Price of First Growth Second Wine Jumped up

2018-07-17 09:35 WBO Global

Write | WBO Team

Translate and Edit | WBO Kiwi

 

According to LIV-EX data, price difference between first growth and its second wine has been getting smaller and smaller. 

 

Why this trend emerged in China? WBO made an in-depth interview and wrote an analysis of it. 
 

 

 

LIV-EX: price ratio of first growth and its second wine has hit the lowest record in 2011 

 

According to LIV-EX, last August, price ratio between first growth and its second wine hit the lowest record in December 2011

 

Before the year of 2007, average price of first growth for a single bottle was equal to the price of 6.6 bottles of second wine; but the ratio has now fallen by more than half - only 2.73.

 

Since June 2015, China wine market got strong again, and second wines has become more expensive. This year, with the continuing upsurge of second wines, the price gap between first growth and second wines has been narrowed.

 

Taking Chateau Mouton Rothschild for example, average price of this wine is only 2.04 times that of its second wine, and price difference of its 2013 vintage is only 1.6 times.

 

Market price of Carruade de Lafite is higher than that of Chateau Lafite Rothschild

 

Wu Xianghua, CEO of FineWest, a fine wine supply chain company , disclosed: “Price of first growth and its second wine is getting closer. But it doesn’t mean that their prices are close at the launching stage, they are getting closer only in market stage.”

 

“Winery launched price is about 3 times the price of second wine. For example, Chateau Lafite Rothschild is 420 Euro / bottle this year, and Carruade de Lafite is 135 Euro / bottle. Chateau Margaux is 348 Euro / bottle this year, and its second wine is 145 Euro / bottle. That is to say, price of Chateau Margaux is about 2.5-3 times of its second wine ,” said Wu Xianghua.

 

Wu added, “However, the price offered by negociant to Chinese importer is different. Price of Carruade de Lafite has jumped from 135 Euro to 175 Euro for each bottle.Chateau Lafite Rothschild were sold at 420-430 Euro, slightly higher. But the price difference between Chateau Lafite Rothschild and its second wine is about 2.4 times.”   

 

 “Second wine rush” appears in  China market

 

Importers believe that this has something to do with China market. 

 

“Many second wines of first growth wineries will eventually export to China market. For example, we imports wine globally, this year some of the first growth are bought from Holland exporters.” Wu also pointed out that “this because Chinese consumers were not as mature as European and American consumers. Chinese drinkers are quite brand conscious, which leads to the irreplaceable status in brand reputation rather than quality itself. 

 

In this regard, Li Yajun, the chief representative of a French winery, also believes that price rise of the second wine is related to China market. In European and American markets, consumers pay more attention to the famous brands and care about the vintage and awards point. Many of the domestic consumers are taking first growth as luxury brand, as for second wines of such wineries, they take them as entry luxury brands with best price-value , leading to high degree of attention.

 

In terms of supply and demand, this will undoubtedly attribute to profit increasing from importer and distributor side.

 

Li Ren, vice president of ASC, also said that the price difference between first growth and its second wine becoming smaller and smaller, and that it is really related to China market. After all, China market has always been one of the most important markets for second wines of first growth. 

 

Sun Shaoliang, a fine wine importer in Zhuhai, also said that Chinese consumers now have a growing impact on Bordeaux's famous wineries, and that American consumers who have had a huge impact on French wines have begun to drink more of their own Napa. 

 

But Sun pointed out at the same time: the price difference narrowed not only because of the second wines but also global economic downturn, which made the price of first growth not as high as before.

 

 

 A differentiation in first growth

 

Wu also pointed out that Chinese attention on high-end wines shows on second wines and subdivisions in first growth.

 

Spot price of Carruade de Lafite is about 250-270 Euro for a single bottle, which is 2 times of the launching price and jumping close to first growth of Right Bank. What’s more? Price of Mouton second wine has risen to more than 210 Euro, according to Wu.

 

“But price of Les Forts De Latour is comparative stable, which is about 160 Euro. Although there was a rise, the amount of increase is not much. And price of Le Clarence Du Haut Brion is about 90 Euro, Pavillon du Chateau Margaux is not that hot too” , said Wu, “There is no obvious quality gap between these second wines, but price gap is becoming obvious, which reflects brand image and popularity of these first growth wineries.”

 

Part of the content originated from the LIV-EX