The World of Fine Wine

IN A RECENT DECANTER ARTICLE (January 2010, p.117), investments and auctions commentator John Stimpfig explored the ongoing price hikes and market speculation surrounding Château Lafite Rothschild and Carruades de Lafite, especially with reference to the wider Asia region. Stimpfig’s analysis referred to a previous article on the same theme, also in the “Collectors’ News” section of Decanter, from two months prior: “Asia’s Love for Lafite Leads Price Rally” (November 2009, p.113).

There is data to support the elevated activity relating to Lafite and Carruades de Lafite. Stimpfig tracks not only Liv-ex but the Liv-ex 100, the Liv-ex Claret Chip Index, and even the Liv-ex Lafite Index, in which Carruades is now lumped together. Despite a relatively modest contraction in late 2008 and early 2009, the Liv-ex Lafite Index is still rising and, as Stimpfig points out, “We all know why. The answer is a heady mix of wealthy Asian collectors and global speculators who have fueled demand.”

Fingers are increasingly pointed at China, but it is important to emphasize that the profiles and behavior of consumers in mainland China are markedly different from those of maturer markets in the wider Asia region—notably Singapore, Japan, Taiwan, Macau, and Hong Kong. One should also distinguish between “collectors,” who have various motives for acquiring specific wines, and the nominally more prosaic category of “consumers.” Yes, prices for Lafite and its second wine are indeed affected by knowledgeable collectors in maturer Asian markets and by speculators globally, but the demand for Lafite and its associated products in mainland China is being stimulated principally by wine consumers, not collectors.

Who are China’s wine consumers, especially those eyeing fine wines from various parts of the globe? The example of Lafite is revealing. In China’s “first-tier” wine cities—Beijing, Shanghai, Shenzhen, and Guangzhou—those ordering Lafite and Carruades are not merely affluent. In Beijing, political power is more significant, because some of these consumers are government officials or the heads of national organizations that remain state-run.That said,Beijing and northern China do have mining billionaires keen to get what they consider France’s finest. Southern China, traditionally speaking, has involved more of a merchant and self-made culture. But the relations between affluence and power are ever entwined in China, since any wealthy public figure has to have considerable guanxi (“relationship power”) within multiple spheres of influence.

What principally unites the affluent and powerful for whom “Lafite” is a buzz word in China is that they are acquiring fine wines for immediate consumption and gift-giving, especially at Mid-Autumn Festival or Chinese New Year. In general, they are not vintage-savvy or even aware of wine’s general attributes, let alone the nuances of Bordeaux, its appellations, and notable properties. For example, the 2008 vintage—with the luckiness of the number eight and China’s Olympic year to boot—will likely see unrealistic price rises, not least for Lafite and Carruades. But why Lafite? The reasons trotted out for Lafite essentially being the only recognized brand among high-end Chinese wine consumers—Penfolds and Jacob’s Creek are perhaps near contenders—are not always convincing. Lafite is neither easier to say for Chinese speakers nor has a better Chinese translation than any other first growth. It has more to do with the presence of DBR Lafite in China from as far back as 20 years ago—veritable ancient history in the China imported-wine arena.

This picture of Chinese fine-wine consumers is, however, somewhat simplistic. What we experience on the ground is a strong generational effect, along with consumer behavior along gender lines—common elsewhere, perhaps, but even more pronounced in mainland China. Older Chinese men chasing Lafite are typically the most conservative of drinkers, for whom wine is red and comes from France (which is practically synonymous with Bordeaux for them). Their actual knowledge of Bordeaux, France, or wine itself is usually limited.

More encouraging is the post-Cultural Revolution generation, referred to in less emotive terms as the “1980s-born.” All have been exposed to the surge in consumer products that followed Deng Xiaoping’s economic reforms and have also benefited from the single-child policy, resulting in the most widely traveled, materially privileged, and consumer-aware Chinese generation to date.
In other words, China’s younger generation is both upwardly mobile and coming to wine for the first time in significant numbers—critically, without having caught a taste for baijiu (Chinese white spirit), viewed as the drink of a less cosmopolitan age. This group, especially China’s younger women drinkers, is not interested merely in Bordeaux but is more adventurous regarding country of origin and wine styles. They are likely to eschew Chinese wines in favor of more chic, trustworthy, imported products, and younger women are more likely even than their male counterparts to seek formal wine education.

Traditionally in China, women “hold the money”—in a housekeeping sense but also in overall family finances and investments, doling out pocket money to their spouses. In a society where self-made women are on the rise, will this generation of affluent Chinese female drinkers affect global fine-wine prices, too? Perhaps they already are.

This article originally appeared in Issue 27, 2010 of The World of Fine Wine magazine, a quarterly magazine devoted to wine and all thing vinous.

It boasts an authoritative cast of writers—including Huon Hooke, Andrew Caillard MW, James Halliday, David Schildknecht, Jancis Robinson MW, and Oz Clarke—contributing some of the most original writing published today, under the editorial baton of Andrew Jefford, and the said Mr Johnson. Find out more at the magazine website : www.finewinemag.com

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