In 2011, Château Lafite Rothschild's wines were riding high, the darlings of Chinese buyers and the auction market.
The futures price in London for the great 2010 vintage, released in July 2011, created shock waves. The wine was one of my top picks of the year, deep and rich, with classic tastes of cigar smoke and cassis and the texture of cashmere.
But it was priced at £12,000 a case (then $19,400) … and the wine hadn't even been bottled yet.
Almost immediately that price began to slip, and it's been declining ever since. Last month, Liv-ex reported that a case of the 2010 had traded for £5,390 ($8,350), nearly 55% less than it cost four years ago.
My question: Should you scoop up a case — or three — now?
Read on.
A REPUTATION EXCEEDS
The tale of 2010 Lafite shows what happens when a wine achieves cult status and then dips in fashion.
Lafite has always had a distinct mystique. In the now famous 1855 classification that ranked Bordeaux châteaux from fifth to first growths, it was named the first of the first growths. It's Bordeaux's most famous property, its wines the most elegant, with more finesse than power.
But that didn't translate into astronomical prices until Chinese millionaires and billionaires caught the fever in about 2006, amassing huge stashes in their cellars.
Even in the week after Lehman Brothers collapsed in 2008, two Chinese buyers pushed prices of 165 lots of Lafite at a Hart Davis Hart auction in Chicago up and up. One of them purchased 50% of all the Lafite lots.
From August 2000 to August 2010, the famed 1982 vintage increased 1,137% in price, according to Liv-ex.
After an Acker Merrall & Condit sale in September 2010, Chief Executive Officer John Kapon told me Lafite was “a well-fed Godzilla,” getting stronger every month.
At a Sotheby's auction in Hong Kong in October 2010, featuring wines direct from Château Lafite's own cellars, a buyer bid four times the retail price of futures for the 2009. Bidders fought over three bottles of the 1869, which each sold for $232,692.
Liv-ex reported that most vintages of the pricey red were trading at 130% more than any other first growth.
CHINESE FAVOR
I've been told the Chinese love of
Lafite began because the name is easy to pronounce in Mandarin — it's called “la fei” on the mainland. Some suggest it was the first wine to get noticed as being great. One theory points to
"Exiled", a popular 2006 Hong Kong gangster film, in which the hero spurns a wine because it's not 1982 Lafite.
At the end of 2010, Andy Xie, an outspoken independent economist based in Shanghai, compared the rise in prices of wine to the dot-com bubble. He predicted Lafite, too, would crash and burn and advised selling immediately. By 2012, auction directors were admitting the bubble had burst.
What happened?
Buying patterns shifted. Burgundy was on the rise. The large counterfeit industry was busily purchasing empty Lafite bottles, and experts speculated that 70% of what was sold in China was fake. Political changes resulted in the government discouraging lavish gift-giving, which had helped boost
Lafite.
WHAT TO DO
So should you buy the 2010 Lafite now? Yes. The wine is great. The price has been steady at around £5,500 ($8,350) for the past few months, according to Liv-ex, whose charts show vintages since 2000 are at their lowest price in the past five years.
In fact, there are other expensive wines that can be had for “bargain” prices right now. Many other highly rated Bordeaux wines from the 2010 vintage have also slipped. The superb Pontet-Canet, for example, is down 26% from its peak in 2013.
One tip: Look for excellent vintages that follow a great vintage. An example is the 2006 La Mission Haut-Brion, which is overshadowed by the more in-demand 2005. About eight months ago, according to Liv-ex, it was 68% below the peak price, but has started to rise.
You could apply these strategies to other less legendary regions, too.
When I asked famed Burgundy collector Donald Stott, who sold a large portion of his wines at Sotheby's earlier this year, what he'd advise a Burgundy lover to buy now, he said he'd be looking at pinot noirs from Oregon.
Elin McCoy is a columnist at Bloomberg News.
