A DECANTER Report.
The Sansulas of India can take solace from the fact that they are not the only ones that are tossed around and left in the lurch after working hard promoting a foreign brand which later takes a competitor in its lap, with the Bordeaux First Growth Château Lafite which has been in news for the prices shooting up in auctions and retail, changing partner in China after seven years’ successful relationship.
The seven-year relationship between Domaines Barons de Rothschild, owners of Château Lafite and their Chinese distributor Summergate has ended. With effect from January 1 next year, their competitor and the biggest importer in China, ASC would be marketing their wines.
There was a disturbing story in the Indian newspapers today. The suitor of a girl killed her simply because she did not agree to marry him! It appears something similar has happened between the two parties in China. Domaines Barons de Rothschild (DBR) wanted an equity stake in Summergate which was not prepared to sell any of its equity, according to the firm’s managing partner Ian Ford and so they decided to dump them and go to their competitor ASC.
A company statement says, « Summergate believes that the interests of its global range of quality producers, its customers throughout greater China, and all of its stakeholders will be best served by remaining independent and free of any single brand owner holding an equity interest in the company. Summergate, now in its twelfth year, will continue as an independent distributor under the leadership of its founding partners, Brendan O’Toole and Ian Ford, working with a first class team of seasoned Summergate wine professionals operating throughout the greater China market. »
« Clearly we took the decision not to sell any stake to DBR with full knowledge we were going to part ways. It was a long-considered decision« , says Ian, adding, « It was an unfortunate divergence of strategy, » he said. DBR was intent on an equity stake and control over their distribution in China, while Summergate’s ‘vision of the future’ was to remain independent.
With Lafite prices reaching unprecedented heights recently, Burgundy has started catching the eye of the importers and consumers in China with nose on the vine and Ian says they may be focusing on just that — for the moment. DBR was a fantastic brand, but there is a lot of space for a lot of big brands in China, and that Summergate was also focusing on Burgundy. Noting that the Burgundy trade body the BIVB had earmarked €400,000 for a concerted campaign in the China market, Ford said he had « plans with two companies in local regions to market and distribute Burgundy in very significant amounts in 2011. »
He also feels that Italy, especially Tuscany is also a region poised to take off in China. Of course, the company will maintain the thrust on the Bordeaux wineries which have established a mark in the affluent Chinese Buyers’ category — as also seen in the recent auctions in Hong Kong by all three leading auctioneers — Acker, Sotheby’s and Christie’s . ASC has reportedly said that DBR Lafite was coming on board — their products are being added to the portfolio with effect from January 1, 2011 according to the emails sent to the company’s customers. It has also confirmed that it would take no stake in the distributor’s company.
This is intriguing and one wonders why the relationship could have not been continued with Summergate in that case. One speculation is that the new distributor has agreed to distribute wines from the Lafite vineyard under development in Shandong with CITIC, China’s biggest state run investment company. Only the company’s sales in the medium term may or may not justify the change of distributor, as in the case of Sansula who was the Distributor for Antinori for seven years when the itch had started.
Read what Jancis Robinson wrote on July 11, 2008 in The Chronicle
« Branding is everything in China’s expanding wine market »
[…] In China, the name Lafite has the most extraordinary and unexpected resonance.
Such resonance that Carruades de Lafite, the Bordeaux first growth’s second wine and often a thin little thing, can command a higher price than super-second Château Cos d’Estournel. And the owners of Lafite’s range of basic Bordeaux generic wines called Légende sell for quite extraordinary prices in China simply because they have the magic word Lafite on the label.
I saw the basic 2005 Bordeaux, with the name Lafite tucked snugly under the Lafite Rothschilds‘ famous five arrows symbol, listed at 950 RMB (about $135) a bottle on the wine list at the super-trendy Made in China restaurant in the Grand Hyatt, Beijing. It’s worth pointing out that on exactly the same wine list the counterpart from the other Rothschild clan, the Mouton lot, was just 350 RMB. What explains the disparity between these wines that were put together from near-identical ingredients bought on Bordeaux’s bulk wine market?
