Wine World is Looking East

Just weeks after Hong Kong scrapped a 40 percent duty on wine this year, American entrepreneur and oenophile Stephen Bachmann flew here to investigate business opportunities.

This autumn Bachmann, who runs a fine wine company in San Francisco, will open a major storage facility in the southern Chinese territory in the hope of cashing in on Asia’s booming appetite for the grape.

The former investment banker says that even before the import tax cut in February, almost half his company’s business was coming from online buyers in Hong Kong and Macau.

“It was a bit like New York City suddenly coming online overnight,” he says.

“Someone lifted a curtain and there was this gleaming city full of people who wanted to spend money on wine.

“I came over in March, which was just just after the duty cut, and thought, well, here’s an opportunity, let’s do it now.”

Bachmann’s company Vinfolio was among 240 exhibitors here this week for the first home-grown wine fair in Hong Kong, which is keen to market itself as the gateway to China’s growing middle class as well as a trading hub.

Asia’s wine consumption has risen sharply in recent years and the trend looks set to continue. The industry projects annual growth in the continent of between 10 and 20 percent over the next five years, compared with one percent growth worldwide, with China leading the charge.

Gregory De’eb, co-founder of the Hong Kong fine wine storage company Crown Wine Cellars, says the former British colony’s decision to abolish the duty is one of the most significant wine industry developments of the past 100 years.

“I would actually argue that Hong Kong is already the wine trading centre for Asia. Up to 23 percent of all wine sold at auction internationally is sold to Hong Kong buyers. But the effect (of the duty cut) has been dramatic,” he says.

Much of the fine wine owned by wealthy Asians has traditionally been stored in London.

But since February De’eb says his company, which operates out of a former World War 2 munitions bunker, has seen a 300 percent increase in business as Asian wine investors move their collections closer to home.

“Within the first three or four days we had 10 container-loads of rare and fine wine confirmed to be shipped over. We had prepared by opening a second facility and are currently opening our third to cater for wines coming in,” he says.

Hong Kong’s status as the only major economy not to tax wine has also brought the world’s auction houses to the city.

Earlier this year, US auctioneer Acker, Merrall sold more than 64 million Hong Kong dollars (8.2 million US) worth of fine wines in a single day, setting an Asian record. Bonhams has also held a wine sale here and Christie’s is planning one in November.

Opening the International Wine Fair this week, acting financial secretary Carrie Lam welcomed the industry’s swift response to the tax cut and hoped it would help Hong Kong businesses capitalise on rising demand in China.

But Don St. Pierre Sr, founder of China’s biggest wine importer ASC, is sceptical about the benefits of using Hong Kong as a gateway to the mainland market.

“Hong Kong just adds an extra stop. You’re still going to have to go into China and deal with all the bureaucracy,” he says. “This whole thing doesn’t quite add up to me.”

St. Pierre has plenty of experience of the difficulties of doing business in China. His son, who now runs the company, was detained earlier this year and held by customs officials investigating wine importers. He was later released without charge.

Most in the industry agree that China remains a challenging place for the fine wine industry, not least because customs officials are legally allowed to take three bottles from any shipment for testing.

“That’s fine if you’re importing 200 cases of standard wine, but not if it’s six bottles of ‘96 Lafite,” De’eb says.

“The net result is the fine wine market in mainland China is not going to develop at all apart from consumption.”

To get around this, the industry is lobbying for China to accept Hong Kong customs certification to avoid the need for additional border checks, although Chinese duty would still be payable.

For now though, most of China’s growing number of fine wine buyers appear content to drink their investment rather than keeping it to sell on.

“They’re huge buyers of classified growth, of the Latours and the Lafites, but they’re not saving it,” says St. Pierre.

“That market’s all about showing off, going out with your friends and saying look, I’ve got an ‘82 Latour here, let’s drink it.”

China’s Obsession with Fine Wine

Article by: Mike Steinberger

A specter is haunting Western wine geeks: the prospect of 1 billion Chinese people besotted with wine. As China becomes an economic colossus, its increasingly voracious appetite for scarce natural resources will inevitably extend to the world’s most sought-after wines.

