Five Reasons Behind the Southeast Asian Wine Boom
In 2013, China became the world’s biggest consumer of red wine–consuming 1.86 billion bottles. That is an increase of 136% over a period of 5 years- an astounding feat which made the country the leading market for red wine in the world.
Last October, Sotheby’s Asia auctioned off a collection of 114 bottles of Romanee-Conti for USD1.6M. This set a record for the highest price paid for a single lot of wine.
This year, the biggest wine storage facility in the region is slated to be open by year-end in Singapore. Singapore Wine Vault (SGWV) with it’s 750,000 square feet of storage space can safely house 10 million bottles of fine wine.
So what has led to the Southeast Asian wine boom? Let’s have a look:
- Traditionally, the region has always preferred more beverages with higher alcohol content. Asians have a love for whisky, cognac, baiju or even sake. The wine business got the push it needed way back in 2006 when mainland China and other economies in the region experienced tremendous growth. All of a sudden, people had more money to spend on luxuries. These included designer clothing, bespoke jewelry and of course, fine wines.
- In 2008, the Hong Kong government abolished import duties on wine and beer. That plummeted the city as Asia’s leading wine hub. Because of its location, reliable transport and logistics infrastructure and excellent reputation as a “world city,” fine wine trade developed quite rapidly in the city. This encouraged many wine traders from different parts of the world to look at Hong Kong as a gateway to Asia.
- There continues to be a rising affluence in Asia and this makes people want to show off and display their wealth by exploring other ways of investing their hard earned money. Fine wine investment has become very big in the region in recent years. Also, Asians have found a way to realistically “share” this new found wealth with friends and family thru wine. They cannot give each family member a new car but they can surely share with them their expensive bottle of Lafite.
- In the early years in this part of the world, drinking alcohol was considered a more “masculine” activity. Of course, the more alcoholic the beverage was, the more desirable it was for the macho men who dominated the drinking culture. Men would congregate at the local pub after work for some whisky or beer. Times have changed since then. The workplace is now welcoming more and more women. As a result women have started drinking, as well! They celebrate promotions, entertain clients and go for a night out with friends. Most of the time, their beverage of choice is wine.
- Widespread internet use and the prevalence social media have also given the fine wine industry a boost. Whereas before people had to physically go to a store and talk to a merchant to buy a bottle of wine, a lot of younger, upwardly mobile Asians turn to the web for wine reviews and guidance. In China, for instance, internet usage has reached the 618 million mark. Sergi Rostoll, Regional Sales Director for Gonzales Byass in Asia Pacific, estimates that currently, 20% of wine sales in China is done online, “China sells a lot of wine online compared to other countries. The Chinese always check T Mall or VineHoo.”
In the early years of the wine boom, the region only exclusively knew Bordeaux. Now, people are turning to other regions in France as well as other wine producing countries such as New Zealand, Australia, Chile and Argentina. Fine wine collectors who can’t get enough are also looking for other ways to get their fine wine fix. One of these is through private auctions such as those hosted by Sotheby’s Asia.
Robert Sleigh, senior director and head of wine business at Sotheby’s Asia, told the South China Morning Post that he sees the fine wine trade getting even bigger in the coming years.
“Our auctions this year have performed the best since 2011. Since we started in Hong Kong, auction value had kept increasing until 2011 before it declined in the next two years due to a price correction of 20 to 40 per cent for the wines that had appreciated the most. This is more related to a price cycle. This year, we have seen increased demand, with 85 per cent of the buyers from Hong Kong, mainland China and Taiwan. I believe the wine market in Asia, including Hong Kong and mainland China, is maturing, and buyers are becoming increasingly sophisticated.”
Clearly, the fine wine trade has taken off in a big way in South East Asia and it looks like it has just begun.