While in China I resolved to get to the bottom of this conundrum. Why should one first growth tower over the others – Mouton Rothschild, Margaux, the highly performing Latour and Haut-Brion – in this particular market?
I suppose we have to begin by acknowledging that China is an intensely image-conscious market. For the Chinese, wine purchases, in restaurants or for gifts, are all about status and « face » on the part of the purchaser. So China is presumably perfectly placed as a target for any sophisticated branding operation. If you go in to China and tell the Chinese that your product is the best effectively enough, those 1.3 billion potential consumers are presumably yours.
Except that my inquiries did not manage to elicit anything so cold-blooded. I went to China via Hong Kong so began by inquiring there why Lafite enjoyed this réclame. Those I asked were all a bit vague. The best explanation I could get was from the first Asian to pass the notoriously difficult Master of Wine exams, Jeannie Cho Lee, herself Korean born and American educated. Her best explanation was that Lafite is somehow easier to pronounce in Mandarin than the names of the other first growths. But since she is not a native Mandarin speaker, I felt her testimony was not rock solid.
Once I got to China I asked everyone I could think of. Marcus Ford, the inventive manager of Shanghai’s pioneering M on the Bund restaurant, also thought it might have something to do with pronunciation but wasn’t sure – even though he has been buying, serving and selling fine wine in China for many years. He did point out to me that Lafite had been awfully clever at capitalizing on its fame in China and that the Légende range of overpriced (my word, not his) appellations-series wines is known colloquially as « Little Lafite. » Genius! They should have called it that in the first place.
In China the market is dominated by three main distributors, who are at one another’s throats. The biggest and best established is ASC, run by a father-son team, both of whom are called Don St. Pierre. I sat next to Don Sr. at a charity dinner and pursued him relentlessly for his explanation as to why his great rival Summergate’s Lafite was so much more popular than his own Bordeaux first growths – Chateaus Latour, Margaux and Haut-Brion – which was rather impolite, I now realize. He raised his shoulders and eyebrows, clasped his hands and admitted he hadn’t a clue.
Though as a Westerner selling wine to the Chinese for possibly longer than anyone else, he did point out how helpful the 1855 classification was to the Chinese. Not generally being fluent English speakers, few of them have yet come to grips with the tyranny of scores and ratings, but there is great respect (an important quality in China) for the longevity of the 1855 classification of Bordeaux. With its mere five divisions it is easy to understand, and since Château Lafite was historically the very first of the first growths to appear on the list, much of that glamour, he admitted somewhat reluctantly, seems to have stuck.
I then tracked down Ian Ford, the American head of Summergate of Shanghai, the blessed importers of a few hundred cases of Château Lafite, an impressive lake of Carruades and an ocean of Little Lafite every year. So how come, I asked, does Lafite stand head and shoulders above its peers in the biggest potential wine market in the world?
« I don’t know, » he said disarmingly. « It’s a branding exercise but I certainly don’t take the credit for it. It’s not because of the taste. »
I would certainly agree. I almost certainly love the taste of Lafite more than the average Chinese. Its very dry, almost austere, racy, elegant style must be particularly difficult for newcomers to wine, and torture to drink with most of the food served in China – whether it be the sweet, sour, spicy foods of the various Chinese provinces, or the rich, truffle and foie gras-laden cuisine of the fancy hotels and restaurants at which most bottles of Lafite must be opened by China’s mushrooming millionaire class.
« But, » he continued, « they were in at the beginning. Lafite president Christophe Salin’s first trip here was in 1992. The word Lafite translates phonetically especially well, » – so there’s one thing that he agrees with archrivals ASC on – « and the Lafite Rothschilds have been very attentive to the Chinese market. Baron Eric de Rothschild’s son is studying Mandarin. They also have a very good Chinese Web site. »
So there you have it folks. To develop a new market, get there first, have an easy name – and don’t forget the Web site.
Jancis Robinson is a London wine journalist.
Visit her Web site at jancisrobinson.com and e-mail comments to firstname.lastname@example.org.