Fears over bootleg booze end three-year boom and send mainland market for fine wines into freefall
Will Clem in Shanghai 05 February 2012
As New Year’s revellers around the world were popping Champagne corks to welcome 2012, the producers of another famous French tipple had considerably less to celebrate.
Trade in the very best Bordeaux wines ended the year sharply down, falling 4.6 per cent in December alone. That came on the back of a six-month slide that erased more than a quarter of the wines’ value from a high point in June.
With the market seemingly locked in a downward spiral, investors and merchants were asking one question - has the Bordeaux bubble burst?
And many eyes were looking in the direction of China.
Mainland wine buyers - one of the main drivers of a three-year boom - had suddenly lost interest.
Prices for Chateau Lafite Rothschild fell 45 per cent, dropping from a record £14,043 (HK$172,189) for a 12-bottle case of the 2008 vintage to a year-end low of £8,108.
Lafite saw its price shoot up virtually overnight in October 2010 after announcing the 2008 vintage would carry the “lucky” Chinese character for eight on its bottle. By the end of last year, it was trading at less than the pre-launch price.
Wine industry insiders say that aside from economic factors such as the European debt crisis, what really scared mainland buyers were worries about bootleg booze.
“Everybody knows that there are huge amounts of fake Lafite in China,” said Guo Qingfeng, general manager of Xiamen Gulong Foods, which specialises in exclusive wines.
“The amount of Lafite drunk on the mainland is enormous, way in excess of the amount of real Lafite in the whole world. Most of it has to be fake, and nobody knows how to tell the real from the fake.”
According to the Bordeaux vineyard’s website, annual production ranges from 15,000 to 20,000 cases. Annual consumption of the wine on the mainland is estimated to be around 3 million bottles - 250,000 cases. Zhejiang province alone is estimated to have guzzled 300,000 bottles last year.
“Rich mainlanders started to get very worried about this last year,” Guo said. “People began to hear about the numbers involved and realised. They started to question whether the Lafite they had drunk was genuine or not.”
One mainland-based wine trader, who asked not to be named, said the problem of counterfeiting had become a major headache.
“It is a real dilemma,” he said. “Proving the providence of a bottle of Lafite is very difficult on the mainland. Many of the fakes are so good it is impossible to tell until you open the bottle - and even then, relatively few wine drinkers would be able to say with any certainty.”
The trader said unscrupulous mainland merchants regularly refilled genuine Lafite bottles with generic red wine - often cheap plonk from mainland vineyards - or produced copied bottles from scratch, artificially ageing the labels for effect. “There has been such intense demand for Lafite, above all other chateaux, from mainland drinkers keen to show off their wealth and often with very little knowledge about wine other than the brand name, that it is hardly surprising people cash in on it,” he said.
“The situation is so severe that it is really undermining the investment market for fine wine in China.
“First-growth Bordeaux wines are the gold standard for wine investments internationally, but I think any that had been stored in mainland China at any point would be viewed as inherently suspect.”
Guo said he also saw last year’s sudden price decline as evidence the mainland market was maturing.
“The problem is that fine wine is about more than just money. You have to have certain knowledge before you can tell a good wine from a bad one,” Guo said.
“Until recently, wealthy mainlanders believed all they had to do was buy the most expensive wine available in order to impress people. Increasingly, they want to show that they know how to appreciate wine for its intrinsic qualities.
“People are starting to realise that although wonderful, certain wines have become over-priced simply due to their popularity. That is dramatically so in the case of Lafite.”
Gulong, a state-owned food group based in Xiamen , Fujian , expanded into fine wines a decade ago after seeing a massive potential market in the mainland’s emerging wealth.
“Education is the key factor that is missing,” Guo said. “We have our own showcase cellar in our headquarters and we run tasting classes for members of our wine club.”
He said it was a challenge to persuade affluent mainlanders who were relatively new to drinking good wine to look beyond price or brand image. “The reality is that many wines available for 300 yuan (HK$369) to 400 yuan a bottle are very enjoyable and we try to teach consumers that,” he said.
“Once you get to 1,000 yuan, you should be talking about an exceptional wine.
“I do not think the market for a real consumer of wine - as opposed to investors - will be affected by this price dip, but I do think the price of those top wines will continue to fall.
“It will probably be the second half of the year before the price correction is complete and values get back down to reflecting the actual quality of the wine.”
