Interesting to follow up on my post last week entitled Boom and Bust? concerning forthcoming Hong Kong auctions and the reined-in expectations for how the wines would sell. The weekend just passed saw these auctions take place and the predictions were unsurprisingly accurate, perhaps even not pessimistic enough. Last year the sales netted over $34 million, and the projection for this year’s Chinese New Year sales was $23 million. In the end the sales netted just $18.7 million, reported here in Bloomberg News.
Talk of millions of dollars spent on wine never seems real to me; the wines traded at these auctions – for example, 1870 Lafite-Rothschild (the provenance was good on that one – kept at the château until 2003), a case of 1990 DRC and so on – are way out of my reach. Nevertheless, although the sum spent here is more than I will earn in my entire lifetime, it is still a massive drop – nearly 20% down on estimate, and 45% down on last year’s takings.
Of course these are different sales, of different wines, so its not quite the same as the Liv-Ex indices (which track the value of specific wines over time) falling, nevertheless the finding still seems significant. Two comments from the piece are worth noting:
“Wealthy Chinese and other collectors focused on the very best older vintages and Burgundies such as DRC Domaine de la Romanee-Conti at Hong Kong weekend auctions, passing on other lots in anticipation of further price declines this year.” – indication that this market continues to turn away from Bordeaux, focusing on Burgundy instead. Some wines – such as 2003 Lafite-Rothschild – went unsold. It wouuld be interesting to see a breakdown of what sold, and what didn’t.
“In general, today was cheap but I think there will still be a correction.” – a comment from one “collector” (terrible word). Clearly, market confidence is falling.
Contrast this, however, with recent moves in the 50 index from Liv-Ex, which seems to have stabilised a little in the past two weeks. A mixed message, it seems? I’m not so sure; we may see this slide further in coming weeks once the news of this poor performance at auction sinks in.
Postscript: See more detail, including top lots and hammer prices, on the Wineyields website.