Chinese wine lovers seen quaffing French '09 futures

A stellar 2009 harvest has enticed wealthy Chinese to buy French fine wine futures for the first time, leaving many winemakers rubbing their hands in glee at the prospect of higher prices and an expanded market.

Wine futures, also known as "primeurs", are wine purchased prior to bottling, while it is still in stored in vats at the wineries, with investors typically paying up about 18 months before bottling, in the hope of eventual appreciation.

"The Chinese people will be on the market for the first time as a big player this year," said Hubert de Bouard, owner of the 24-hectare estate of Chateau Angelus, one of the highest-tier wines from the St-Emilion region of France.

"Usually the Chinese, they buy and they have the bottle, but now they are thinking if they don't get into futures they will miss some of the best wines."

De Bouard was among winemakers from Bordeaux who visited Singapore to exhibit their wines at a tasting session attended by nearly 1,000 enthusiasts against a backdrop of swiftly recovering Asian economies that looks set to encourage buyers from China.

De Bouard estimates 40% of his annual production is sold in Asia and expects the figure could soon rise to half as Asians sip more wine.

Ideal weather meant perfect grape growing conditions last year, prompting wine expert Robert Parker, Jr., whose 100-point scale gives investors an easy way to rank wines, to award scores between 98 and 100 points to some of France's best-known labels.

A weaker euro would make wine investment more feasible for foreigners this year, said Jean-Philippe Delmas, estate manager for Chateau Haut-Brion, a wine many investors usually see as a sure-fire proposition.

"The euro is less stronger than before, so it's good news for us," said Delmas, whose 48-hectare estate has made wine for about 500 years. The currency has weakened as jittery investors fear the troubles of debt-stricken Greece may infect more EU nations.

Delmas said Haut-Brion's production this year would be more than 10,000 cases, up about 30%  from last year. He too saw stronger Chinese interest in the 2009 wine, which is expected to be priced towards the end of May or early in June.

"Until now, the Chinese market, they don't buy en primeur, but today it is still a small market. It will be maybe 10 years for it to really take off."

Asked about pricing, he replied, "It should be close to the 2005, but it's too early to say it should be lower or higher. The wine is better, so it should be higher, but the economic situation is not the same as in the spring of 2006."

Last year both Angelus and Haut-Brion cut prices for the 2008 harvest by 40 to 50%, as wealthy international buyers and financial speculators turned cautious in the economic crisis.

The London International Vintners' Exchange (or Liv-ex) index, which tracks fine wine prices, was up 28% on the year by the end of March, compared to a 22% fall in the second half of 2008, when bank collapses hit wine investors.

"I know that even if the market in the United States is collapsing, the market in Hong Kong, the market in China, is eager to buy wine," said Arnaud Compas, of Singapore- and London-based brokerage Hermitage Wines.