Title Explaining the Phenomenon of Wine Auctions in Asia by Luxury Brand Concept: Identify the Potential and Risk on Brand Equity of Fine Wine Merchants Keywords: fine wines, Bordeaux top growth, wine auctions, Asian market, luxury brand, wine merchants, French wines, German Wine Auction *Full version can be provided on request.

1. APPLIED RESEARCH DISSERTATION
Presented and defended by
Shelley Chi Wah LAM
17th December 2010
Wine Auctions in Asia and Luxury Brand Concept:
The Potential and Risk on Brand Equity of Fine Wine Merchants
Master 2, Luxury Brand Management
Business name: Millesima
Work placement tutor: Gerard Spatafora
Dissertation tutor: Paul Dawson
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2. Acknowledgement
I am heartily thankful to my Lecturer, Paul Dawson, whose encouragement,
guidance and support from the initial to the final level enabled me to develop an
understanding of the luxury brand management.
In addition, I offer my regards and blessings to all of those who supported me in
any respect during the completion of the project, including Mr. Richard Sutton,
London Fine Wine Merchants- Armit, Mr. Richard Brierly, London Wine
Merchant Vanquish, the Ex- Wine Auction expert, Mr. Richard Bampfield MW,
professional wine expertise specializes in wine appreciation and commercial
consultancy on wine trade, Mr. Phillip Wittmann, Weingut Wittmann, Westhofen,
Mr. Bengel, the wine maker of Staatsweingüter Kloster Eberbach in bei Kloster
Eberbach, Export Sales Manager, Jochen Becker-Köhn of Weingut Robert Weil,
Rheingau, Mr and Mrs. Diel, Schlossgut Diel, Rümmelsheim, Hilke Nagel, Press
and Communication from VDP German.
I also extend my heartfelt thanks to my family and well wishers.
Shelley LAM
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3. Table of Content
Acknowledgement
Introduction 5
Section 1. Methodology 6
1.1 Objective of the Dissertation & Limitation of the study 9
Section 2. Fine Wines as Luxury Products 10
2.1 Defining Fine Wines 10
2.2 Fine Wines- the Luxurious Status 13
2.3 Business Model for Bordeaux fine wines 13
2.4 Bordeaux Distribution System 15
2.5 Fine Wines and En Primeur 16
2.6 Bordeaux Classifications 16
2.7 Wine Investment 18
2.8 The HNWI Consumers 20
Section 3. Wine Auction – An Specialized Distribution Channel on Wine Selling 21
3.1 Wine Auction History- Who set the trend, how & why 21
3.2 Michael Broadbent MW- an important person in Wine Auction History 22
3.3 Type of Wine Auction 22
3.4 Case Study: German Wine Auctioneer VDP. Die Prädikatsweingute 23
Section 4: Chinese market- the emerging interest in Auctions 26
4.1 Strong interest in Auction, but not only on wine auction 28
4.2 Luxury Brands in Chin 30
4.3 Twenty-first Century Deluxe Report 200 30
4.4 Case Study: Richemont and its Presence & Development in China 32
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4. Section 5. Brand equity: Why it is important for fine wine merchants & Chateaux? 38
5.1 The difference of Luxury Brand Management and General Marketing 40
5.2 Branding Case Study: Lafite Rothschild & Mouton Rothschild 40
5.3 The Ex-Cellar Effect 43
5.4 Branding and Wine Label with Localized Culture 45
5.5 Case Study on Krug Champagne: The Rapid Changing Consumer Behaviour and 46
Preference
5.6 The Importance to Build Up Luxury Brand Equity for Fine Wine Merchants 47
Section 6: Wine Auction in Hong Kong - a Luxury Branding Tool for Fine Wine 50
Merchants?
