Asian Wine Collectors Anticipate Fall Auctions in Hong Kong

Posted on Sep 16 2010 - 3:49pm by Winnie Hsiu

In a personal finance article at the end of August, U.S. News & World Report senior editor Kimberly Palmer argued that collecting expensive bottles of wine is a waste of money. She points to a study done by Stanford Graduate School of Business and California Institute of Technology researchers, in which wine lovers offered a taste of the same wine in two different glasses insisted that the one labeled with the more expensive price tasted better. Serious wine collectors, though, would disagree. This fall’s wine auctions at Christie’s and Sotheby’s in Hong Kong will cater to the most serious wine collectors in the world — most of whom will not actually taste the wines they buy at auction, but will instead store them as an investment, in climate-controlled storage units that have their temperature and humidity recorded every few seconds.

East Asia has become a hub for wine collecting over the past few years. After the markets crashed in 2008, many wine collectors in Europe and the United States sold at least parts of their collections. As a result, rare French wines flowed in a river (metaphorically speaking) to China, Singapore, and Hong Kong. Wine collecting is especially popular in Singapore, where the import duty is much lower than it is in Hong Kong and Thailand.

“In the months following the financial crash of 2008, lots of European and American sellers pushed their inventory to Asia,” Christie’s Hong Kong wine specialist, Michael Au, commented in today’s Wall Street Journal. “As a result, there’s a higher chance to find a rare bottle out here in the Asian market.”

This fall, Christie’s and Sotheby’s will cater to the desire of serious wine collectors to find a rare prize to add to their collection. Christie’s will kick off the auction season with its sale this Saturday of 400 cases of rare wine owned by the South Korean company SK Networks. The wine is not Korean, though, and is not even in Asia at the moment — it is being stored in Europe. These cases of wine come from 13 châteaux, including Château Lafite Rothschild, Château Petrus and Château Haut-Brion.

On October 1, Sotheby’s will offer another collection for wine lovers to salivate over, with a sale titled “The Magnificent Cellar of Marcus D. Hiles.” Hiles is a Texas real estate investor who is very serious about his wine, so much so that he built his own cellar, with an underground river flowing through it to maintain the wine at the correct degree of coolness and humidity, to store it. The sale at Sotheby’s Hong Kong will include only about 20 percent of Hiles’ collection, but that 20 percent includes more than 6,500 bottles, estimated to be worth between $3 million and $4.7 million U.S. dollars (or $23.4 to 36.7 million Hong Kong dollars).

Collectors buying wines at auction take a special interest in knowing how the wines have been stored. In fact, they are likely to insist on knowing exactly where each bottle in a collection has been and for how long, and to demand to know what the climatic conditions were like in the facility where each bottle was stored. Wine should be stored at around 13 degrees Celsius, with humidity levels ranging from 55 to 60 percent, according to today’s Wall Street Journal. Improper storage conditions can be very damaging to fine wines.

Many wine buyers will turn to climate-controlled self storage units to store their collections. While ordinary climate-controlled storage can work perfectly well for storing wine (if the temperature and humidity are continuously monitored and adjusted), many self storage companies are beginning to offer specialized wine storage areas in addition to ordinary storage units. Some have added tasting rooms and additional security measures for their wine storage areas. The following self storage facilities are just a few of the U.S. self storage facilities that specialize in wine collection storage as well as ordinary self storage:

Sources used:

Adobe Creek Wine & Storage.

Big Jim Self Storage and Wine Cellar.

Brickell Xtra Storage.

Elmwood Self Storage.

Gold Key Storage.

Gonzales, Tony. “Wine storage competitors work together in shipping venture.” Self Storage Industry News. April 13, 2010.

Kilpatrick, Kim. “Wine collectors heat up Singapore self storage market.” Self Storage Industry News. Dec. 21, 2009.

Ma, Amy. “So you want to start a wine collection…” The Wall Street Journal. Sept. 16, 2010.

“The Magnificent Cellar of Marcus D. Hiles to be offered at Sotheby’s Hong Kong.” Art Daily. Sept. 16, 2010.

“Need for wine storage on the rise.” Inside Self-Storage. March 4, 2010.

Palmer, Kimberly. “5 upgrades that waste your money.” U.S. News & World Report. Aug. 31, 2010.

Passy, Charles. “Just BYOB to these wine-storage facilities.” The Wall Street Journal. March 4, 2010.

Private Mini Storage.

Redwood Empire Wine Storage.

Stor Self Storage.

Store Self Storage and Wine Storage.

Strong Box Self Storage.

Wine Care Storage.