Bloomberg News

Burgundy Soars as Chinese Buyers Grab $69,000 Cases at Auction

November 14, 2011

Nov. 14 (Bloomberg) -- Hong Kong investment banker Alan Chen embraced wine collecting after a visit to Bordeaux’s Chateau Margaux five years ago.

“Now I’m fascinated by Burgundy,” said Chen, head of Asian Equities at Mizuho Securities Asia Ltd., as we sipped 1999 Domaine de la Romanee Conti Richebourg at a pre-auction tasting in Hong Kong.

It’s outstanding, but he prefers the ethereal 1999 DRC Romanee-Conti he poured at his Bali wedding in 2009. When his wife said her favorite wine was 1990 DRC La Tache, he bought 60 bottles the next day. Current auction price? $68,821 a case.

Chen, 41, is part of the new Asian wave of Burgundy collectors bidding up prices.

While red Bordeaux has been the big driver of wine auctions, Burgundy is the new star, especially in Hong Kong. At California-based Spectrum’s late September sale in the Chinese city, 80 lots of DRC brought more than $1 million.

“Burgundy’s on fire and sizzling,” said John Kapon, president of New York-based Acker Merrall & Condit, which set 145 price records at its Nov. 4 and 5 auction in Hong Kong. “Bordeaux is a day at the office now.”

In the past two weeks, Acker sold thousands of bottles from the Burgundy cellar of American collector Donald Stott. Acker’s Oct. 29 sale in New York totaled more than $4 million and set 114 records, while the two-day Hong Kong event raised $14.5 million.

The latter demonstrates the rapidly growing market in mainland China for Burgundy’s top names, Domaine de la Romanee Conti and Henri Jayer Cros Parantoux, and serious Asian interest in going beyond these labels.

Bid on Burgundy

Wine consultant Marc Lazar, president of St.-Louis based Cellar Advisors, says his Chinese clients began asking him to bid on Burgundy in March this year.

“Everything is happening quickly,” he said between bids at the Hong Kong auction. “Bordeaux is so ubiquitous that it’s no fun to chase anymore.” Like others, Lazar pegs DRC as China’s new Lafite.

For Hong Kong wine merchant Jason Ginsberg of Ginsberg + Chan, the shift was dramatic. In July, 80 percent of the company’s sales were Bordeaux. Two months later, they were 80 percent Burgundy.

“The switch to Burgundy is a natural progression from Bordeaux,” said Timothy Kopec, who once presided over the massive wine list at New York’s Veritas restaurant and now heads an eponymous advisory service that helps U.S. and Asian collectors build their cellars. “Wine lovers are branching out to the next tier -- Rousseau, Roulot, Roumier and others.”

Better Match

He said Burgundy suits the pure flavors of Hong Kong cuisine better than Bordeaux does. And you can drink Burgundy younger.

So how soon will a Chinese buyer become the new Don Stott? Stott’s collection, amassed over more than 40 years, is unique because it includes such a wide variety of labels, appellations and vintages. The 72-year-old sold his firm Wagner Stott Mercator LLC to Bear Stearns a decade ago.

“When everyone else focuses on something, I look elsewhere -- Roumier, Anne Gros, Bernard Dugat,” he said in a phone interview.

Burgundy’s appeal is not just the wines, but also the people who make them. Part of the Acker auction sizzle was the presence of eight Burgundian producers from domaines a step down from the DRC in price and recognition.

Some were new to the auctions, like Domaine du Comte Liger- Belair, whose stunning smoke-and-spice 2005 La Romanee brought HK$128,000 ($16,460) for 3 magnums, way over the high estimate. Others, like Domaine Drouhin and Clos de Tart, haven’t had much auction traction until recently.

Wine Waiters

At Acker’s Nov. 4 evening sale at the Island Shangri-La, waiters circulated in the packed Grand Ballroom, pouring wines on offer, something the auction house doesn’t do in New York. The strong prices for whites were the first surprise, as most Asian buyers prefer reds.

George Tong, executive director of Hong Kong’s Wong Hau Plastic Works and Trading Co., who added Burgundy to his collecting mix in 2006, had his eye on lot 862, 3 bottles and a magnum of the ripe, muscular 1990 Roumier Musigny (estimate $HK 128,000 to 200,000). Lazar grabbed it for HK$240,000.

A woman from Beijing, who raised paddle 208 again and again for Domaine Armand Rousseau lots, took most at above the high estimates and drew cheers. She spent about $500,000 on the silky-textured reds. Eric Rousseau, his glasses shoved up on his head, went over to cement a new relationship.

Still, the DRC section brought the largest dollar value of any producer in the sale, and a case of Henri Jayer’s 1990 Cros Parantoux was the auction’s top lot.

Private Rooms

Part of the Chinese interest in Burgundy is surely due to encouragement by advisers like Kopec and Lazar. Kopec says his clients are wine curious and fast learners, honing their palates by sharing bottles in private rooms at restaurants.

Not everyone is happy about this trend. Top Burgundies are produced in tiny quantities and increased demand means pressure on prices. At the Wine Future 2011 conference in Hong Kong the following day, critic Jancis Robinson voiced the concern that many outside of Asia have: Will thirsty China suck up all the great Burgundy, leaving none for the rest of us?

(Elin McCoy writes on wine and spirits for Bloomberg News. The opinions expressed are her own.)

--Editors: Adam Majendie, Daniel Billy.

To contact the writer of this story: Elin McCoy at elinmccoy@gmail.com

To contact the editor responsible for this story: Manuela Hoelterhoff in New York at mhoelterhoff@bloomberg.net.


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