All the Wine in China

Chateau Mouton-RothschildXavier de Eizaguirre, the director of Chateau Mouton-Rothschild, recently said that France can’t possibly produce enough fine wine to satisfy the Chinese market.

It sounds like a very broad statement, but Eizaguirre of course is referring to wine on the level of Mouton. Combining his property and the other four First Growths (Lafite-Rothschild, Latour, Margaux and Haut-Brion), the total production is perhaps 100,000 cases per year. Technically that has to supply all of humanity, although recently the lion’s share of the wine seems to be going to Hong Kong.

From one perspective, this is a dangerous situation for the chateaux. If they satisfy the demands of their Chinese clients and ignore everyone else, it could come back to bite them someday. From another angle, it seems there has always been a Hong Kong in the world of the blue-chip wine business. As wealth is created around the world, the newly minted billionaires seek out the same classic status symbols. In the case of truly fine wine, the market is worldwide and the supply is finite (producers of generic Bordeaux are starving, but no one seems to factor them into the equation).

Lafite has emerged in Asia as the ultimate luxury brand, and prices are staggering—cases of Lafite have been known to sell for three times their market value in Hong Kong, no small matter when we’re dealing with $60,000 vs. $20,000. To their credit, the chateaux do make an effort to spread their allocations of wine to different regions. The intensely acquisitive Chinese find ways around this, hiring consultants to place bids for them at auctions in New York and London; most likely, they have proxies buying futures for them in foreign markets as well. Transporting the wine back to China is a minor nightmare, but easily accomplished if you’re a billionaire.

This situation hasn’t been lost on the Napa Valley vintners, forty of whom just returned from a trade mission to China (their eighth, in fact). The wineries were mostly (you guessed it) those making full-bodied red wine from Bordeaux grape varieties. I would have loved to have been a fly on the wall at one of the consumer tastings they conducted (“Se, it says Cabernet Sauvignon. So it’s just like Bordeaux, but easier to drink…”).


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