6.1 The Wine Auction Market 50
6.2 How Branding Affect the prices for Fine Wines 51
6.3 Release Price trends of 22 Cru Classé Bordeaux 51
6.4 Average current price by vintage (22 top chateaux) 52
6.5 First Wine and Second Wines 53
6.6 Luxury Branding- Why it is important for the fine wine merchants 54
6.7 How Wine Auction Assists Fine Wine Merchants to Build the Luxury Image? 55
6.8 Is Brand Manager Necessary for Fine Wine Merchant? 58
Section 7: Understanding The Risk on Wine Auctioning 59
Conclusion 64
Bibliography 66
Glossary 69
Appendix- Management Presentation Jun 2010: Millesima Business Plan 2010-2012 70
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5. Explaining the Phenomenon of Wine Auctions in Asia by Luxury Brand
Concept: Identify the Potential and Risk on Brand Equity of Fine Wine
Merchants
Keywords: fine wines, Bordeaux top growth, wine auctions, Asian market, luxury
brand, wine merchants, French wines, German Wine Auction
Introduction
On 29th October, 2010, En Primeur 2009 Lafite was sold at 294% of trade price in
Sotheby’s wine auction in Hong Kong. With the boom in wine auction and
increasing interest in fine wines in Asia market, especially on the blue chip
Bordeaux and some of the well-known burgundy, fine wine merchants and Chateaux
owners have recognized the potential to sell their wines to Asia market through wine
auctions in Hong Kong. The primary reason to sell wines through wine auction is the
financial earning when catching the right target audiences who are demanding for
fine wines. The secondary reason is to reach the new market with a minimal start up
cost, and target to build up their luxury status by cooperating with various renowned
auction houses.
Wine auction is a complicated topic which in all dimensions- consumers behaviour,
branding, provenance, distribution, auctioneers’ pricing strategy, communication,
etc. Wine Auction is usually held within a fixed time frame, for example, eight hours
time slot every quarter year. Every element in the chain can affect the outcome and
the resulted prices. Particularly in Asia, where the burgeoning interest starts to
evolve, market situation is volatile and thus it very difficult to predict the outcome of
wine auctions. On the same wine brands, instead of having booming prices through
wine auctions, some of the auction houses are actually getting price results that are
more close to the trade price. The objective of this study is to give a holistic
approach to understand the potential return and risk of selling wines through wine
auctions in Hong Kong, and it’s effect on the brand equity of the fine wine
merchants.
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6. This study will examine the wine auction situation three aspects, with a focus on
Asia market. First of all, the Asian consumer behaviour in auctions will be studied.
Secondly, a detail analysis on the current wine auction strategy will be examined,
through analyzing the numerous wine auctions in Hong Kong from 2009 to 2010, on
pricing, provenances, participates, and how the auctioneers’ decisions on lot
arrangement co-related to the price results for this specific market. Finally, besides
the monetary benefits from wine auction, this study will also give an idea on how
wine auction can help to build up the luxury brand equity in new market, which is an
essential element for sustainable business development, that can be built up from
time to time, and have less influence by the market situation.
Section 1. Methodology
This applied research theme was developed during the internship in a fine wine
merchant Millesima. As a fine wine merchant with more than two millions bottles of
fine and rare wines in the private cellar, Millesima is developing a strategy to expand
to Asia market, first to Hong Kong. Consider that there would be a concern on cost
issue when expanding the market to Asia, instead of investing substantial amount on
the fixed cost such as office set up, retail store opening, the management of
Millesima has identified that wine auction could be a way to extend their wine
selling to Asia market.
After the tax and duties on imported wines uplifted in 2008, there is a trend of
increasing imported wines to Hong Kong 1. Some of the wines are consumed in Hong
Kong, and most of the wines are further transported to China. Due to the restricted
law of wine importing and the strict regulation on the wines label and descriptions,
usually wine merchants deliver the wines to Hong Kong, and the sector of Hong
1
CN Wine News 2010
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7. Kong to China will be on the own arrangement of the Chinese specialists 2. Thus,
Hong Kong is benefited to function as a wine hub, wine trade amount is expected to
go further up.
In terms of wine auctions, there are more than thirty wine auctions organized by five
major auctioneers in Hong Kong during the beginning of 2009 to end 2010. With
strong demand on fine wines in the Asia market, these auctioneers achieve record
breaking sales prices on Lafite, and other various well-known top growth of
Bordeaux and Burgundies. It is expected that by the end of 2010, Hong Kong will
surpass the US market and become the first wine auction destination in the world3.
Although the market shows a good sign and positive prospect, the demand driven by
the high interest of Chinese is still considered to be unstable. According to Christie’s
Elswood, the burgeoning wealth brings out a serious question on the market
knowledge when the wines are sold four to five times more than the reference price
in the auctions. In order to understand how the wine auction can work best for the
fine wine merchants to sell their wines to Asia, this study is carried out.
