What begins as a documentary about the production of premium red wine in Bordeaux evolves into a treatise on the global economics of the industry. For readers of this journal, the lovingly photographed history of wine production in Red Obsession will be entertaining, if not enlightening; but the assessment of the global economics of wine production and consumption will be trivial and quite possibly annoying. So, even if not a feast for the mind, the film is a treat for the senses, with credit going to cinematographers Steve Arnold and Lee Pulbrook and composer Burkhard von Dallwitz.
The first half of the film is filled with lovely panoramas of the five Premiers Crus estates of Bordeaux—Haut-Brion, Lafite-Rothschild, Latour, Margaux, and Mouton Rothschild—plus interviews with some of the towering figures of contemporary Bordeaux. The scenes will be familiar to oenophiles but welcome for their beauty. Likewise, the interviews provide little new information for wine aficionados, but it’s a treat nonetheless to hear directly from winemakers such as Christian Moueix (who oversees production at Château Pétrus, among other estates) and proprietors such as Corinne Mentzelopoulos (now the sole shareholder of Château Margaux). Soon, natural scenes of vineyards are interspersed with scenes of the key commerce that occurs during “en primeur” week in Bordeaux.
One can only be impressed that the writers/directors David Roach and Warwick Ross were able to gain access to the region’s key players. Apparently, Roach and Ross had to spend six months just convincing some of them to talk, after they felt they had been burned by the 2004 documentary Mondovino, which portrayed the Bordeaux elite as villains.
Without explanation for the general audiences for whom the film is intended, the film focuses almost exclusively on a single, very special segment of the world of red wine: the Premiers Crus of Bordeaux. These same audiences may be pleased that the film is narrated by actor Russell Crowe, despite the fact that somewhat ironically he recently portrayed a London financial trader who is aggressively disdainful of French wine culture in the (very loose) film adaptation of Peter Mayle’s novel A Good Year.
Halfway through the film, we learn that traditional Bordeaux markets in the United States and the United Kingdom are weakening, and that a robust new market for premium Bordeaux is developing in China. Much of the second half of the film is essentially an examination of contemporary Chinese character, ambition, and taste. The focus is on the richest of the rich. With an estimated 600 (US dollar) billionaires in the new, post-Mao China (and presumably many thousands of millionaires), a market has exploded for the greatest wines of Bordeaux. One wealthy Chinese industrialist, who has made his fortune manufacturing sex toys, has a collection worth $60 million, with bottles of Lafite-Rothschild scattered throughout his house.
Interviews with wine critics, journalists, and winemakers reveal the way the industry works, how demand exceeds supply, how the weather determines yield and quality, and how the prices of the likes of Margaux and Lafite-Rothschild are set. Of course, all of this is a textbook example of what all budding economics students learn in their first year—the laws of supply and demand. Supply of the first growths of Bordeaux is limited. Even with a season of ideal rainfall and perfect temperatures, there is only so much wine that can be produced. Higher prices may cause Louis Vuitton to make more purses and Maserati more GranTurismi, but Latour will not expand its output. Supply of these brands is infinitely inelastic.
As for demand for the best of Bordeaux, it is rapidly increasing. As China’s economy has grown at breathtaking rates in recent years, so too has demand for luxury goods. China is now the world’s largest importer of fine wine from Bordeaux. Robust and rising demand, combined with inelastic supply: an obvious recipe for price escalation. If only the film had explained that clearly and simply.
However, the film does provide a hint—although no more than a hint—of why the prices of the first growths have increased so dramatically relative to the prices of other classified Bordeaux. This comes from the film’s extended discussion of Chinese character, ambition, and taste. One observer after another comments on the Chinese fascination with labels and brands. Combine this with the emergence of China’s billionaire and millionaire nouveaux riches, and the result is dramatically increased demand for the top tier of luxury-good brands, in particular, for collectibles—whether paintings by French Impressionists or classic wines by Lafite Rothschild.
The film reminds us that a Chinese proverb says, “Remember to dig the well before you are thirsty.” So, in addition to being important and growing Bordeaux consumers, Chinese entrepreneurs are now trying to become meaningful competi- tors, as they seriously invest in their own wine-making efforts, with wineries that may not produce the best wines but are built to resemble the great châteaux of Bordeaux.
Robert N. Stavins
John F. Kennedy School of Government, Harvard University