You may recall a handful of posts I wrote in years’ past about the huge rise in Chinese wine buying. Around 2008, the Chinese government cut tariffs on wine imports by 80%, so you can imagine how things took off. But now it seems the Chinese government is putting some brakes back on. Wine-searcher.com reported recently about new austerity measures that have been imposed after “…estimates for spending on banquets and entertainment were made public by researchers in early 2012, the figure was put at $50 billion to $145 billion per year.” Big time money, and not a lot of austerity there, huh?
In 2013, these measures (I’m not quite sure what the measures entail) took effect. Feel free to read the linked article above to the details, but here are the key figures they’ve seen so far:
- “…more than 50 percent of China’s medium- to large-sized companies have slashed their corporate spending.”
- The same vintage of Chateau Lafite was trading at $1,930/btl now trading at $970
- Average price per bottle of local spirits baijiu dropped to $164 down from $323
- 60% to 80% of all Chateau Lafite bottles in China is now counterfeit.
I can’t say I’m shocked by the drop. The good times can’t always roll that hard. Given the philosophy of the government, it seems like there will be a bit of a roller coaster for the foreseeable future, albeit hopefully with slightly less steep drops.