The research methodology includes both primary and secondary research. For
primary research, numbers of interviews were conducted with wine expertise and
wine merchants in London. In addition, knowing that Germany has a long history on
wine auctions, a field study was conducted in Rheingau and Rheinhessen, and
interview was conducted with the wine makers, vineyard owners and VDP
personnel, who are actively participants in each year’s auction. List of interview
conducted is shown as below:
 Mr. Richard Sutton, London Fine Wine Merchants- Armit
2
XiuHua 2010
3
CN Wine News (2010)
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8.  Mr. Richard Brierly, London Wine Merchant Vanquish, the Ex- Wine
Auction expert
 Mr. Richard Bampfield MW, professional wine expertise specializes in wine
appreciation and commercial consultancy on wine trade
 Mr. Phillip Wittmann, Weingut Wittmann, Westhofen
 Mr. Bengel, the wine maker of Staatsweingüter Kloster Eberbach in bei
Kloster Eberbach
 Export Sales Manager, Jochen Becker-Köhn of Weingut Robert Weil,
Rheingau
 Mr and Mrs. Diel, Schlossgut Diel, Rümmelsheim
 Hilke Nagel, Press and Communication from VDP Germany
Besides the qualitative research on wine auction market and wine trade to Asia,
secondary research on existing literature 4 , analysis and news are conducted.
However, there is limited research on fine wine and the luxury brand concept, and
there is only one literature study on wine auctioning, which specified on the co-
relations of vintage lot arrange and sale prices. Obviously, there is a large gap on
research study on wine auction and brand equity, which also indicate that the
research on these areas are far behind the market trend. Thus, this study will focus
on the market situation of wine auctions in Asia, and start a conceptual research to
examine how wine auction can affect the brand equity.
4
Jones, G. V. and K.-H. Storchmann (2001), Jan Bentzen and Valdemar Smith (1995)
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9. 1.1 Objective of the Dissertation
During June 2010, a business plan presentation was developed for Millesima
(Appendix), to advise on their business development in Hong Kong. Due to the
strong their interest on the selling wines through wine auctions, and the booming of
wine auction in Asia, this dissertation further studies the opportunity and risk on
selling fine wines through wine auctions in Hong Kong, and examine how wine
auctions can help to develop the luxury status for fine wine merchants like
Millesima.
Limitation of the study
This dissertation focus on the fine wines and wine auction as selling channel. All the
business model and strategies are specially catered for the fine wine merchants, who
intend to expand their market to China.
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10. Section 2. Fine Wines as Luxury Products
2.1 Defining Fine Wines
There is no absolute definition on fine wines. However, to qualify as fine wines, the
following criteria are all essential:
 The potential to improve in bottle and appreciate in value:
The aging potential defines the quality of the wines. The higher aging
potential, the higher quality of the fine wines as aging can provide the fine
wines with more balance and smoothness, which are highly appreciated by
the wine connoisseurs.
 Heritage, brand names and reputation:
in additional to the wine quality, brand name and heritage definitely represent
the personality of wine. Wine appreciation is subjective, and consumers
usually form connection with the wine if the brand image are communicated
in the right way. However, branding should not overwhelm the wine quality
and be over-addressed.
 Storage condition
Fine wines are fragile, especially after a few years of aging. To keep the
wines in perfect condition for future drinking, the storage is very important.
Fine wines are always stored in temperature controlled warehouses with
minimal movement.
 Provenance:
provenance means the origin. Fine wines are limited in quantity and highly
sought after. Due to the high demand on fine wines in different markets,
some of the fine wines are 'travelled around', e.g. shipped from France to
North America, then transfer to new market such as Hong Kong and China.
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11. The transport of the fine wines will increase the risk of bottle-shock, due to
the trauma and volatility of the bottle.
 An active secondary market:
fine wines are usually with high demand. As the quantity are limited and are
drunk every year, fine wines that has aged for a long time are usually highly
sought-after. An very active secondary market encourages the transaction of
fine wines and create the return in wine investment.
 Track records on investment value
Wines can be seen as a commodity for drinking. However, for fine wine, it is
more than a commodity. The trading and investment on fine wines have
raised the need for price analysis. All the well-known fine wines with
investment value usually analyzed with tracked records, done by some
exchange company in United Kingdom, e.g. London International Vintners
Exchange (Liv-ex).
2.2 Fine Wines- the Luxurious Status
Fine wines should be marketed as luxury products, based on the following
characteristics:
 Limited production
Although there is no definite definition on fine wines, to be considered as
fine wines, it must have the quality, such as fruit concentrations, good
balance, complexity of the aromatic characteristics, good structure and long
finish. To qualified as fine wines, the wine making must be very precise, and
wine must not be made under mass production. The mass production on the
grapes will decrease the concentration of the fruit. Without concentration of
the fruitness, wines can never achieve the quality standard of fine wines.
