Selling South African wines to the Chinese Market

When we think about wines with a global reputation, we tend to think of France first and foremost. Certainly when we talk about wines that are popular within the world’s biggest market for red wine, China, we tend not to talk about the wines of the new world. But why not? South Africa’s wines are gaining in popularity, their quality has been proven, and it seems that China has taken an interest — if recent reports are to be believed.

vine in Africa
Vines in Africa

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Asia’s love affair with Bordeaux

After a few shaky vintages in Bordeaux, you could be forgiven for feeling nervous that interest in the fine wine market was beginning to subside in Asia. Admittedly the market became so vast, so quickly, that there was little chance of growth continuing at such a fast pace. However, recent reports show that Asia’s love affair with Bordeaux is far from over, and in fact,this may just be the tip of the iceberg.

Mouton-Rothschild and the year of the ram

Chateau Mouton-Rothschild
Chateau Mouton-Rothschild

The evidence speaks for itself – at the top end of the market, a recent ex-chateau auction of Chateau Mouton-Rothschild in Hong Kong smashed all records, fetching a total of US$4.1 million. An extraordinary collection of 66 bottles was featured, offering vintages between 1945-2012.

This auction took place just before the Chinese New Year, giving it particular significance for the Chinese bidders, since it is the year of the ram – of course ‘Mouton’ is the French word for sheep! Continue reading

Making wine in a city, a war zone, and a desert

LDN CRU Mixed Dozen
LDN CRU (photo from official site)

Wine writer Jamie Goode recently reported on the first vintage of London Cru, the first ever UK-based ‘urban winery’. You might think a city center is an unusual place for a winery, and you would be right! Unsurprisingly, the grapes are not grown in London, but rather sourced from several well-known European wine-making regions such as Languedoc-Roussillon and Piedmont. However all of the vinification is done in London, and it will be very interesting to taste these wines. London is not the only unlikely place where wine is made though – so today we’re looking at some of the other more unusual locations around the world where wine is made against the odds. Continue reading

Fine wines to watch

Various factors come together to determine the value of a wine – there’s the quality of the vintage, its classification, and perhaps most significantly, how it has been rated by wine critic Robert Parker. Wines that Parker scores with 90 points or above become highly desirable often regardless of their Bordeaux classification, including wines that might otherwise slip under the radar. So, what are the factors that determine which wines are the ‘ones to watch’ whose value will improve the most?

Re-classification

The wines of Bordeaux were classified in 1855 and little has changed since then. Recently though, there has been some movement. Two St Emilion estates received promotion to Grand Cru Classé A status, Pavie and Angélus, resulting in a flurry of activity as buyers sought to get their hands on them.
Of course, re-classification doesn’t happen overnight, and a good deal of legislation accompanies it, giving the smart investor with a close eye on the market a chance to source wines that are being considered for promotion.

Parker re-evaluates the wine in bottle

The score that Parker initially assigns to a wine on tasting the barrel sample is a crucial one, but it’s often his in-bottle score in the years to come that determines the wine’s value on the second-hand market. A recent example was Parker’s perfect scoring of Chateau Pontet-Canet 2010– a fifth growth punching above its weight whose value has rocketed.

A special endorsement

When Hong Kong first emerged as a market for Bordeaux, First Growths dominated. In his ‘Magical 20’ tasting, Parker selected 20 wines from the 2009 Bordeaux vintage that he felt were of First Growth quality, taking attention away from the top wines and ensuring that there would be a race to buy the wines he endorsed. Wines like Cos d’Estournel and Pichon Lalande were identified for praise, and their value consequently soared.bordeaux

A new market?

Who could have predicted how immense the market for fine wine in China would be? Far from slowing down, this is a market whose taste is changing, turning its attention to wines from beyond Bordeaux and exploring different wine regions. It is possible that India will soon drop its wine import duty too, and it is worth keeping an eye on markets like Russia and Singapore as well. Wines to watch out for include Chateaux with historic links to emerging markets.

When it comes to wines to watch, we can’t get it right every time of course, nor can we predict what will appeal to one man’s palate, so for every 2010 Pontet-Canet there will also be a Pichon-Baron whose value suffered slightly from not receiving a perfect score from Parker this time. Nonetheless it remains highly investible and may benefit from re-evaluation in future. Ultimately fine wine is a solid investment, and if you happen to have some of these wines in your collection, your investment will prove to be even more lucrative than you thought.

Tracking China’s Wine Investment Trends

Tracking China’s Wine Investment TrendsAs was recently revealed by a BWC Management and Consulting publication, fine wine investment has been rising in Asia by 40%, compared to only 10% in the rest of the world. Even though there was great expectation for an increase in China’s involvement in the international wine market, these new figures wildly exceeded previous estimates. It all began back in 2009 when the Chinese arranged some highly profitable Sotheby’s auctions that were held in Hong Kong. In accordance with predictions made at that time, China has emerged as an international leader in the fine wine trading. In a few short years the Chinese market has moved up to number five on the global list of wine consumption and imports more wine from Bordeaux than its UK and German counterparts.

Wine Consumption Versus Investment

In those earlier years, wine purchased by the Chinese was predominantly for drinking pleasure. Although that trend has also increased, savvy Asian investors quickly understood the value of safely investing in fine wine. It may have been spurred on by the sale of a litre of Chateau Petrus that brought in £58,000 at the Hong Kong auction, but for whatever reason, the tendency of wealthy Chinese businessmen to safeguard their money by investing in fine wine is now well known. As a matter of fact, they not only invest in wine to versify their financial portfolios, but they also buy it as impressive gifts to give to their appreciative friends. This expensive habit was the focus of an article that came out in an annual report regarding the richest individuals in China. The Chinese Millionaire Wealth Report stated that not only do the Chinese buy the world’s finest vintage for personal pleasure or for investment, but also to gift to their friends.

Low Risk Investment in Fine Wine

The Senior Private Client Portfolio Manager of BWC Management & Consulting, Samuel Cheung is not surprised. According to him, the Chinese simply realised that investment in stocks and shares can be very unstable so they’re taking advantage of the low risk nature of wine investment.