For those wine enthusiasts looking to make the leap from merely drinking wines to investing in wines, you’re in good company. With China now accounting for 40% of the global buyer’s market for fine wines, it’s no surprise that this liquid asset class is being closely tracked. According to its Global Investment Returns Yearbook for 2018, Credit Suisse has recognised fine wine and rare wines as a top-performing collectible. For those interested in joining in on the action, we’ve tapped John Kapon, Chairman of Acker Merrall & Condit to share some advice on how to invest your hard-earned dollars in wine.
As the chairman of America’s oldest wine merchant and one of the largest fine and rare wine auction houses in the world, Kapon is also well known as one of the most entertaining wine auctioneers in the business. We had a chance to catch him recently in Hong Kong for Acker Merrall’s “Billion Dollar Celebration”, a live auction held last month which later went on to fetch more than US$1 billion dollars in sales, a significant milestone for a company that began in New York City as a package store in 1820. While results from the auction pointed to the continued dominance of Burgundy, John was more than happy to share some additional tips for the aspiring wine collector and insights on the influence of Asia on the fine wine market and future wine auctions.
We’ve come a long way. When I first started this 20 years ago, we had US$4.5 million in sales — a long way from US$1 billion. We’ve analysed prices from 20 years ago compared to today and come up with a multiple of 8.8 on how prices have gone up on the best wines in the world. It’s just incredible to see how far the wine market has come, and it shows how wine is becoming more a part of everyday life and culture here. I didn’t even know Asia back then — it was literally a foreign concept to me until I came here in 2007 for the first time. One year later, we were doing auctions and the rest is history. To achieve that number is gratifying and shows how far wine has come in the world, and how the best wines have gone up in value over time.
When a wine appears at an auction, it’s almost a stamp of approval in that it signifies that it’s an auction-worthy wine, so part of that goes into the selection process. We have tons of auctions in New York City where we open up a ton of wines. You don’t have to be a billionaire to go to a wine auction. You can buy 3-4 lots every time and slowly amass a collection over the long term. A lot of people come, buy 1-2 lots and taste 10-15 wines throughout the course of the day, which is very educational for them because they don’t often get to do that.
One of the keys to collecting is tasting and experiencing what you’re collecting. You’re not just putting it in the closet and waiting 10 years to enjoy it. You want to enjoy and understand it. People get together for tastings with friends who love wine, and that is central to becoming a great collector.
On our end, we have an appraisal system and process for wines that get appraised. Wines that are more collectible tend to be traded more and there are more sales records and histories that we follow. We can see when wines have been trending up and down or staying at the same price for the last 10 years.
From a wine-collecting standpoint, it’s similar to real estate where they say location, location, location; when it comes to wine, it’s producer, producer, producer. Bordeaux and Burgundy are the two icons of the fine wines market but many people in the U.S. start with California — it’s easy to understand and accessible. In Asia, people probably start with Bordeaux because they’re more Europe-focused here, and Bordeaux is easiest to understand.
Burgundy’s the rage now and in the last three years it flipped with Bordeaux. We also see great potential in other areas like Italy, Rhone, Champagne, Spain, California and Germany. These other regions are what is up and coming; there’s a lot to be learned about these wines, especially in Hong Kong and China.
The best brands are the best investments and age the best. It’s best to buy wines by the case and if you can’t, buy a few bottles here and there and build your collection the organic way and it’s still a lot of fun. Internet auctions are a great way to do this; we have internet auctions where you can buy 20 lots and spend HK$20,000 whereas in a live auction chances are you’re going to spend a lot more, upwards of HK$500,000.
Internet auctions can offer great value. We have internet-only auctions every month on the first of the month where you can get lower-value wines. Instead of buying 12 bottles, you can get one bottle of wine for HK$10,000, it’s smaller quantities, and more diverse selections, which is a great way for people to start to collect. You have to buy the best brands — producers are what matter, and you have to follow the market. There’s up-and-coming producers but the iconic brands are prone to be the best investments because they’ve already proven to be so.
We have an app where people can bid live. They can participate on their phone or on their desktop as if they were at an auction, but can bid from their homes and be comfortable wherever they are. The internet has brought the live auction room to people. But for the experience of tasting and learning, nothing compares quite like going to the room. We must open up 100 bottles of wine per auction.
