China is Taking More Than Our Jobs — They’re Sucking Up Our Stores of Lafite Rothschild Too

Lisa Reisman (MetalMiner) was on MSNBC's The Dylan Ratigan Show last week, supposedly to talk about metals and big picture trade issues. She was instead tossed a question on what she thought about the loss of US jobs to China. Isn't this old news? That giant sucking sound of jobs headed outside our borders goes back to long before Ross Perot worked his slightly loony campaign plank nearly two decades ago. Flash forward to today, and it's not just job losses (and a massive trade deficit) we're facing. The Chinese are sucking up our stores of Lafite Rothschild as well (for those who don't collect wine, Lafite is one of the first growth Bordeaux, regarded, in my view, as much for its snob appeal as anything it has on Haut Brion, Margaux, Latour, etc.). In fact, Chinese enthusiasm for Lafite has driven prices to an insane level. Consider estimates in the current Hart Davis Lafite Auction that's running at the moment. NB: In the title of the auction on the cover page of the linked-PDF there is a direct Chinese Kanji translation for Lafite.

High estimates for many single bottles in this auction are over $2,500 and high-price case estimates from 2000 (considered an excellent year) are reaching nearly $40K (that's right -- $40K for 12 bottles of wine) -- and for 1982 they're $60K per case! These numbers are more remarkable when you consider them in context. Much of this wine was bought on the futures market for what I remember to be around $300-$350 per bottle (I just donated a bottle of mid-nineties Mouton Rothschild to a charity event that I paid no more than $175 a bottle for five years ago that's now worth around $700, by way of comparison). In other words, the appreciation has been utterly insane for anything with the name "Lafite" in the title, and not bad for most every other top-flight Bordeaux. And every collector and merchant I know blames the Chinese for the bubble market we're currently in.

Photo background: This is one of the author's prized bottles of 1998 Mouton which has appreciated over 300% in just five years in large part thanks to the Chinese thirst for first growth Bordeaux. Unfortunately, the author was too cheap to buy a case of Lafite at the time, as he would have realized at least a $20K gain.

I was at a charity auction at my kids' school this past weekend with a number of friends and fellow parents who collect more seriously than I do. One dad I spoke to (with a 10,000 bottle collection) remarked that everyone he knows has -- or is -- selling their complete stock of Lafite at the moment given the silliness of the rate the Chinese are sucking it up (let's hope they don't mix it with Coke, as I've seen firsthand before with other reds consumed in Beijing). Even for those who have never sold their wine before -- after all, I say "liquid investments" are better drunk than traded -- the urge to make an 800% or even 1000% profit is too great.

Why are the Chinese so hot on Lafite? From what I've heard, a lot of it comes down to status (and at the current insane prices, it makes a small dent on the Chinese trade surplus with the EU and US). Regardless, they've somehow glommed onto it. A bottle of Lafite makes an exceptional business gift in China, or so I'm told. Fortunately, given the Chinese propensity to save and not consume, I'm sincerely hoping that provided the tens of thousands of bottles of Lafite that have headed to China in recent quarters are stored in climate controlled facilities -- don't hold your breath -- that they eventually end up back here. That is, after the bubble market ends, and prices come back down to earth -- and even after Lafite futures start being priced on the world market in RMB rather than dollars or euros.

- Jason Busch

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