Wine Investment, Mouton Rothschild and China

Mouton Rothschild has enjoyed significant price increases during the month of October according to Liv-ex (the Fine wine Exchange) whereas Lafite Rothschild's performance has plateaued. Over a 5 week period from the start of October, according to the Liv-ex Claret Chip Index, Mouton has increased in price by 5.3%, the highest rise among the First Growths. Up until October Mouton has had to play second fiddle to Lafite but growing interest from Asia has shown itself in Mouton’s 64% increase in activity in the first half of 2009 in comparison to 2008.

There is speculation that perhaps Mouton is about to realise its brand potential in Asia and that if this is the case then Mouton could provide a good investment opportunity in the Fine Wine market in the next 12 months. Perhaps when we are into the New Year we will have a more concise picture on whether Mouton can sustain its position.

There are a few of reasons why it seems that Mouton has started to eclipse its prodigious cousin: Lafite is expensive and high demand is putting pressure on availability, Asian fine wine consumer’s tastes are starting to broaden and mature as buyers in the East look beyond Lafite Rothschild (Chateau Latour has also shown an upwards movement recently and in some cases has over taken Lafite) and the fact that they both share the name Rothschild.

Both Lafite and Mouton are successful at branding (see Which is the Biggest Rothschild Brand?) but Lafite has been more successful in China until now. Lafite was, of course, swift to translate its website into Chinese and has clearly been visiting China from early on (1992). Lafite is also developing a vineyard in China in partnership with CITIC, China's largest state-owned investment company, on over 60 acres of vines on the peninsula of Penglai in Shandong province.

Much has been made of the fact that “Lafite” is easy for Chinese consumers to pronounce and is therefore one of the reasons for its popularity - but so is “Margaux”! Apparently the Chinese version of Lafite is 'Lai-fat' which means “come get rich”. Interestingly, one of the unofficial Chinese names for Mouton Rothschild is ‘Wu Tang King'. Wu Tang is the Hubei Province Daoist martial arts sect particularly renowned for its swordsmanship.

The Chinese translation for Chateau Beychevelle (Longchuan, meaning ‘dragon boat’) has helped that property’s wines do particularly well there. Chateau La Lagune is known as LangLihu (the beautiful lake) which also seems a smart move. The Chinese Bordeaux Guide announced in 2008 that the 10th Edition of Chinese Bordeaux Guide 2009 will publish the official Chinese names of the 1855 Medoc Classification, it was with a view to standardizing the Chinese names of the 61 châteaux.

While every château has the same name in French and English, it has an average five to 10 different Chinese names. This is because a journalist in Singapore, Hong Kong, Taiwan or China will translate, for example, Chateau Mouton Rothschild differently. However the Chinese Bordeaux Guide is dependent on the châteaux re co-operation in this and only 14 châteaux have confirmed their official Chinese names. Chateau Latour and Chateau Ducru Beaucaillou have also confirmed they will only use their original names. It will be interesting to see how this situation develops and whether a brand name in Chinese will affect the wine's visibility and it's price.