Boasting internationally-recognized names like Chateaux Margaux and Mouton-Rotschild and Smith Haut Lafitte, the French region of Bordeaux is often dubbed the fine wine capital of the world.
Until last year, global buyers were ready to pay top prices in the thousands of euros. But the so-called "premier crus" no longer sell at premier prices.
The Liv-Ex 50 wine index lost one-third of its value since last August. Justin Gibbs, Founding Director, Liv-Ex tells CNBC: "The market today is showing all signs of extreme stress. The bid-offer ratio in the market is near-historic lows, the spreads are near-historic highs and the returns on wine investments over the last 5 years are near-historic lows."
Florence Cathiard is the co-owner of Chateaux Smith Haut Lafitte-producer of the prestigious grand cru ClassÃ© of which 80 percent are exported. She tells CNBC: "I am not sure the price will be skyrocketing like in '09 and '10. The world is not doing so well. Last year I had to lower my prices by 41 percent. We have to be very attentive to the market" (Watch for More: 'Wine'-ing About Higher Prices)
Adding more pressure to prices is the fact that this year's harvest isn't likely to see a repeat of the bumper crops of the last two years. However, Florence Cathiard is becoming more optimistic as the summer moves on: "The quality of the vintage is nice, not great. We had a cold and rainy July, but now things are really improving, and we are still expecting a delicious harvest.
Compounding the hangover for growers is a slowdown in Chinese demand, where prestigious bottles of Bordeaux have long been considered the ultimate gift and status symbol (Read More: China Develops a Taste for Napa Wine).
In 2011, Bordeaux exported 58 million bottles of wine worth more than 300 million euros to China. That's a growth of more than 100 percent-unlikely to be matched any time soon. China and Hong Kong now make up Bordeaux's biggest export market with a 35 percent share. And if buying bottles isn't enough, the Chinese have recently even bought entire wineries and wine trading firms.
Florence Cathiard and her husband, too, benefited from the thirst for their fine grand crus from the Far East. But the demand patterns are changing: "The Chinese are not buying the same, they are very clever, they have tremendous fashion for bottled wine. In the beginning they bought everything. Small, the not very good wines, and the really big names."
Even if the Chinese are now buying fewer of the expensive bottles, Cathiard still sees the glass half full: "They now understand better, (the) great culture for wine and food, now they know what's in their glass, and that's good for us."
That's exactly the silver lining that Justin Gibb of Liv-Ex sees. "As the wine market develops, the consumption develops. People buy wine, they learn to drink it, they learn to understand it, then they move up the price scale, ultimately benefiting the very top end," he says.
However, it is not just the Chinese who have changed their buying behavior. Cathiard says that in 2009 the Americans would have bought three-times her crop, but 2011 saw lower quality and slower sales, and 2012 isn't great either because of the election year in the U.S..
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