If even a tiny fragment of China’s population acquires the means and desire to regularly drink the likes of Haut-Brion and Romanée-Conti, the effect on (already high) prices and (already tight) supplies will be profound. And, in fact, the balance of wine-buying power is already shifting eastward: Chinese collectors have furiously sought out one first-growth Bordeaux, Château Lafite; and Hong Kong, which recently lifted all duties on wine, is now poised to rival London and New York as a hub of the global wine trade.

Of course, there is always the possibility that China could eventually slake its own growing thirst for cabernets and merlots. China has a long viticultural heritage, and on the back of the country’s economic gains, the local wine industry is booming: China is now the world’s sixth-largest wine producer. But output is one thing, and quality is another. Might there soon be truly fine wines bearing the “Made in China” label?
I lived in Hong Kong in the mid-1990s, just before the British colony was returned to Chinese rule. Hong Kong was a sophisticated city with a number of major wine collectors, but the mainland was a vinous frontier, and the tales of mainland wine culture that filtered out were wild (and often carried a distinct whiff of condescension): Stories of Château Petrus being mixed with Coca-Cola and similar crimes being perpetrated against other prestigious wines were widely circulated.

More than a decade later, a vibrant and increasingly savvy wine culture has taken root in China. The country’s wine consumption jumped more than 50 percent during the first half of this decade and is on course to increase another 70 percent during the second half. These numbers have caught the eye of all sorts of Western wine luminaries, who have begun to take China very seriously. Robert Parker just paid his maiden visit, a trip that included a $2,300-a-head black-tie dinner held on the Great Wall. Acclaimed British wine writer Jancis Robinson went to China in March and came back a believer; her popular Web site is now being translated into Chinese. And last summer, I saw Bernard de Laage, the marketing and communications director for Château Palmer, a Bordeaux third-growth, just before he headed off on a trip to China. I assumed his itinerary would be limited to the obvious destinations: Beijing, Shanghai, Hong Kong. But it turned out he was doing tastings in Wuhan, Taiyuan, and Qingdao.

In an e-mail last week, de Laage told me that he is returning to China in September and will be visiting Dongguan, Xiamen, and Shenzhen. Evidently, the wine bug has spread far beyond the China’s biggest and most international cities.

But it is not just the enthusiasm of Chinese wine buffs that is attracting all this attention; it is their rapidly growing purchasing power. Boris de Vroomen, the managing director of Moët Hennessy Diageo Hong Kong Limited and the chairman of the Hong Kong Wine and Spirits Industry Coalition, recently estimated that Hong Kong buyers account for as much as one-quarter of the wine sold at auction these days and that 40 percent of the fine wine sold by merchants in London goes to collectors in Hong Kong, mainland China, and Macau.

In an effort to bring this business home, the Hong Kong government scrapped import duties on wine and beer in February. Three months later, New York’s Acker Merrall & Condit, which has topped the U.S. wine auction market four of the last five years, held its first-ever sale in Hong Kong, and the response was so exuberant—the total take was $8.2 million and several record prices were set—that it immediately scheduled a sequel for November. Two other leading houses, Zachys and Christie’s, are also holding auctions in Hong Kong this autumn.

But there is more than enough Chinese money to go around, a point underscored at the recent Auction Napa Valley, an annual charity benefit renowned for its high quotient of celebrities (Oprah attended this year’s event, and Jay Leno emceed it) and the lavish sums paid for trophy wines. Back in the tech-bubble days, it was Silicon Valley moguls who caused the biggest stirs; this year, it was an Internet entrepreneur from Shanghai named David Li, who ponied up $500,000 for six magnums of 1992 Screaming Eagle, California’s most sought-after cult cabernet sauvignon. “I love Screaming Eagle,” Li gushed to the Wine Spectator. “Napa Valley wines are the best in the world.”

I am delighted he thinks so, and as a Franco-centric wine drinker, I only wish Mr. Li could persuade other Chinese oenophiles to focus on Napa rather than Bordeaux or Burgundy (an even more alarming prospect, given the minuscule quantities of wine produced there). Alas, for most Chinese collectors, France is the touchstone, and Bordeaux especially—so much so they’ve even started to buy wineries there. Last January, a Chinese firm acquired an estate called Château Latour-Laguens, in the Entre-Deux-Mers section of Bordeaux (no relation to Château Latour). One first-growth, Lafite, has become a particular obsession for many Chinese wine fans.

