Domestic Lafite price falls 20% over 6 months
- By An Wei
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E-mail China.org.cn, July 5, 2012
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Data provided by the world's biggest wine exchange London International Wine Quality -- shows that at the end of last year, high-end red wine began experiencing a cool down. Once rising prices are now rapidly falling. Prices have fallen over 20 percent over the past six months. In the domestic market, the price of Lafite has continued to drop during the past six months.
Last Friday, Shanghai Wine Exchange data shows that compared to the previous trading day, total transaction volume was down 12.02 percent and amount of volume was 3.16 million, increasing 0.06 percent. Lafite is leading the price drop with 4.75 percent.
Lafite prices began to fall in July 2011. The overall drop extent exceeds 20 percent. As one of the largest domestic wine importers, Liu Zhen, general manager of Shanghai C&D, has long been concerned about wine price trends. His analysis reveals that the economic downturn and weaker consumer demand are the reasons for the price drop.
Many Chinese customers view Lafite as a high-end red wine, leading to a substantial appreciation of prices.
According to a research by Shanghai Wine Exchange, wine prices dropped three times during the 1990s. These three drops happened during a financial crisis: the financial crisis in Asia in 1998, the subprime crisis in 2008, and the European debt crisis in 2011, respectively.
During these three financial crises, wine prices always experienced rollercoaster-like price volability. Before the breakout of every financial crisis, wine prices suddenly and sharply raise. Once the financial crisis arrives, the drop of wine prices is relatively large, generally falling more than 20 percent, and lasts for more than six months on average.
In light of the present international situation, especially under the condition that there is still no clear plan for solving the European debt crisis, and there is no specific schedule to the full recovery of the European or global economy. Therefore, insiders predict that the possibility of a remarkable wine price rebound is limited, and domestic wine investors should remain cautious.
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