Thus, quantity of the production are always under strict controlled, produced
in low quantity, to ensure the wine produced from the best grapes, with the
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12. best aging potential. In Bordeaux wines, only the very top end is concerned
with less than 0.1% of the overall wine production.
 Scarcity
Wines are commodities for drinking pleasure, regardless the price. Even the
most high priced wines are always for future drinking, although the drinking
period may last for decade. Since only fixed quantity is produced each year,
when the time goes by, the fine wines will be consumed and availability will
only go down. Therefore, some good vintage fine wines are always highly
sought-after. As the quantity is rare, investors can always set higher re-sell
price to achieve better return. In simple term, the fine wine prices are driven
by a small group of leading brands, and the quantities diminishes over time
when wine is consumed.
 Complexity
Fine wines are like the hand-crafted luxury goods. The quality of the fine
wines highly linked to the personality of the wine maker, and the land. Fine
wines do not have fixed formula on production, every wine is highly tailor
made according to the climate and environmental situation. Besides, fine
wines have the complexity to show the characters. Based on difference brand
names, producers, appellation, classification, vintage quality, fine wines can
show the dynamic nature, which attract wine lovers' attention to understand
more and to find out the background behind the fine wines.
 Heritage
Fine wines are always attached with the stories behind the brands, especially
for Bordeaux wines. The history, the owner, the wine makers, and the land,
all contribute to the heritage of the fine wines, which help to express the wine
personality and indirectly help to form personal linkage with the wine lovers.
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13. 2.3 Business Model for Bordeaux fine wines
Bordeaux is known as the capital of fine wines. Compared to total seven hundred
million bottles of production each year, fine wines only occupy around thirty
millions bottles, with estimated yearly turnover over two billion euro (CIVB, 2009).
However, although Bordeaux is the biggest producers on wines, the fine wine
portion with high investment value are less than 10% of the total quantity. The wine
trading in Bordeaux is very unique and complicated. It involves various parties
which play different roles to contribute the success to the market5.
2.4 Bordeaux Distribution System
Bordeaux has a specific mechanism to sell their wines. Usually, after wine is made,
it will be stored in barrels for eighteen to twenty four month before bottling and
selling to the market. In this stage, producers already start selling their wines when
the wines are still in barrels. En primeur, or wine future, is the name for this form of
selling. Basicially, en primeur offers the customer an opportunity to invest in a
particular wine before it is bottled. And on the other hand, Chateaux owners or
producers can get their cash in advance, so as to invest again in next vintage wine
making, such as preparing the equipment for next vintage, or hiring new
professionals for improving the wine making process.
For producer, they can be benefited from the advanced cash flow system and have a
guarantee on certain sale level of the product. For consumer, buying en primeur
gives them the opportunity to secure the rare wines which are highly sought after in
future. The purchase price of en primeur is usually lower than the price of the wines
after bottled in two years time. One wine investment, en primeur has an very
important role as it has the highest potential return based on the relatively lower
purchase price before the wines are aged. However, due to the unknown evolution in
fine wine itself when aging, buying en primeur for investment also has the highest
potential risk, and thus requires professional advice before investment.
5
Jane Anson (2007)
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14. In terms of the distribution, Bordeaux has an unique system with several key parties
handling specific roles and duties. It can be simplified as below:
 Vineyard / Estate owners or wine producers: This is the most important
party on the success of the fine wines. It involves professional experience on
grapes planting, wine making, blending of wine, storage and aging, etc.
Besides, it is believed that the land itself- the terrior, plays an crucial role on
the wine characteristic. All of these elements have to be a prefect match to
produce the fine wines. Once wines are produced, the producers will decide
their allocation to the courtier, according to historical sales figures and
performance of courtiers.
 Courtier: traditionally, the wine makers or Chateaux owners seldom involve
in sales and marketing. It is the major role for courtiers to locate the market,
further distribute the wine allocation to more wine merchants. Courtier also
has a role to monitor the market performance, to ensure the wines are
distributed to the right market and marketed in an appropriate way. Courtier
usually has good relationship with Chateaux and has a responsibility to give
feedback from the market to the Chateaux, to ensure the producers know
about the market response and further improve their quality.