Acker Merrall President John Kapon confirms the intense Lafite interest among Chinese connoisseurs, adding half-jokingly that it is getting to the point that “there doesn’t seem to be enough [Lafite] to go around!”

India’s Domestic Wine Industry is Booming

A decade-old domestic wine industry in India is expanding rapidly as Indians acquire a taste for wine. But as Anjana Pasricha reports from New Delhi, high import duties continue to remain a barrier for foreign wine producers in the Indian market.

When corporate executives threw parties ten years ago, they only stocked whiskey, vodka and beer. But as a growing economy and increasing affluence changes tastes, middle and upper class Indians make sure they have wine to offer when friends come over. And those who do not know enough about wine are thronging to wine appreciation seminars and events to master the intricacies of which wines to serve with what.

Many of these events are organized by the Indian Wine Academy. Its head, Subhash Arora says:
“The growth has been slightly faster in the last three, four, five years, because there has been a lot of wine promotion, and people have been trying to create awareness, wine education and things like that, and so the culture is expanding and its increasing regularly,” he said.
The boom in wine drinking has helped the Indian wine industry become one of the fastest growing in the world. The industry took root barely a decade ago, but it now accounts for nearly three quarters of the wine sold in the country.

Rajeev Samant, who began Sula Vineyards in the Western Maharashtra state, says the quality of domestic wine is improving in his words “slowly and steadily” as knowledge of winemaking increases.
“When we started no one had ever planted wine grapes in our area, no one had ever made wine, none one had ever tasted wine, so of course these are pretty big barriers to overcome, but what we have found is that the climate in Maharashtra is fantastic for wine growing,” said Samant. “The knowledge is increasing day by day, and today we make a pretty decent bottle of wine. I would say that probably the best bottle of wine that is made in India today would compare easily with a $30 bottle of wine that is produced abroad whereas five years ago it might have been just a $12 bottle.”
But not everyone is happy. High import duties make foreign wines very expensive, keeping them out of reach of all except the most affluent. Taxes were lowered last year after complaints from the European Union to the World Trade Organization, but they continue to be prohibitive at about 150 percent.

However, the government is under pressure to further slash duties on imported wines, and foreign wine producers are hoping to benefit from the boom in the Indian wine market if that happens.
Indeed, there is still huge potential for growth, because India’s wine consumption, although increasing, is still tiny compared to Western countries. India sells about one million cases of wine a year – that is expected to double by 2011.

Cup Runneth Over at Asia’s Wine Hub

Hong Kong – A wine school, a wine museum and even wine tourism are among the plans being considered by the government to make Hong Kong into a wine hub for the region, a media report said Friday.

Other proposals include the conversion of a munitions store and heritage sites into wine cellars, the South China Morning Post said, quoting Finance Minister John Tsang.

‘We are identifying heritage sites that may be used for storage as well as many other wine-related activities, such as a wine school, a wine museum and venues for wine appreciation events,’ Mr Tsang said.

He added that the conversion of an underground munitions tunnel on Hong Kong Island into a public wine cellar and a private club was a ‘good working example’ of what was possible. The tunnel was redeveloped into a wine centre by Crown Worldwide, a Hong Kong-based removals and logistics company.

Mr Tsang said the Tiger Balm Garden theme park in the Kowloon district of Hong Hong or a munitions storehouse on Stonecutters Island could be ideal places for conversion into wine-orientated facilities.

Nicholas Pegna, manager director of wine merchant Berry Bros & Rudd, said using heritage sites for wine related activities would benefit the community and tourism.

‘It may include a museum, a wine school and a wine centre with commentary and wine tasting. I do encourage the idea for the public use of old buildings because it is preserving the heritage,’ Pegna said.

Tsang pointed out that Hong Kong investors own about a million cases of fine wine overseas with about half stored in facilities in Britain with the rest stored in France, Spain, Germany and the US.

Conservative estimates predict that given the right facilities and incentives about 50 per cent of this could be brought to Hong Kong for storage or trading.

The government has already ended all taxes and customs controls on wine so that traders no longer need a permit to import, export, store or manufacture wine.

