Pop Goes the Lafite?
Talk about temptation: I read the other day that empty bottles of 1982 Château Lafite Rothschild are fetching as much as $1500 in China, and among the empty trophy bottles staring at me as I write this post is, yes, an 82 Lafite. It doesn’t take much imagination to figure out what those bottles are being used for in China, and having written at length about the wine fraud issue, I certainly have no desire to contribute to the problem. But $1500 for that dusty keepsake sitting on my desk? Oscar Wilde said that the only way to get rid of temptation is to yield to it, but I think I’ll just remove the bottle from my office and put it in the basement.
The booming market for Lafite empties certainly suggests that China’s mania for this Bordeaux First Growth has become a bubble. More possible evidence comes in the form of an all-Lafite auction taking place this weekend in Chicago. Hart Davis Hart is putting 400 lots of Lafite on the block; over 3000 bottles, ranging in vintage from 1961 to 2006, will be on offer, and the pre-sale estimate is $4.3-$6.5 million. Although HDH has not joined the stampede of auction houses to Hong Kong and continues to hold all of its sales in Chicago, there is no doubt that this Lafite extravaganza was conceived with Chinese buyers in mind—the Chinese characters for “Lafite” are even on the cover of the catalog. As far as I can tell, the Chinese are pretty much the only ones buying Lafite these days: everyone else seems to be unloading their bottles to cash in on the soaring Chinese demand.
But is the Chinese demand sustainable? Bubble-spotting can be tricky—just ask Alan Greenspan, the man formerly known as Maestro. China’s Lafite fetish sure looks irrational. On the back of Chinese buying, prices for Lafite have surged 500 percent in the last five years. Even crazier, the chateau’s second wine, Carruades de Lafite, has seen a 1,300 percent price increase during the same period and now often trades at a premium in China to the four other First Growths, Latour, Mouton, Margaux, and Haut-Brion. When Lafite recently announced that bottles of its 2008 grand vin would be marked with the Chinese character for “8”, which is considered a lucky number in Chinese culture, the nod to Sinic superstition immediately sent the price of the 08 soaring an additional 20 percent.
No one has come up with a conclusive explanation for why Lafite enjoys such cachet in China. Sure, it’s a prestigious wine, but so are the other First Growths and their Right Bank equivalents (Pétrus, Cheval Blanc, Ausone). Some suggest that it is a linguistic issue—that Chinese oenophiles have an easier time pronouncing “Lafite” than other names. Economist Andy Xie, who claims that 70 percent of the Lafite consumed in China is counterfeit, believes it is just a classic snowball effect. He points out that in China, fine wine is very much a status symbol; Lafite was well-known and expensive, and for whatever reason, it became the “It” wine for the mainland’s newly affluent, which served to drive up prices and make Lafite even more desirable. We do know that brand loyalty in China sometime rests on a dubious foundation. Take Château Beychevelle, a Fourth-Growth Bordeaux that commands marginal interest everywhere else but which has also become a hot item in China. And what accounts for its popularity there? Evidently, the dragon boat on the label is the big selling point; in fact, Beychevelle is known in China as “Dragon Boat Wine.”
It’s easy to be condescending about this stuff, to mock Chinese wine enthusiasts for their excesses and lack of refinement. But as Matt Kramer points out in his latest column for the Wine Spectator, it wasn’t so long ago that we Americans were the wine newbies. And, really, what’s the difference between China’s Beychevelle jones and our critter label craze? Perhaps we’re not quite the wine sophisticates we imagine ourselves to be (even if we have now surpassed France to become the world’s largest wine-consuming nation—go team!). Whether or not China’s fixation with wines such as Lafite and Beychevelle proves to be transitory, this much is certain: the wine boom in China and the rest of East Asia is real, and the effect on supply and prices is going to be profound.