He Wei Qi, a businessman from eastern China's Zhejiang province, says he routinely pays more than 30,000 yuan ($4,500) for a bottle of wine to entertain guests. "A price tag of more than a million yuan a bottle—that does more than show off your wealth, it shows you have good taste," said He, 38, while attending a three-day Hong Kong wine and spirits exhibition that drew about 700 companies from 29 countries. "We don't care how outrageously expensive the wines are."
The value of wine auctions in Hong Kong reached $120 million this year, almost double the $64 million in 2009 and four times the amount generated before the city cut duties on wine to zero two years ago, according to local auctioneers. Sotheby's and Christie's International say their auctions of wine in Hong Kong will raise more than sales in New York and London combined this year. Sotheby's had to issue tickets for the first time for its Oct. 29 wine auction, when it offered almost 2,000 bottles of Lafite shipped directly from the Bordeaux chateau's cellars. The sale beat the auction record for a single bottle set in 1985 in London, when publisher Malcolm Forbes paid 105,000 pounds ($169,000) for a 1787 vintage. At the Oct. 29 auction, three bottles of Château Lafite's 1869 vintage each sold for a record $230,000, 28 times Sotheby's top estimate before the auction. "What we've seen emerging in the last year are people paying virtually any price for wine," said David Elswood, Christie's London-based head of wine. "That's not investment. That is just uncontrolled spending."
Chinese collectors in Hong Kong, the mainland, and Taiwan now hold about one in four bottles of fine or rare vintage wine globally, according to Crown Wine Cellars, which stores about HK$1 billion of wine in a network of converted ammunition bunkers in Hong Kong. Asia's wine market will expand four times faster than the rest of the world, said Robert Beynat, chief executive of wine exhibition organizer Vinexpo Asia Pacific. Much of the growth will come from mainland China, the final destination of much of the fine wine sold in Hong Kong, he said. Liu Xue Biao, a wine merchant from Shenzhen, said that wine he buys in Hong Kong for $3 a bottle can be sold on the mainland for 300 yuan, a 1,400 percent markup. "They are willing to pay just about any price," said Liu, accompanied by two assistants carrying suitcases for their purchases.
Imports by Hong Kong merchants jumped to $600 million in the first nine months of 2010, more than all of last year. China's surging wealth—its number of billionaires soared by 60 percent in the past year—is "inflating a bubble" in wine, said Christie's Elswood. "When you're paying four, five times or even more than the reference price then you have to seriously question the market knowledge of that buyer." One example: At Sotheby's Apr. 3 auction in Hong Kong, a 12-bottle lot of Château Latour 1982 fetched $43,649. Two weeks later, New York-based Tribeca Wine Merchants ran a newspaper ad offering the same for $2,250 a bottle, or 38 percent less.
The bottom line: Fast-growing wealth in China is boosting demand for fine wine sold in Hong Kong. That's raised fears of a wine price bubble.