 Negociant: the nature of negociants is very similar to courtier, but in a
smaller scale in terms of quantity. Once allocations are distributed to
negociants, negociants will further distribute the allocations to various wine
merchants. The report back on sales and market feedback are all similar as
above. Besides, it is also the negociants' responsibility to export the wines to
external market, and to negotiate the prices and marketing direction with
overseas distributors.
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15.  Wine merchants: responsible for the selling of wines to the end customers. It
can be done through retail store (wine shops), or private sales. Wine
merchants usually have strong distribution network on wholesales as well, in
order to provide the most extended coverage to more end customers.
There are two major well-developed market place for fine wines- Bordeaux and
London. Both cities have large scale of fine wine trading, well-equipped storage,
tracking, labelling procedures. Most importantly, there are bonded warehouses for
duty free storage so investors can exclude from duty and taxes while trading their
fine wines. Based on the various experience on fine wine trading, some of the online
trading site are developed successful. Liv-ex is an excellent example to provide the
wine trading market place, not only for United Kingdom but also for customers
worldwide.
Le Conseil Interprofessionnel du Vin de Bordeaux (CIVB)
Other than the above entities, there is also a very important organization in
Bordeaux, named Le Conseil Interprofessionnel du Vin de Bordeaux, or CIVB.
Founded in 1948, CIVB serves as a Bordeaux wine Bureau, to group nearly 10,000
Bordeaux wine producers and growers, and 400 négociants. It is considered as one
of the most important wine industry body in France. CIVB has a role to promote the
interests of its members via national and international communications channels,
conduct research into market trends into both production to distribution. Also, it play
a key role in addressing viticulturally technical issues of quality, environmental and
heritage concerns.
2.5 Fine Wines and En Primeur
Also known as Wine Futures, En Primeur refers to the process of buying wines
before they are bottled and released onto the market. Wines are usually delivered 2-3
years after the vintage, and can only be purchased by the unmixed case (12 bottles,
24 half bottles, 6 magnums).
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16. The opening En Primeur price is almost always considerably cheaper than the future
price of the wine on the open market. En Primeur can also be the only way to secure
wines that are available in very limited quantities (some properties produce as little
as 200 cases a year).
How does En Primeur work?
Wines are still Bottled in the Stored in UK, Wines remain in bonded
aged in Barrels properties under warehouse until delivery is
before Bottled (In France) Bottled bonded requested.
After 18-24
(in France) wines warehouse (VAT & Duty applied for
Months of
send to delivery request)
aging in
1.En Primeur wines are purchased before they are bottled and released onto the
market and while they are still lying abroad. En Primeur wines are bought at In
Bond prices - ie exclusive of Duty & Vat.
2.On arrival in the UK the wines will be stored, under bond, on consumer’s
behalf in the cellar.
3.Customers will be notified of their arrival and asked for any further delivery
instructions.
4.All En Primeur purchases are Ex-Vat and Ex-Duty. If/when customers choose
to have the wines delivered (anywhere in the EU) these taxes become payable.
2.6 Bordeaux Classifications
Bordeaux classification was developed in 1855, at the request of Emperor Napoleon
III. Under this classification, the Bordeaux wines from left bank was ranked in five
categories according to price. Not every wines are categorized in the 1855
classification. Since the classification was developed more than a hundred sixty
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17. years ago and it has not been updated since 1973, it is always a controversial topic
where it truly includes all the quality fine wines.
There are five first growth, four of them are from Médoc and one of them from
Péssac- Leognan. The first growths are:
 Château Lafite-Rothschild, Pauillac
 Château Margaux, Margaux
 Château Latour, Pauillac
 Château Haut-Brion, Péssac-Leognan
 Château Mouton Rothschild, Pauillac, promoted from second to first growth
in 1973.
In the same year, the sweet white wines were classified into three categories. In
Sauternes and Barsac, only Château d'Yquem being classified as a superior first
growth.
In the 1855 classification, only left bank wines are ranked. Until 1955, the
classification on St. Émilion was developed, with two Premier Grand Cru Classé A:
 Château Ausone
 Château Cheval Blanc
For rest of the region such as Pomerol, there is no official classification applied.
However some Pomerol wines, based on the excellent quality and limited quantity,
are often considered as being equivalent to the first growths of the 1855
classification. For example, Château Pétrus and Château Le Pin, and often sell for
even higher prices and they are one of the favourite fine wines for wine
collectors.Based on the famous brand names, exeptional quantity and rareness, the
above fine wines are very famous in the wine trade, and usually have more
investment value.
