Latour to leave the en primeur system

So, Chateau Latour recently announced that this 2011 vintage is the last they’d release for en primeur… makes sense, if their cash flow is strong anyway, why not withhold the wines, bypass the negociants, and reap the higher market price when they finally release the wines? It’ll be interesting to see if the rest of the first growths follow suit, and even more fascinating to observe the fallout on the thriving en primeur markets.

But I wonder if their timing isn’t the greatest. 2009 and 2010 were phenomenal vintages; and the Cheateaus have all signaled that they will be cutting prices for the 2011 vintage, which has suffered hail, storms, and whatnot…

Decanter’s report of the announcement:

Chateau Latour to leave en primeur system

• Monday 16 April 2012
• by Jane Anson in Bordeaux

Chateau Latour has indicated it will not sell wine en primeur – as a future – from the 2012 vintage onwards.

The Pauillac first growth has sent a letter to Bordeaux wine merchants and negociants saying that the upcoming 2011 campaign will be its last vintage sold en primeur.

Instead, director Frederic Engerer says, the first wine, Chateau Latour, and the second wine Les Forts de Latour,  will be sold – through negociants – when they believe they are becoming ready to drink.

Their last en primeur campaign will be with the 2011 vintage.

Engerer’s motivation, according to negociants who received the letter, is partly a response to the increasing desire of consumers for ready-to-drink wines that have been stored in optimal conditions, and partly to be able to offer vintages to the market over a longer period of time.

As a sign of the power that Latour holds within Bordeaux, of the dozen negociants contacted by Decanter.com, none were willing to go on record. Most, however, noted that Latour has been reducing the amount of wine sold en primeur for the past decade, building up supplies at the chateau in anticipation of this strategy.

It was noted during en primeurs earlier this month that a new cellar was under construction at the property.

Most negociants believed the strategy could be successful with emerging markets such as China – where the concept of buying en primeur is still in its infancy – but that it would be more difficult with the traditional markets of England, the US and Europe, who have built up a relationship with the property, sometimes over centuries, and count on large allocations of wine every year.

Some of these merchants, who had bought recent vintages of Latour in good faith en primeur, would now be competing against releases from the chateau itself.

Almost all saw the effect on the end consumer as higher-priced wine, released in small quantities by the chateau to control circulation.

‘If Latour is looking to kill the speculation side of the market,’ one negociant said, ‘then we should applaud the move. But it will be challenging to convince large numbers of consumers to pay current high prices, especially if the wines are sold years after the excitement created by the en primeur tastings has passed.’

Other negociants pointed to the effect on smaller chateaux if the Latour move disrupts the wider system, as their cashflow often depends on en primeur sales.

An owner of one of these smaller estates, however, felt optimistic. Again unwilling to go on the record, he said, ‘As long as negociants make more money on 12 bottles of a First Growth than on the entire production of a cru bourgeois, we will never share their mindset. But if enough 1855 chateaux follow Latour, they may have no choice but to return to the real economy of the smaller estates. This could be great news for the non-speculative estates of Bordeaux.’

Reaction outside of Bordeaux was also more positive. Jancis Robinson said on Friday, ‘So sensible, Chateau Latour’s move to sell wine only when ready. Lucky Pinault (François Pinault, owner of Latour) can afford it.’

Chris Adams of Sherry Lehmann in New York said, ‘My impression of the Latour team is that they are wine lovers committed to making and releasing the best wine possible — so it follows that their being able to assess a vintage as it ages and making a more informed decision about its release date will consistently deliver to the market a wine that has been meticulously cared for with a clearer context for its consumption.’

It is not yet clear if Latour will show the wine during the main en primeur season, or wait to even have it tasted until they believe it is ready to drink. Until things become clearer, most observers feel it is simply too early to comment on the long-term effect.

‘This can’t really be compared to any previous commercial strategy within the Bordeaux system,’ said a courtier. ‘It’s certainly a risk, but whether it pays off, only time will tell.’

Simon Staples, Berry Brothers wine director, said he thought it was ‘a brave decision’ that ‘has been on the cards for a while now’.

But, he went on, it saddened him, as it took the glamour away from the business of selling futures.

‘I don’t think it will help the value of Latour increase in the global market. En Primeur, when it is managed properly – a rare occurrence indeed – with correct pricing and far more importantly, the timings of release, is a beautiful thing to behold. Merchants, journalists and negotiants get excited and in turn get private clients buzzing to buy. Very similar to a major sporting event really but when Brazil, the All Blacks or Barcelona decide not to enter it does take the patina off a little.’