This comes as a research report for Hong Kong’s Trade Development Council forecast that the value of wine consumption in Asia, excluding Japan, is forecast to double to 17 billion dollars by 2012 and rise to 27 billion dollars by 2017.

Asian Wine Auction Nets US$8.2 Million

America’s leading wine auction house sold $8.2 million of fine vintages in Hong Kong on Saturday in Asia’s largest such sale, underscoring the city’s potential as a regional wine hub.

Acker Merrall & Condit’s inaugural auction of fine and rare wines in Hong Kong drew hundreds of collectors from Hong Kong, China, Asia and the West.

The mood was convivial and bidding brisk during the day-long session which netted HK$64 million ($8.2 million) in sales with 92 percent of the 922 lots sold, as well as smashing at least five world auction records for some of the world’s finest wines.

The day’s highlight was a 12-bottle case of 1990 Domaine de la Romanee-Conti, often considered the world’s most expensive wine. It was sold for HK$1.89 million ($242,000) including the buyer’s premium to a Singaporean buyer. The price was a world record for any case of Romanee-Conti of any vintage ever sold.

Three magnums of Dom Perignon champagne of ‘66, ‘73 and ‘76 vintages made $93,000, the highest price ever paid for any champagne. A case of Chateau Le Pin 1982 fetched HK$823,000 ($105,500) — a world record for that vintage, while a case of 1945 Chateau Mouton Rothschild sold for $155,000.

The ‘45 Mouton Rothschild is considered one of the Chateau’s greatest vintages and described as “a Churchill of a wine” with a “V” sign on its label to mark the Allied victory in World War Two.

“It’s a very special piece of history,” said Cecilia Piacitelli, the buyer of the 63-year-old wine.

The auction comes months after Hong Kong decided to abolish its 40 percent wine duty in February to try to develop into an Asian wine hub along the lines of London and New York.

“The tax cut is great, I think the rest of the world needs to follow Hong Kong’s lead, maybe China will be next, Russia (or) Indonesia,” said John Kapon, Acker’s president.

“It’d be great to see other countries follow the lead and realize hey, good wine is part of good life and it just doesn’t make sense to tax it so high,” added Kapon who said China, Russia and South Korea’s wine taxes hovered close to 50 percent.

But some top wine collectors who frequent European and U.S. wine auctions, said the prices in Hong Kong were high.

“I tried to find some bargains but it was difficult today,” said George Tong, a respected Hong Kong wine connoisseur.

Over the years, a small clique of affluent so called “super-collectors” in Hong Kong has established a reputation for seemingly limitless spending on some of the best vintages coming onto the market each year, outbidding other global connoisseurs.

Bonhams hosted a recent $1.5 million wine auction in Hong Kong, the first in the city in over a decade and the first since the wine duties were abolished. Global auction houses Christie’s and Sotheby’s are reported to be considering sales of their own.

Acker will hold a second Hong Kong wine auction in November.

(Editing by Elizabeth Piper)

The Launch of Zampa Wine Brand in India

Valle de Vin has launched Zampa, its flagship brand of premium wines that is bound to surprise and fascinate wine connoisseurs in India. The brand named Zampa is available in two varietals Zampa Syrah 2007, a premium full-bodied red wine, and Zampa Chenin Blanc 2007, a premium white wine.
Zampa Syrah 2007 is a blend of soft ripe plums and red berries, with fine grainy tannins and a smooth finish. The Zampa Chenin Blanc 2007 is a concoction of honey and lemon with a very crisp finish that promises an extremely sensual experience. Zampa Syrah 2007 and Zampa Chenin Blanc 2007 will be available at Rs. 660/- and Rs. 600/- respectively for a 750ml bottle.

Valle de Vin, a company promoted by industry veteran Deepak Roy, is set to establish new standards in the Indian wine market with its Zampa class of wines. The brand will stand for pure quality and unparalleled culinary experience. What’s more, Zampa is made to suit the Indian palate.
Says Mr. Deepak Roy, “Zampa is a salute to the wine connoisseurs in India. But more than that it is designed to reinvent wine taste in those who have effectively never been able to appreciate wines before. Zampa’s aim is to develop a strong and healthy wine culture in India by educating consumers and eradicating prevailing misconceptions towards wines.”
Zampa’s promise of quality and experience also reflects in its tagline  “Unmask Your Soul”. The package design is creative and colours pastel, on a label that reminds of a Mask made out of grape leaf.

