On the 24th and 25th of November a lavish collection of wine and spirits will go under the hammer at Sotheby’s in Hong Kong. Belonging to Taiwanese billionaire Pierre Chen, highlights include a six-litre imperial of 1982 Pétrus, yours for an estimated $60,000. And this is just the start of the Pierre Chen/Sotheby’s roadshow, with auctions planned in Paris, Beaune and New York. Overall, more than 25,000 bottles will be sold for a projected total of $50m.
What surprised me most is that bottles as valuable as a jeroboam of 1971 La Tâche from Domaine de la Romanée-Conti (estimated to sell for up to $160,000) will be roused from their slumber and shipped to Hong Kong, rather than remaining safely in storage while bits of paper change hands. Rare paintings and cars can be repaired but all you have to do is drop a bottle and it becomes worthless instantly.
The man tasked with packaging the wines safely is Vincent O’Brien, the MD of Octavian Wine Services in Wiltshire where Chen stores his wine. The company’s main storage facility is a former mine that was dug out in the 18th century and then later used by the Ministry of Defence to store bombs. It doesn’t require any air conditioning or climate adjustment, like the cellars deep beneath Épernay in Champagne, so it’s naturally the perfect place to store wine. There’s over £1.2bn of the stuff stored there. The oldest bottle is a 1775 Massandra Sherry from the Czar’s cellar in Crimea.
O’Brien is an Irishman and an accountant by trade rather than a wine specialist, which gives him an outsider’s perspective on the fine-wine business. He describes it as ‘a very trusting industry, it has not as modernised as much as it should.’ This was workable when the fine-wine market was a few collectors in Britain and the US but now it’s a multi-billion-pound global industry with wine making up part of investment portfolios for people who have no interest in actually drinking the stuff.
In the past, the kind of people who bought bottles cared mainly that the contents were sound because at some point they would be reaching for the corkscrew. Nowadays, every aspect must be considered, including the packaging. But, O’Brien explained, you have ‘investment grade wine but not investment grade packaging.’ For some buyers, more than sound paperwork, the ‘aesthetics of the case is taken to be a validation’, he added. It’s best to leave wine alone as much as possible but ‘as the value has increased, the more we’re being required to interfere with it. We’re opening up over 8-9,000 cases a month to take images,’ he said.
When I asked him whether shipments the size of Chen’s made him nervous, he replied that ‘it’s our day job, it’s what we do regularly’. Mistakes are rare, with Octavian’s error rate standing at 0.002%. Moving valuable stock requires quality checks and photos at each stage so that ‘if there’s ever a question, there are validatory points. The burden of proof is on you, [because] we guarantee we will cover everything.’ He added: ‘it is amazing how few warehouses take images of stock arriving and leaving. Images tell a story.’
Wine and spirits have some of the most opaque supply chains in the world
Once the wine is covered in black wrap and onto a lorry, ‘we can breath a sigh of relief,’ O’Brien said. The first batch from Chen’s collection is now with Sotheby’s in Hong Kong. Nick Pegna, the auction house’s global head of wines & spirits, explained that much of it will be transported ‘by sea to avoid any change in air pressure’ and ‘the detailed inspection procedures before shipment are repeated on arrival in terms of verification, and temperature is logged throughout.’
The 50-million-dollar question is: will there be any fakes in the collection? O’Brien explained that staff at Octavian don’t have ‘expertise to validate bottles but we do due diligence on our customers.’ Wine has a particular problem for investors: are rare wines commodities, in other words interchangeable items of the same value like gold, or more like works of art or classic cars, i.e. individual items with their own specific value? Rare wines should be in the latter category, with all the provenance that category demands, but the wine business hasn’t fully caught up when it comes to concepts such as paper trails, ‘you get better provenance buying a secondhand car through Auto Trader,’ he quipped. Too much is still done on trust. Maureen Downey, an expert in wine authentication, agreed: ‘wine and spirits have some of the most opaque supply chains in the world.’ And she added, ‘There are a lot of auctions in the past who did not do due diligence and many today who continue not to do due diligence.’
Some auction houses have been made to look foolish at best by forgers such as Rudy Kurniawan. Though one of the names Downey trusts implicitly is Sotheby’s, she thinks it likely that the team will uncover a few dodgy bottles: ‘With that much wine, there’s a high likelihood there will be bottles that will be pulled out. Not because Chen’s a bad guy. Many collectors expect vendors are doing the work to make sure they are getting authentic bottles. Sadly, that is not the always the case.’
Wine has a particular problem for investors: are rare wines commodities or more like works of art or classic cars?
She described the authentication process as ‘a bottle at a time situation. That’s why they are selling it piecemeal because it takes so long to do.’ Pegna elaborated: ‘We train all our specialists to determine the authenticity of bottles, matched to appropriate provenance, and always have two or more senior specialists review high value bottles. We use high powered magnifying camera loupe to review labels and our internal library of resources to research authenticity issues. Provenance research can also involve contacting the producers.’
All this suggests there’s a very high likelihood that the wines will be in good condition and genuine when they go under the hammer in Hong Kong this weekend. Then it’s just a question of where buyers should store their investment grade wine. O’Brien noted with a wry chuckle that after all that work getting the wines to Hong Kong, much of it will be returning to his cellars deep beneath the Wiltshire countryside.