Digital innovations help resilient market to thrive amid pandemic

He Shusi

Digital innovations help resilient market to thrive amid pandemic

While most industries have struggled during the catastrophic COVID-19 pandemic, one sector has fared well, showing unusual resilience — the collectibles market.

Expansion in the art and wine market will certainly continue when the pandemic ends, said Robert Sleigh, senior director and managing director of operations at Sotheby’s Hong Kong Ltd, on the sidelines of the roundtable.

The pandemic not only has created a global health crisis, but has threatened the global economy with a grim recession. Everyone has felt the pinch of ever-shrinking disposable incomes and dampened purchasing power. But people’s penchant and enthusiasm for investment assets has remained high as more investors appreciate the reliable value gains and wealth-preservation attributes of collectibles such as art and wine.

Asia saw HK$422.12 million (US$54.45 million) in wine sales in 2020, just slightly behind 2019’s HK$461.82 million. “It’s driven by a movement to a digital-first approach, with seven times more online sales in Asia than ever before and 80 recent of bidding globally taking place online,” Sleigh said. “Wine remains one of the most affordable asset classes.”

Wine boasts a favorable supply-demand dynamic, in which wine is produced in a limited quantity and its price rises when it’s consumed while the demand remains intense. “Unlike financial instruments, wine quickly finds its consumable price rather than a trading or investment price, which we saw in the last global financial crisis,” Sleigh said. “At the top end, demand for the finest and rarest wine last year is as strong as it had ever been, with rarity and provenance still being the driving forces.” The insatiable demand for the rarest Burgundy from Asia’s top collectors has certainly been a key theme driving the fine wine market, he added.

The lockdown has had people drink more wine at home than in restaurants, and therefore, wine lovers have had more money to spare for investing in fine wine as a collectible as opposed to splashing on a bottle in a high-end restaurant or bar, Sleigh said.

“Unlike a traditional financial recession, there were no margin calls or need to liquidate assets for the most part,” which explains the resilience of the fine-wine market compared with overall volatility, Sleigh said.

The trend of art investment has also resisted the economic downturn of the pandemic.

“While there was a short lull in activity in the early days of the pandemic, where there was an expectation of ‘COVID pricing’, it quickly disappeared. Our clients made it clear that they wanted to buy and sell, and we were material in providing liquidity in the market, which was badly needed,” he said.

Asian collectors, who account for over 30 percent of Sotheby’s worldwide auction sales, have proved especially resilient in 2020, Sleigh said. “The strong results (generated by Asian clients) have cemented the company’s market-leading position in Asia for the fifth consecutive year. The number of Asian clients bidding online was growing faster than anywhere else, more than doubling in 2020.”

The digital innovations have played an overriding part in the collectibles market’s resilience. In Hong Kong, Sotheby’s has held 63 online auctions across a diverse range of categories from Chinese Works of Art, Contemporary Art to Jewelry, Watches and Wine, achieving a total of nearly HK$250 million, he said.

Looking ahead, Sleigh is upbeat about the prospect for the collectibles market in light of the burgeoning and supportive digital tools and people’s sophisticated tastes.

“The market will continue to grow but some of the changes will stay,” Sleigh said. “Reduced foot traffic caused by travel restrictions and gathering bans demand us to be more flexible and creative to engage potential investors, buyers and sellers.” One example, he says, is, “by bringing in and curating more online sales and virtual selling exhibitions, particularly for young collectors”, who are a rising cohort in Asia.

Apart from the sale of art, wine and spirits, that of collectible luxuries, such as jewelry and watches, will be spurred by the convenience and immersive experience of online events, he said.