Zampa is made by two of world’s most renowned wine experts, Australian wine maker Paul Bailey and viticulturist Simon Robertson, both of whom are contracted by Valle de Vin to produce Zampa in India. The company has developed its vineyard and winery in Sanjegaon near Nasik.
“With growing popularity of wines in the domestic market, our vision is to be a leader not by volume but by quality and wine experience. As the wine market prepares for growth, one can see an increasing demand from conventional wine drinkers as well as the socialites. Our aim is to introduce these opinion leaders to the Zampa experience and let them set the standards in the society,” adds Mr. Roy.
The company is doing everything required to bring out the best quality in Zampa. It has installed a Cool Room to ensure that the grapes are maintained at 16 degrees temperature after harvesting, a temperature ideal to bring out the best aroma and flavor. The company has introduced bunch pressing, a process that preserves the freshness of grapes and enhances wine quality.

Success at Vinexpo Asia-Pacific 2008

The success of Vinexpo Asia-Pacific 2008 in Hong Kong reveals how much the Asian wine and spirits professionals were awaiting the event. The attendance of large numbers of important buyers, importers and distributors, alongside the international press and renowned experts, who spoke at the seminars and led tastings, confirms the leadership of Vinexpo Asia-Pacific in this area.
Meaningful figures

The exhibition held at the Hong Kong Convention & Exhibition Centre, welcomed 8,868 exclusively professional visitors, exactly 28.8% more than in 2006.

45% of these came from Hong Kong and Macao, while 55% were from 19 other Asian-Pacific countries: China (2,254) led with twice as many visitors as in 2006, followed by Korea (657), Taiwan (438), Japan (209), Singapore (203), Australia (175), Thailand, the Philippines, Malaysia, Vietnam, Indonesia, India and other countries in the region.

These visitors represented all the different business sectors: importers, wholesalers, retailers, sommeliers and food & beverage managers, duty free and airline purchasers, and the hospitality sector.

375 journalists from Asian press, radio and TV covered the event as well as a number of European and US general and trade press correspondents.

692 exhibitors from 32 countries presented the largest range of wines and spirits ever put on display at a single venue in Asia-Pacific and had around 70,000 bottles available for tasting.

The University hosted 33 seminars and was visited by more than 4,500 professionals. The presentations and tastings were particularly well attended by visitors, who continuously sought information with a real thirst for knowledge.

And don’t forget that number 8! It is a symbol of luck and success in Asia – the Beijing Olympics are due to begin at 8.08 on 8 August 2008 – so the 8,868 visitors, who came to Vinexpo Asia-Pacific 2008, clearly represent in Asian minds a very auspicious number…
Market trends

The strong interest generated by the exhibition confirms the energy that exists in the Asian market, which is a consequence of the growing attraction of consumers towards wine and spirits.

“All the exhibitors reported noticing marked progress over the past few years in the knowledge and appreciation of the products. We are convinced that this contributes to the development of the wine and spirits industry in the region by stimulating consumption,” declared Ms. Dominique Hériard Dubreuil, President of Vinexpo Overseas.

According to the VINEXPO / The IWSR study, Asia’s wine market will grow the fastest in the next five years, achieving 8% annual growth compared to a world average of 1%. Retail sales of still wines in Asia in 2006 amounted to US$4.753 billion and should increase by 33.9% between now and 2011.

Having downed 1.04 billion 9-litre cases in 2006, Asia-Pacific remains the leading consumer of spirits in the world – 47% of all spirits consumed in the world are drunk in Asia!

Generosity from the exhibitors

1,912 bottles including about one hundred of spirits were collected at the end of the exhibition. Vinexpo had invited exhibitors to donate bottles in aid of the Sichuan earthquake victims in China. These bottles will be put on sale in the coming month by Watson Wine Cellar for the 22,000 members of Watson Wine Club to purchase. The proceeds will then be handed over to the Hong Kong Red Cross.