2009 Carlisle Sonoma County Syrah, California, USA

My coworker, who shares his wine allocations with me sometimes, told me in the elevator today that the 2009 Carlisle Sonoma County Syrah, California, USA he recommended I buy from KL Wines earlier this year, has appreciated some 5x the price we bought it at! OMG. I bought 5 different bottles then, the cheapest being the Sonoma Syrah for $25 – my coworker just sold it at auction for $125!!!

But we opened the bottle 2 Sundays ago, when Ruoxi and Pakshun were here. Haha. Although to be honest, if I were to guess the price of the bottle blind, I would have put it in the $40 range. First opened, it had a beautiful fruity nose, but tasted somewhat restrained with the tannins. It did open up a lot more as the evening went on and the body rounded out, becoming silky smooth with a long finish.

At least we still have 4 more bottles, albeit from different vineyards and different vintages and different grapes (Syrah and Zinfandel)… and two more arriving in the mail next week.

Lafite 2008 Continues its Ascent

From Decanter:

Carruades de Lafite set to overtake first growths?
September 17, 2009
by Jane Anson in Bordeaux

Lafite 2008 is currently trading at around 3,800 pounds per case, rising in price by around 90 pounds per week, even though it is not due to bottled until next year.

Margaux 2008, in contrast, is trading at just over £2000.

Carruades 2008 is still at around £1,000, but it is predicted to keep climbing closer to the other first growths once in bottle.

Gary Boom, managing director of Bordeaux Index, told decanter.com, ‘Today a case of Carruades 2004 would set you back £1800, which is considerably more than the 1650 pounds you would pay for a case of Mouton 2004.

‘And this for a wine that cost around 280 pounds at initial release. The 2008 may not climb as high as the firsts, but it is likely to go higher than Cos and the other Super Seconds.’

The September Liv-ex report also looks at the phenomenon of the ‘seemingly unstoppable Brand Lafite’, reporting that Carraudes has bucked the trend of price drops during the financial crisis, and that on average, recent vintages are now 22% more expensive than they were at the peak of the market in June last year.

‘Asia has made up its mind on this brand,’ said Boom, ‘and completely ignores either vintage effect, or Parker scores.’

The other second wines are trading at a third to a quarter of the price of Carruades, and even the other Firsts, apart from Lafite, are very much score-led in terms of the price.

‘And I’m not sure this will slow down – before the wine is bottled, trading takes place in Europe, but once in bottle, it heads over to Asia, and then goes out of circulation, so pushing the price even higher.’

The huge cachet of the Lafite – and Rothschild – brands is one of the reasons for the success of the wine. Added to that, the label of Carruades is so similar to that of the first wine as to be indistinguishable, especially to an Asian audience.

Boom added that ‘Mouton will be next [to conquer the Asian market], as it also has the Rothschild name attached.’

I’d like to point out though, sadly, the investor rarely – if ever – sees 100% of the gains. It is divided up amongst the various middlemen, say the broker, the auction house, or if through private sale, the retailer/client. Still, it’s exciting to see the gross return triple in the lifespan of the investment. And while its ascent may not be as thrilling as that of certain stocks (think LVS from its $1 nadir in March to its current value of near $20), it is definitely less of a heart-stopping ride.

WSJ: Bargains in Bordeaux

WSJ posted an article about the summer bargains that can be found in Bordeaux. I’d be on the look out for such bargains, but what was more interesting to me was the part on wine brokers trying to get rid of their surplus supplies on hand. Indeed, my wine broker sent me a couple of “exclusive” offers on 2003 Margaux today, as well as several 2008 second growth en primeurs. I see the rationale – now that there is a glut in supply, prices have come down quite a bit, so it could make sense to snap up a couple cases now and hold on to them for a couple years until demand starts to exceed supply. That said, I have no excess cash right now.

A Surprise Summer Bargain in Bordeaux
Once hyped, now overstocked, midrange 2005 vintage offers quality and promises long life
By DOROTHY J. GAITER AND JOHN BRECHER
31 July 2009

Good wine stores are awash in 2005 Bordeaux. Remember 2005? It was yet another “vintage of the century.” Prices on good Bordeaux—not just the famous first growths, but most of the well-known names—rose to ridiculous heights. Even regular folks on Main Street were somehow convinced that an ever-more-valuable case of 2005 Bordeaux would be the ticket to an early retirement, which created even more demand and even higher prices.

