceived high quality of the wines. A great reputation is also thought to provide incentives for wine agents to maximize their efforts, which is great for the entire brand. Additionally, regional reputations were found to encourage cooperation among the component wineries for price fixing, producing high quality products and erecting barriers to competition.

The study discovered that the leaders accrue significant benefits from the Bordeaux brand. This would include Saint-Emilion, Bordeaux Supérieur, Sauternes, and Médoc. On the other hand, Graves, Margaux, Premières Côtes de Bordeaux, Entre-deux-Mers, and Côtes de Bourg seemed to derive little benefit from being part of the group. It is posited that this was due to the last group not having a strong enough association with the Bordeaux brand. This was especially true for Entre-deux-Mers and Côtes de Bourg, which were found to have a more modest reputation than some of the other Bordeaux wines. The AAWE suggests that specific marketing efforts be used to strengthen the link between these individual appellations and the Bordeaux brand within the consumer’s mind.

The working report concludes by indicating that further research still needs to be done. Thankfully, the fascinating field of wine reputations, their effect on group brands, and the individual members of the group, is at the forefront of modern research. Further studies promise to add to the ideas presented in this working paper.

Now that the harvest had been completed and there’s just three months to go before the 2009 en primeur will be available, interest in this vintage is considerable. It is the considered view of the experts that if a vintage’s en primeur receives a good review, the earlier vintages should also pick up both sales as well as price increases. With everyone predicting that 2009 would be an exceptional vintage, the canny investor would need to consider investing in the 2009 en primeur.

Buying en primeur wines is similar to trading in futures, the wine being purchased at a predetermined rate from the producer at the time the grapes are harvested and taking delivery of it when it is bottled, usually two or three years later. In effect, the investor is able to get the vintage at its cheapest. A favourable rating by the likes of Robert Parker and Jancis Robinson, among others, could see prices surge as the vintage comes into the market. Though it is not unusual for wines sold en primeur to sometimes be available later for a significantly lower price, the demand for the Big Five of Lafite Rothschild, Latour, Margaux, Haut Brion and Mouton Rothschild reduces this risk considerably, assuming that initial prices aren’t set too highly of course!

Investing in en primeur has the advantage of ensuring the wine’s provenance, since the wine is bought early on in its lifetime and without a long chain of ownership. Add to that the fact that obtaining wines en primeur may be easier than trying to get the same vintage a few years later when one might face the twin issues of higher prices coupled with less stocks available.

As always, prudence requires that the fine wine investment is made through a reputable and reliable distributor in order to be sure that he is getting the real thing rather than counterfeit goods.

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.”’