Wining on a bicentennial heritage

HK has lived up to its name as a wine lovers’ haven. Auction house chief John Kapon tells Sophie He the Chinese passion for the alcoholic beverage has helped lift the city’s status as a key global wine auction market.

Hong Kong, long renowned as a wine connoisseurs’ paradise, has joined New York City as the world’s two most important wine-auction markets, thanks to the rising number of affluent Chinese mainland people who have cultivated an undying love for fine wine and come to Hong Kong for wine auctions, according to John Kapon, president and chief executive of auction house Acker Merrall & Condit.

Acker Merrall & Condit started off as a wine shop in 1820, and Kapon is a third-generation wine merchant at the helm of the family business.

“Acker Merrall & Condit is America’s oldest wine shop with an almost 200-year tradition and heritage of selling and buying fine wines of the world,” Kapon tells China Daily in an interview.

The company set up its Asian headquarters in the special administrative region in 2008 and has been conducting auctions in the city since. It holds six traditional live wine auctions in Hong Kong each year and, occasionally, one or two smaller ones in the city too. At its latest auction in Hong Kong on Nov 4, Acker Merrall & Condit raked in sales exceeding HK$40 million.

Apart from Hong Kong, the auction house holds nine auctions in New York, plus monthly online sales.

“The Asian market is very important to us, accounting for about half of our overall business. And, there are more Chinese buyers at our US auctions as well,” says Kapon.

The goal is to attract more Chinese buyers and, to do that, the company plans to educate Chinese consumers by exposing them to different wines, plus all the flavors that the wine world has to offer, through wine tasting events, dinners and dog-and-pony shows, where people can actually learn about the product by tasting and experiencing it, he says.

“It’s amazing that the Chinese are so passionate about wines, and they learn so quickly. They have an eagerness and desire to learn.”

With the aim of extending its tentacles across Asia, the company had thought of bringing in a Hong Kong investor about a year ago, but the idea is no longer on the table.

“We (Acker Merrall & Condit and the potential Hong Kong investor) were in discussions for a while, but there were a few issues we couldn’t sort out, so that investment is no longer on the cards.”

The family touch

For the time being, the company is in a good place, it’s financially sound, and Kapon wants to keep it in the family.

“We don’t want to lose that family touch because we feel like that our clients have become part of the family. We have this very close relationship with them and we don’t want to get too corporate, and this was one of the reasons we thought twice about the investment,” he explains.

According to the entrepreneur, New York and Hong Kong now dominate the fine and rare wines market, and are the two hubs for the wine world. About half of the company’s business comes from Chinese buyers — from the mainland, Hong Kong, Macao and Taiwan.

In terms of the difference in consumer behavior, Kapon says Western consumers’ wine knowledge is more like “A to Z”, and they are more willing to try out products from other regions.

The Chinese market is currently dominated by Bordeaux and Burgundy — the two iconic wine regions of France — Kapon says, adding he sees strong demand for “A-plus” wines in China, and there is demand and desire for wine knowledge to be greatly expanded.

“Hong Kong consumers tend to be more international. Mainland consumers don’t speak as much English, but they do recognize what’s the best and understand quality. I believe that’s why we have attracted a large number of Chinese mainland customers to Hong Kong to take part in auctions here in the city.”

As a third-generation owner of the family business, Kapon says he would like to turn the rich heritage Acker Merrall & Condit has as America’s oldest wine shop into more of a household name.

The company is still known to those who are familiar with the fine and rare wine industry, but there’re still a lot of consumers who aren’t familiar with the Acker Merrall & Condit brand.

“I hope that, someday, more consumers would know what we’re doing and the quality wines we offer. Nobody offers a better selection of the world’s best wine on a monthly basis like us, so we want to get our name out there, not just in

CAPITAL IDEAS: PETER LIANG

China and in Asia, but also in Europe and South America.”

Groundbreaking steps

Acker Merrall & Condit had sold many bottles consigned by convicted wine fraudster Rudy Kurniawan several years ago. Kapon recalls that the company had obviously been a big victim of fraud and it’s scared of going through that again, but stresses they have learned a good lesson from that very unpleasant experience.

In the wake of the Kurniawan scam, the company has instituted groundbreaking procedures that have helped it deal with problems connected with counterfeit wines.

“We are the first auction house to add a third-party inspector to look at wines with a certain value and a certain age. So, all the bottles that come under the hammer under certain categories are inspected by third-party inspectors. This really helps to instill integrity in the process.”

Kapon believes the entire industry has learned a lot from that episode because Kurniawan was someone who had touched many companies worldwide.

The industry now is very much safer than before.