Agriculture

For sale:a $95,000 barrel

Signs of life in fine wine market as Palmer prepares for big Hong Kong sale

Chateau Palmer w

Palmer’s grand chateau

Two weeks ago we wondered whether Alibaba’s new ‘Day of Wine’ in September could turn out to be wonderful for winemakers (see WiC324), especially for those who make most of their sales over the internet.

This week we focus on the more exclusive end of the spectrum: an auction in Hong Kong devoted entirely to a single producer – the venerated Chateau Palmer from the Médoc district of Bordeaux.

Among the attractions at the Sotheby’s event on June 4 is a 225-litre barrel of Palmer’s latest vintage, which approximates to 300 bottles of wine and comes with a pre-sale estimate of $65,000 to $95,000.

“This is the first time that Palmer has offered a full barrel of wine at auction,” says Adam Bilbey, head of wine for Sotheby’s in Asia. “It’s a fantastic opportunity for the winning bidder, who has the option of bottling the wine in different formats – half-bottles, double-magnums, Melchiors – and the chance to personalise the back label of the bottles.”

The wine comes direct from the Chateau’s own cellars or from the reserves of the négociant Mähler-Besse, a historical distributor and partner of Palmer, says Thomas Duroux, the winemaker’s chief executive officer.

“The wine has perfect provenance and it has been perfectly kept,” Duroux told WiC. “The quality is assured – we checked every single bottle, tasting the wine, recorking it and adding a proof tag, which serves as a guarantee of its authenticity.”

Assurances like this are becoming more of a feature at Asia’s leading auction houses, which screen out the copycat bottles that have come under the hammer.

Palmer is classified officially as a Third Growth wine but it has established itself as a label that is challenging for First Growth status. The Chateau has also worked hard to promote itself in China, especially since demand from mainland buyers started to become significant about 10 years ago. Part of that effort means more visits to Hong Kong – which Duroux describes as “the centre of the fine wine world”, alongside London – and Palmer also employs an export director who speaks fluent Mandarin.

The auction in Hong Kong comes at a time in which the fine wine market is showing signs of life. The benchmark Liv-ex 100 index, which monitors the prices of a hundred of the most sought-after fine wines on the secondary market, has just reported five consecutive months of gains. That’s a marked improvement from four years in the doldrums following a period in which prices had overheated, spurred by an influx of speculative demand, mostly from China. The subsequent slump saw the best of Bordeaux lose some of its buzz, and Beijing’s austerity campaign dealt a further blow to demand.

“In 2013 and 2014 we definitely saw that sales were down,” Duroux acknowledges. “It wasn’t just because of the anti-corruption measures. Merchants in China had bought a lot of wine in previous years and they needed to sell it before they could start purchasing again. Now that most of that stock has been sold, we are seeing renewed interest.”

According to Jeannie Cho Lee, a Master of Wine based in Hong Kong, Bordeaux’s chateaux were sending as much as half of their production to China during the peak. Although that contribution has declined, Lee says that China (together with Hong Kong) is still their most important market, importing about five million cases a year.

In the meantime Palmer has been furthering its reputation in China’s fine wine circles. “We are known for being part of the Margaux appellation in the Médoc region and we have a reputation for a unique style because we use a special proportion of very good, old Merlot,” Duroux told WiC. “It gives the wine a velvety character in which the tannins really embrace the palate.” These tannins are important for Chinese wine lovers, he says, because they give the wine more “backbone”, delivering a sensation that’s more familiar to a culture with a long heritage of tea drinking.


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