2009: The Year of the Chinese?
Wednesday 10 March
Last week UK wine trader, Bordeaux Index reported record sales in the Far East, with fine wine sales in excess of £8.1 million, representing a massive increased of 72% on the previous year. Not bad for a month’s work.
With the 2009 vintage tipped to be the greatest of the century, founder of Bordeaux Index, Gary Boom, said: “We fully expect the Asian market to invest heavily in this vintage, which will help continue to drive significant growth in the wine market in 2010.”
But hang on a minute, the Chinese haven’t really bought into en primeur before: buying wine that you can’t receive for another one to two years just doesn’t equate for many Asian buyers (they have a point, it is a bit strange when you think about it).
So I asked Geraint Carter, who also works at Bordeaux Index, why this year was any different to the rest.
“Well it’s certainly fair to say that precedent indicates a preference for physical assets in the Chinese/HK market,” he admitted. “That said we’re optimistic that this year will see a significant jump in participation for the following reasons:
1. They tell us they will – there has been plenty of firm interest expressed from both private and trade clients.
2. Level of familiarity/sophistication with the practices of the wine trade has increased rapidly. Good merchants with proper customer relationship and substantive infrastructure, as well as the efforts of the major Chateaux to raise their profiles.
3. Some of the recent surging demand from China/HK has been driven by investors, and there’s no doubt that the 2009 en primeur campaign will be a big attraction to those looking to speculate.
4. China is enjoying a period of very loose monetary policy. Assets have and will continue to attract capital looking for yields in this type of environment.”
They all sound like sound reasons but I’m just going to hang fire to see whether there’ll really be a massive shift in mentality from Asian buyers this year.
In my experience the Chinese are paradoxical, from a Euro perspective. More important, it is dangerous to generalise when we are talking about a small niche market in the wider context of big China. True, Chinese do like tend to prefer physical assets but equally there is possibly no country on earth that can speculate (whether we are talking gambling or shares) as voraciously.
The real issues, therefore, are whose opinions the Chinese who are speculative-minded (for these will dominate Chinese buyers) will follow, how or whether they will be able to “securitise” the investment in a manner that is satisfactory to the downstream buyers, and, above all, whether they will analyse the market two years down the track as a dead cert for profits or not. That, after all, will be the prime determinant as to whether the Chinese will take everything Bordeaux wants to sell, or next to nothing.
- by Hugh Ammundsen, Auckland
Thanks Hugh,
I think the issue is many are predicting that this will be the year when 2009 en primeur kicks off in the Asian market when it is very difficult to ascertain whether or not that will happen.
True, these markets have rocketed in the past year since Hong Kong abolished its taxes on wine but I’m still unsure whether all this excitement about ‘Asia’ coming on board for the 2009s is just hype.
- by Rebecca