2 comments:
Sales slide after vintage year for bogus Bordeaux
Fears over bootleg booze end three-year boom and send mainland market for fine wines into freefall
Will Clem in Shanghai
05 February 2012
As New Year’s revellers around the world were popping Champagne corks to welcome 2012, the producers of another famous French tipple had considerably less to celebrate.
Trade in the very best Bordeaux wines ended the year sharply down, falling 4.6 per cent in December alone. That came on the back of a six-month slide that erased more than a quarter of the wines’ value from a high point in June.
With the market seemingly locked in a downward spiral, investors and merchants were asking one question - has the Bordeaux bubble burst?
And many eyes were looking in the direction of China.
Mainland wine buyers - one of the main drivers of a three-year boom - had suddenly lost interest.
Prices for Chateau Lafite Rothschild fell 45 per cent, dropping from a record £14,043 (HK$172,189) for a 12-bottle case of the 2008 vintage to a year-end low of £8,108.
Lafite saw its price shoot up virtually overnight in October 2010 after announcing the 2008 vintage would carry the “lucky” Chinese character for eight on its bottle. By the end of last year, it was trading at less than the pre-launch price.
Wine industry insiders say that aside from economic factors such as the European debt crisis, what really scared mainland buyers were worries about bootleg booze.
“Everybody knows that there are huge amounts of fake Lafite in China,” said Guo Qingfeng, general manager of Xiamen Gulong Foods, which specialises in exclusive wines.
“The amount of Lafite drunk on the mainland is enormous, way in excess of the amount of real Lafite in the whole world. Most of it has to be fake, and nobody knows how to tell the real from the fake.”
According to the Bordeaux vineyard’s website, annual production ranges from 15,000 to 20,000 cases. Annual consumption of the wine on the mainland is estimated to be around 3 million bottles - 250,000 cases. Zhejiang province alone is estimated to have guzzled 300,000 bottles last year.
“Rich mainlanders started to get very worried about this last year,” Guo said. “People began to hear about the numbers involved and realised. They started to question whether the Lafite they had drunk was genuine or not.”
One mainland-based wine trader, who asked not to be named, said the problem of counterfeiting had become a major headache.
“It is a real dilemma,” he said. “Proving the providence of a bottle of Lafite is very difficult on the mainland. Many of the fakes are so good it is impossible to tell until you open the bottle - and even then, relatively few wine drinkers would be able to say with any certainty.”
The trader said unscrupulous mainland merchants regularly refilled genuine Lafite bottles with generic red wine - often cheap plonk from mainland vineyards - or produced copied bottles from scratch, artificially ageing the labels for effect. “There has been such intense demand for Lafite, above all other chateaux, from mainland drinkers keen to show off their wealth and often with very little knowledge about wine other than the brand name, that it is hardly surprising people cash in on it,” he said.
“The situation is so severe that it is really undermining the investment market for fine wine in China.
“First-growth Bordeaux wines are the gold standard for wine investments internationally, but I think any that had been stored in mainland China at any point would be viewed as inherently suspect.”
Guo said he also saw last year’s sudden price decline as evidence the mainland market was maturing.
“The problem is that fine wine is about more than just money. You have to have certain knowledge before you can tell a good wine from a bad one,” Guo said.
“Until recently, wealthy mainlanders believed all they had to do was buy the most expensive wine available in order to impress people. Increasingly, they want to show that they know how to appreciate wine for its intrinsic qualities.
“People are starting to realise that although wonderful, certain wines have become over-priced simply due to their popularity. That is dramatically so in the case of Lafite.”
Gulong, a state-owned food group based in Xiamen , Fujian , expanded into fine wines a decade ago after seeing a massive potential market in the mainland’s emerging wealth.
“Education is the key factor that is missing,” Guo said. “We have our own showcase cellar in our headquarters and we run tasting classes for members of our wine club.”
He said it was a challenge to persuade affluent mainlanders who were relatively new to drinking good wine to look beyond price or brand image. “The reality is that many wines available for 300 yuan (HK$369) to 400 yuan a bottle are very enjoyable and we try to teach consumers that,” he said.
“Once you get to 1,000 yuan, you should be talking about an exceptional wine.
“I do not think the market for a real consumer of wine - as opposed to investors - will be affected by this price dip, but I do think the price of those top wines will continue to fall.
“It will probably be the second half of the year before the price correction is complete and values get back down to reflecting the actual quality of the wine.”
Post a Comment