Lafite in Hong Kong: The price of provenance

After yesterday's drama of sky high prices at the Sotheby's Hong Kong auction, today's developments began to add some context to the numbers.

Firstly, a reminder of how things looked overnight. This table shows the difference between recent trade pricing [Source: Lix-ex] for a case of Lafite, and the price it reached at Sotheby’s Hong Kong auction on day 1.

But following a second auction of a set of virtually identical vintages, less than twelve hours after the close of day one, the record prices start to drop away.

Indeed, if you then compare day two’s prices against the same recent trade pricings as the above table, the story is generally much more in keeping with what we had originally expected from Hong Kong.

That is to say significant increases, but with the major shifts coming in standout vintages [i.e. 2005 & 1996 – which brings them further into line with the excellent 2000]

So why the sudden reality check? Where had the frenzied buyers disappeared to?

Well, the major difference between the two sales was the provenance of the stock.

Day one was directly from Lafite’s own cellars, and we’re often reminded of the importance of status, history and provenance in Chinese culture. Provenance is as much about the people that owned the stock, as it is the storage conditions.

Day two’s stock, albeit potentially just as well stored and looked after, was from the private collection of South Korean company SK Networks and had changed hands at least once – common on the market, but being sold straight after virgin-esque Pauillac stock was always going to be be tough.

The final table below shows the difference in prices between the two days, comparing like for like, with the exception being the day one’s stock was directly from Lafite. From this, we start to get an idea of the influence of provenance on price in Hong Kong auctions.

Taking out the anomalous 1990 [a separate analysis for another day], the ex-cellar Lafite stock performed 17-55% better than its private collection equivalent.

Some big numbers still, but there does seem to be some method behind the madness, and the first signs of calculated restraint. If you listen carefully, you can almost hear the market’s sigh of relief.

Written by John Abbott