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18. It is also important to note that except Bordeaux fine wines, Burgundy wines are also
with high investment value. In terms of the scarcity, Burgundy Grands Crus only
represents two million bottles per year (about ten percent of Bordeaux fine wine
quantity), with estimated yearly turnover around hundred million euro. Due to the
different classification system and production structure, Burgundy production are
fragmented into smaller vineyards with different wine making styles. Thus, for
investment, Burgundy wines are focused on a few leading producers such as
Domaine de la Romanée-Conti.
2.7 Wine Investment
Fine wine is an investment product other than traditional investments such as stocks,
bonds or cash. Today collectors store more than two billions of fine wines in UK
bonded warehouses and hold more than three hundred millions wine funds. Recent
five years, there is a strong demand on fine wine from new markets, such as Hong
Kong and China, which leads to hugh impact on prices, wine trade business models
and storage. A recent survey conducted by the Private Banking department in Korea
showed that wines was the third matter of interest for the High Net Worth Income
customers. The strong demand from Asia, which has totally different drinking
culture compared to European and America, has raised a high concern for the wine
merchants and fine wine vineyard owners6.
Generally, the reasons for choosing wine investment over other investment products
are:
 The prestige image
Drinking fine wines is definite a prestige social lifestyle. There is nothing to
be compared to enjoy the wines family and friends, and to share the
happiness moment. In terms of investment, buying fine wines are always
associated with the prestige image, as the fine wines are always rare and
6
Ashenfelter, O. (1989)
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19. difficult to find in the market. Owning a legend vintage of a renowned
branded fine wine is usually linked up with the taste of the collectors.
 Return on investment- low co-relation with other investment
Comparing with other investment products, wine investment has a lower co-
relation with other investment. Although wine market is always linked to the
economy as a whole, it is less likely to have direct linkage with other
economic index. Besides, wine investment is not a major investment option.
Investors do not use wine investment to dominate their investment portfolio.
Wine investment always a secondary choice comparing to other products and
customers usually invest in wine only when they have substantial amount of
disposable income.
 Tangible Asset
Unlike the stock investment, which highly relies on the investor expectation
co-related to the economic environment, wine investment is an investment on
tangible asset- the wine itself. Fine wine prices are highly relied on the
demand of the secondary market, and have less linkage with the confidence
towards the market trend. The tangible asset is rare, and the production, the
supply, plays a key role in the market. The less quantity production on the
fine wines, the higher the scarcity and thus the more potential for better
investment return. Contrast to the stock market which is allowed issue more
share to divide the risk and to attract more investors, fine wines are non-
dividable.
Also, due to the tangible nature of wine investment, the logistics, storage
conditions become crucial concern for wine investors. To make it simple for
trading and keep prefect conditions on storage, the fine wines for investment
are always stored in the bonded warehouses, which temperature controlled
and are excluded from tax and duty until the wines are transfer outside of the
warehouses.
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20.  Portfolio diversification
Fine wines are very dynamic and prices depend on various aspects- the
quality of the grapes and the land (the terroir), the vintage, the wine making
skills, the aging potential, the drinkable period, the marketing strategy, the
heritage and branding of the vineyard, the export strategies, the geographic
locations, the support of government on the fine wines, consumer taste and
cultural influence, to name a few. Investing in fine wines is complicated, and
thus, the investment portfolio is usually more diversified. The potential and
risk of wine portfolio are varied with all the elements above.
 Pleasure experience
Regardless of the monetary return, investing in wines is always full of
pleasure. The wine investors are always the wine lovers, who drink and
develop passion in wine appreciation. Without the drinking pleasure, wine
investment becomes flat and hard to understand. Besides, the best aspect of
wine investment is, even the return is not very substantial, it is always less
likely for fine wines to be depreciated in value (expect those which pass the
best consmption period). It is always the pleasure to drink the fine wines with
or without monetary increment after a few years of investment.
2.8 The HNWI Consumers
Wine investment can involve large amount of money and it takes time to have a
significant return. Usually wine investment period is encouraged to be five years
minimum. Therefore, usually wine investment is delicated to the high net worth
individual (HNWI), who has high net worth. In the private banking business, these
individuals typically are defined as having investable assets (financial assets not
including primary residence) in excess of US$1 million7.
7
Merrill Lynch (2007)
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