Still in Love with Lafite

by Westgarth Wines June 16, 2013

It’s no secret that Lafite and China’s wine collectors have been locked in a fairly intense love affair for the last several years. This relationship created an almost unprecedented demand – and skyrocketing price tag – for the wine that Baron Eric de Rothschild, owner of Château Lafite Rothschild, calls “the girl you want to marry and spend your life with.”  Although there are certainly other Bordeaux First Growths which are as desirable, not one has come close to the power of the enchanting Lafite in capturing the imagination of the Asian oenophile.

What ignited this relationship is complex.  Many theorize that the wine’s impressive lineage speaks to China’s cultural respect for history.  Subtle and elegant, Lafite initially attained its celebrity status when it was ranked first in quality by the 1855 brokers’ classification ordered by Napoleon III for the Exposition Universelle de Paris.  Also keeping in line with this classical tradition, the wine’s distinctive label has remained unchanged throughout its production, further underlining its superior standing.  On the opposite end of the spectrum, other experts point to more modern factors, such as the insatiable penchant for international luxury items that runs rampant among Asia’s nouveau-riche, with fine wine ranking high on their list.  The Chinese have wholeheartedly embraced fine wine consumption at a fever pitch, and it has become the chic beverage of choice among the economic elite. Aside from the obvious delight to the palate, Chinese oenophiles consider indulging in fine wine – particularly red wine, and especially the alluring Lafite – as a heart-healthy practice, noting its added perk of being high in rich antioxidants such as resveratrol.  This benefit is yet another major draw for China’s notoriously health-conscious society.  Adding to the attraction is the color red itself, which has always represented blessings and prosperity in Chinese culture.  Combine all these elements and you have market which is ripe and willing to spend whatever it takes to own the very best.

Hong Kong’s 2008 abolishment of import duty and taxes also augmented fine wine’s rise in popularity among Asia’s affluent, allowing for increased access, consumption and appeal. The change heightened wine imports by a phenomenal 88% in Hong Kong, and made the hub the first free wine port among major global economies.  Important auction houses including Sotheby’s, Christie’s and Bonham’s have all begun holding sales in Hong Kong, garnering astronomically prices for their featured star; in 2010, Sotheby’s watched as three bottles of 1869 Lafite became the most expensive wine ever sold, with each one reaching USD $233,972.  At this same auction, all 284 lots, with 190 of them being Lafites, went to Asian buyers.

China’s obsession has hardly gone unnoticed by the Rothschilds.  In response, Château Lafite Rothschild announced in 2010 that its Lafite 2008 would feature the Chinese symbol for the figure eight, which holds special significance for the Chinese with regards to luck and fortune.  (It also commemorated the partnership between Domaines Barons de Rothschild Lafite and the local CITIC East China Group, Inc., on their first Chinese winery, a 4.3 acre spread in the eastern Shandong province, also affectionately called “China’s Bordeaux.”)  This one strategic, solely cosmetic move drove prices up by 20% virtually overnight, catapulting investor profits through the roof once again.  A case of 2008 became worth $16,275 on Liv-ex; two days later, the same case reached $33,325, and continued upward with no end in sight.

Fast forward to 2012.  Everything that rises must converge, and so it was for Lafite. With a market unable to sustain the figures of the previous 24 months, cases of the beloved wine began to decline. A case of 1982 Château Lafite that commanded $62,000 or more in 2010 was being auctioned for less than $38,750 – an almost 50% drop.  Moreover, as Asian buyers became more knowledgeable and confident, they began indulging a growing curiosity about other top-tier fruits of the vine.

But true infatuation runs deep, and Lafite is hard to forget.  By November 2012, the jewel in the Rothschild’s crown was starting to reclaim her place and position among besotted Asian fans, and Liv-ex reported a notable increase in its index.  And, while what are considered “off” vintages were initially the more popular investment, both “on” and “off” vintages are now moving up in favor and value at a similar pace. The import of Bordeaux wines into China has increased by 55% over the last year or so, and with Asian aficionados now buying on average one Bordeaux château per month, it’s clear that their appreciation for fine wine is not a passing fancy.

So what does this mean for the serious, savvy wine investor?  With Lafite’s classic delicacy, unwavering reputation, and nearly impeccable history, it remains a smart investment.  Lafite is also consistent, regularly earning ratings of 98+ by critics and experts, with an amazing five vintages doing so between 2000 and 2010.  Finally, the recent April 2013 Liv-ex figures show that Lafite 2008 enjoyed the strongest monthly movement of all high-end luxury wines, pointing to an encouraging trend that may inspire a market to rival that of several years ago.  Simply put, there is no time like the present to add Lafite to your investment portfolio.