Lafite at $230,000 a bottle means boom for Hong Kong wine vaults(1)
Jerome Favre/Bloomberg
Bottles of wine are stored in the Hong Kong Wine Vault in Hong Kong, China.
Fergus Fung swipes his card across a sensor and waits as his face is scanned by a computer to match his profile. A steel door opens and the Hong Kong entrepreneur enters a vault that holds his treasure of Bordeaux and Burgundy.
This is the Hong Kong Wine Vault, one of more than 15 repositories that have been set up in the past three years in the Chinese city as it overtook London and New York as the world’s biggest auction market for top wine labels like Chateau Lafite, Domaine Romanée-Conti and Krug. The temperature is a constant 13 Celsius and humidity is 75 percent, protected by 4 inches of insulation on the walls, ceiling and floors.
“The facial recognition thing is a bit gimmicky,” said 35-year-old Fung, founder of the WOM guide to Hong Kong restaurants. “But with any wine cellar, security is a key issue.”
After Hong Kong axed wine duties in February 2008, imports surged to $858 million last year, from $185 million in 2007. Auction house Sotheby’s (BID) hasn’t had an unsold bottle in the city in its last 15 auctions and broke the world record in October with three bottles of 1869 Chateau Lafite that fetched HK$1.8 million ($230,930) each.
“It’s exploded, and you need logistics to support that,” said Robert Sleigh, who runs Sotheby’s Asia wine business. “Now there are world-class wine storage facilities in Hong Kong.”
The city needs them. Temperatures can soar to 35 degrees Celsius, with relative humidity near 100 percent, factors that could render a $75,000 bottle of Chateau d’Yquem undrinkable. Moreover, few collectors have room for cellars, with 99 percent of the population living in apartments.
Tax Break
Still, it wasn’t until the government cut the wine duty to zero from 40 percent in February 2008 that storage took off.
“It’s a free-trade zone for wine,” said Anthony Mak, managing director of Modern Wine Cellar which opened its doors in June in Hong Kong’s New Territories.
The tax cut drew customers from the mainland, which has some of the biggest buyers among its 1.1 million millionaires.
“Half our customers are Chinese,” according to Thomas Shum, manager of The Cave, which opened near the border with China last December, he said, “This business is new in Hong Kong and now is a good time to catch the trend.”
Imported wine in China is taxed at 45 percent including customs duty, while the UK charges 41.7 percent in excise duty and VAT. Hong Kong wines have no sales tax.
Jerome Favre/Bloomberg
A sommelier pours a glass of Burgundy wine during a wine tasting at the Hong Kong Wine Vault in Hong Kong, China.
