China graft crackdown sends chill through red wine index

May 08, 2014 10:35
Prices for 1992 Lafite have fallen from about HK$50,000 per bottle three years ago to about HK$26,000. Photo: Bloomberg

The most-watched barometer of the red wine market has extended its run of falls to 13 months, sending the index down to levels not seen since 2010 and putting it about a third off the peak set in 2011, Apple Daily reported Thursday.

Paulo Pong, founder of major wine importer Altaya Wines Ltd., said the fall in the Liv-ex Fine Wine 100 Index is mainly due to cooling in China's market.

The index is based on prices for the 100 most popular wines, more than 80 percent of which are from France’s Bordeaux region. China’s rapid growth pushed prices of fine wine to multiple highs three years ago, but the tide has turned as the Chinese economy has slowed and the government cracked down on official excess.

A bottle of 1992 Lafite from Bordeaux’s Château Lafite-Rothschild once fetched as much as HK$50,086 (US$6,460.71) in 2011 but attracted just HK$26,000 in January, the lowest in five years. A 2008 Lafite, with the bottle engraved with the Chinese figure for eight, now sells for between HK$6,000 and HK$8,000, down more than 60 percent from the peak of HK$17,000.

An analyst said wealthy mainland buyers had inflated the prices of red wine from France's five biggest makers -- Château Lafite-Rothschild, Château Mouton-Rothschild, Château Margaux, Château Haut-Brion and Château Latour -- to unstable levels and the prices have dropped between 20 percent and half on average since the anti-corruption campaign began.

Pong said he now sees value in stocking up on fine wine, especially vintages more than a decade old because the index is nearing bottom.

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