Giacomo Conterno from Italy is one of the best producers on the planet, his wines are incredible and his flagship wine is getting really expensive really quickly. Old Riojas from Spain, CVNEs (pronounced coo-nay) from Spain, wines from the ‘50 and ‘60s — you can get these for less than HK$1,500 a bottle and these are just delicious wines. From Rhône, Jean-Louis Chave is one of my personal favourites. He makes a huge range of wines and they’re all good, from US$30 per bottle to a US$3,000 bottle — he’s another one who I think has huge potential to significantly grow in value in the future.
That you have to spend US$1 million dollars to go to a wine auction — you don’t. A lot of people buy 1-2 lots and slowly amass a collection. Like collecting anything else (e.g. cars, watches, etc), you do have to have the funds to collect fine wines. It’s fun even if you’re just learning, it’s a fun experience — at least our auctions are.
Everyone gets a free pass, but we keep an eye on people. If you come to three or four auctions and don’t buy anything, expect to be on a waitlist. You have to participate a little bit, even if you buy one lot every two to three auctions, just to show good faith. Some people try to bid at five or six auctions and lose because it’s a hot lot and we understand that.
Our auctions are a bit different than others; we make it a real party and event and I don’t think that’s going to change. Good food, good wine, good people. That’s what people want — an experience-driven kind of auction. They don’t want to sit in a classroom and get served crackers and water, which is how traditional British auctions are run — you might miss your lot because you’ve fallen asleep! But we like to have fun, make it enjoyable and an experience. That’s not going to change.
We’re going to see prices continue to go up: We’re just scratching the surface when it comes to global participation. For us, perhaps we hit US$10 billion in sales. There’s so much wealth out there and there’s only a limited amount of wines — you can’t just make more La Tâche because you want to, there’s only so many vines of La Tâche and only so much fruit you can get out of that vineyard every year.
Most of the market is dominated by Greater China (i.e. China, Taiwan, HK, Macau) and America. Brazil is a decent third. There’s so much potential for increased demand from areas that are closed or where distribution channels were previously closed, especially in the Southern Hemisphere, so the future is looking awfully bright for the best lots.
Unlike 20 years ago, now in restaurants in New York City there’s wine on every table — it’s become part of everyday life. When you go to restaurants in Hong Kong, it’s not quite there yet, wine is not as universal. It will trickle down or up or both ways, as wine becomes part of everyday culture.
The best way to learn is to taste. Go to industry events; James Suckling holds some great ones that are open to the public, like his recent Bordeaux Confidential. A lot of consumer events are available in Hong Kong and going to as many of these as possible is a great way to start.
Another example is our Greatest Wines of World Weekend, which features seven extravagant meals paired with amazing flights of wines. We’ll probably end up tasting half a million worth of wines in one weekend, which even the wealthiest collectors I know don’t get to do normally. We’ll have foodies and wine lovers, people from the U.S., Shanghai, Taiwan and Hong Kong, mainly affluent people who are making it a destination weekend and want the experience of a lifetime. We do a lot of luxury tastings and weekends like this where people have the opportunity to try fine wines.
I’m glad you asked this as I don’t drink the wines that I sell at the auctions. As for my personal favourite wines for everyday home drinking, I’m into German and Austrian wines for the whites. With dry white wines from Germany, there’s been a revolution in the last 10-15 years where they are making these GGs (Grosses Gewächs) and they’re just fantastic. You can get some people making wine for 300 years, and have 3rd and 4th generation wines that are only US$30-$40. I love the Austrian Grüner Veltliners, they are delicious. I drink a lot of Italy and Rhône at home because they offer tremendous value compared to Burgundy and Bordeaux — for that under US$50 segment, you can really get bang for your buck.
As for a last supper wine, I’ve been fortunate enough to taste a lot of fine wines and am active in learning firsthand myself. I actually thought about it and if I put a number to it, I’ve probably tasted and/or drank 30,000 bottles considered to be the finest and rarest wines. The greatest vintage of all time is 1945: Three of the best wines have been 1945 Romanée-Conti DRC, Château Petrus, Château Mouton Rothschild — all exquisite wines. I had one in April last year, and this year, I’ll have two. It’s funny, sometimes you get the same wine a few times a year then you don’t see them again for 10 years.
Christina Tam is a wine & spirits columnist for Lifestyle Asia Hong Kong. A communications professional by day, Christina is an experience-seeking oenophile who is constantly inspired by wine’s ability to transport through its geography, culture and history with one sip. Follow her on Instagram @madame_toastte.