Billionaires’ Wine Thirst Quelled by Record Futures

Source: Sotheby's via Bloomberg

Three bottles of Chateau Lafite from the 1982 vintage. Wines from the first growth chateau in Bordeaux have been fetching record prices at auction, fueled by demand from Asian bidders. Close

Three bottles of Chateau Lafite from the 1982 vintage. Wines from the first growth... Read More

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Source: Sotheby's via Bloomberg

Three bottles of Chateau Lafite from the 1982 vintage. Wines from the first growth chateau in Bordeaux have been fetching record prices at auction, fueled by demand from Asian bidders.

Surging demand for Chateau Lafite and other French trophy labels, especially from Asia, has pushed both prices at auction and wine futures to records. Not all wine dealers are happy.

The prices for some of the most expensive bottles are starting to discourage even billionaire collectors, said dealers -- some of whom had warned in January of a bubble that could burst in 2011. Chinese and other buyers balked as some Bordeaux producers raised prices as much as 80 percent last month for the new vintage offered “en primeur,” when it is still in barrels.

“En primeur sales have halved,” Simon Staples, fine wine and marketing director of the London-based merchants Berry Bros & Rudd, said in an interview. “It’s a combination of high prices and the fact that the chateaux released less than last year.”

Sales growth is also slowing at auctions. Takings at the biggest three wine auction houses in the first six months of 2011 were up by 46 percent on the same period in 2010, according to Bloomberg calculations, down from the 88 percent sales increase in 2010.

The Liv-ex Fine Wine 50 index, tracking daily price movements of the 10 most recent vintages of Bordeaux’s five First Growth chateaux, declined from 445.49 points on July 1 to 433.51 points on Aug. 2. The London-based index, based on trade sales, rose 136.67 points to 401.11 last year.

Photographer: Elin McCoy/Bloomberg

A barrel sample of 2010 Chateau Grand Puy Lacoste, a Bordeaux fifth growth, awaits tasters at the chateau's tasting room in Pauillac, France. The wine is a standout, with a futures price of $90 a bottle. Close

A barrel sample of 2010 Chateau Grand Puy Lacoste, a Bordeaux fifth growth, awaits... Read More

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Photographer: Elin McCoy/Bloomberg

A barrel sample of 2010 Chateau Grand Puy Lacoste, a Bordeaux fifth growth, awaits tasters at the chateau's tasting room in Pauillac, France. The wine is a standout, with a futures price of $90 a bottle.

The future sale prices were boosted by scores of more than 90 for the vintage from the critic Robert Parker.

Futures Increase

Chateau Latour 2010 was released at 780 euros ($1,106) a bottle, a 30 percent increase on the also highly rated 2009 vintage. Chateau Ausone was pitched at 1,120 euros a bottle, 17 percent higher than last year. The 108 euros being charged for bottles of Carruades de Lafite -- the second wine of Chateau Lafite -- was a 59 percent increase.

Last year, Asian buyers snapped up a third of the Berry Bros. Bordeaux 2009 futures allocation. Only 5 percent of the merchant’s 2010 wines have gone to the region, Staples said.

“The 2009 vintage was the first that attracted a lot of Chinese en primeur investment,” said Staples. “They’ve seen it has really increased in value and have been put off by the prices of the 2010s. If it isn’t in a bottle, they can’t show it off to their friends.”

Chinese consumers continue to spend millions on older vintages in bottles at specialist auctions. Sotheby’s (BID), Christie’s International and Acker, Merrall & Condit took a record $258.3 million in wine sales in 2010, more than double 2009. About two-thirds of the most expensive lots were selling to Asian bidders, according to both Christie’s and Acker.

Auctions Increase

Sotheby’s and Christie’s raised $53 million and 28.7 million pounds ($47.1 million) at wine sales in the first half of 2011, increases of 49.3 percent and 120 percent respectively. Acker took $54.8 million, up 10.4 percent. The total for all three, about $155 million, compares with $106 million a year ago.

Growth for all three companies was primarily driven by sales in Hong Kong. Sotheby’s HK$96.8-million “Ultimate Cellar” auction on April 2 was the New York-based company’s 15th straight 100 percent-successful “white glove” sale in the region.

Hong Kong

“The market has continued to grow because we’ve had some unbelievable collections to sell in Hong Kong,” Serena Sutcliffe, Sotheby’s worldwide head of wine, said in an interview. “Some individual prices have come down. Lafite has leveled out. It couldn’t continue to rise with every sale. Now buyers are looking at other chateaux and they’ve begun to close the gap.”

In October 2010, a 12-bottle case of Lafite’s 1982 vintage, sourced directly from the chateau, sold for HK$1 million ($128,000) at Sotheby’s Hong Kong. The wine fetched HK$605,000 a case at the same auction venue in April.

By contrast, Chateau Mouton-Rothschild ‘82 fetched HK$169,400 a case at Sotheby’s Andrew Lloyd Webber Wine Collection auction in January. The price in Hong Kong climbed to HK$217,800 in April at Sotheby’s “Ultimate Cellar” sale.

John Kapon, chief executive of Acker, believes the problematic 2010 futures campaign will drive Chinese buyers back into the auction market.

“Bordeaux has scared off Asia just as it was coming to the table,” Kapon said in an interview. “People from that region will notice they can get three bottles of 1995 Bordeaux for the price of one bottle of 2010. They don’t like paying for things and having to wait years to get them.”

Record Bottle

The French collector and restaurateur Christian Vanneque had to wait six months to take possession of a bottle of 1811 Chateau d’Yquem for which he paid a record 75,000 pounds ($122,070).

The price, paid in a private sale brokered in January by the London-based Antique Wine Company, was the highest for a bottle of white wine, according to the Guinness Book of Records.

The 200-year-old sweet Sauternes was handed over at a ceremony in the Ritz hotel in London on July 26. It will be put on display at Vanneque’s new restaurant, SIP Sunset Grill in Bali, Indonesia, the Antique Wine Company said in an e-mailed statement.

(Scott Reyburn writes about the art market for Muse, the arts and culture section of Bloomberg News. Opinions expressed are his own.)

To contact the writer on the story: Scott Reyburn in London at sreyburn@hotmail.com.

To contact the editor responsible for this story: Mark Beech at mbeech@bloomberg.net.

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