It wasn’t exactly a tulip craze, but it was close. Now prices have come back to earth—or at least they’re somewhere in the lower atmosphere—and it seems to us that stores are stuck with boatloads. Not a day goes by that we don’t get an email alert from a store shouting about its OUTRAGEOUS DEALS on 2005 Bordeaux. They seem to be getting louder as the 2006 Bordeaux hit the shelves, much like car dealerships trying to move last year’s models. While few people are calling 2006 the year of the century, we assure you that merchants are preparing ad copy even now explaining that the Bordeaux they personally are selling happens to be the exception and, in their own way, are indeed the deals of the century. So those 2005 models must go!

We are always looking for bargains, so this certainly seemed like a good time for us to pounce. To get an idea what was out there and whether it was indeed a good deal, we decided to check out midrange red Bordeaux from the 2005 vintage. We set our price limit at $65 and bought 10 wines that have been among our favorites for many years: Châteaux Beychevelle, Brane-Cantenac, Duhart-Milon, Giscours, Gruaud-Larose, Gloria, Haut-Batailley, Lafon-Rochet, Lascombes and Phélan Ségur. Other people have different favorite midrange Bordeaux, but these are some of ours. They have been our go-to fancy Bordeaux reds for decades. We have drunk them young and with age. They are old friends. In each vintage, they give us a good snapshot of fine Bordeaux and a hint about their ageability. We bagged all 10 wines and tasted them in small blind flights over three nights. In each case, we tasted the wines first when we opened them to confirm that they needed decanting—they did—and then we let them sit for an hour before we tasted. Each night, we then also tasted them with steak or a roast (not just for the tasting but because, geez, if you’re having fine Bordeaux, it just seems like a shame not to have some good beef).

At the end, here’s what we would say: Depending on where you buy them—because prices are so variable—these wines are tremendous bargains and a wonderful departure from the whites you’ve been drinking this summer. They are classic Bordeaux, with layers of tightly wound fruit, hints of tobacco and cedar, fine acidity, balanced oak and the kind of mineral underpinning that tastes like true earth. These are the kind of wines you want to sip, not gulp, because every little taste includes so many different, interesting flavors and such great texture—not to mention that the wines seem to change with each passing minute, as they get more air and warmth. They are wines with the structure of a beautifully crafted building.

These days, so many of us are so comfortable with our California Cabernet Sauvignon or Merlot that it’s really important to pick up a fine Bordeaux from time to time just to remember how different they are—more textured, more challenging, less eager to be loved and more confident in their own pedigree. That doesn’t make Bordeaux better, just different, and different is good.

We were least impressed with Brane-Cantenac and Phélan Ségur, which were good but not as impressive as the other eight. Our favorite was our very old friend Gruaud-Larose, which brings back warm memories going back 50 years (50 years of vintages, not 50 years of drinking). It’s so classy and so beautifully made that it’s a bargain at about $60.

While these wines are good now—your friends would be blown away if you served one of these with a steak off the grill this summer—we really would suggest that you lay some down. It’s impossible to know when wines will be at their peak, but in general, we’d say these will be better 10 years from now. They have all the stuffing needed to have a long, beautiful life. In some vintages, the wines are excellent but too expensive for us to think about laying down a case or two. In other years, the wines are affordable, but not built for the long haul. We find the combination of prices and age-worthiness in the mid-range 2005 Bordeaux to be unmatched in many years.

Even more than usual, it’s important to shop around for these. We bought Beychevelle, for example, in one store for $47.99 and at another for $89.95, almost double.

We don’t know about you, but, for us, there’s a big psychological difference between paying $48 for a wine and $90—in fact, it’s the difference between a wine we might actually drink and enjoy for no particular reason and a wine that falls into the dreaded “save for a special occasion” category.

One more thing: Because 2005 was such a good vintage, we have found that the lower-priced, more-obscure Bordeaux wines from that year also can be great deals. While they generally are not made to age, and in fact should be drunk soon, there are quite a few of them on shelves, too.

Because they are often quite inexpensive—sometimes less than $10—it’s worth taking a chance on one. Their names are generally unfamiliar—like Château de Lugagnac, Château Au Grand Paris and Château Les Tours de Peyrat—but they can offer a lot of bang for the buck.

2008 Lafite Price up in Early Trading Post Parker Point Release

Probably still waaaaay too early to tell, but I like the early indications of where the prices are heading. Hehe, quite as exciting as watching the movement Citigroup stock.

Decanter tracks the 2008 Lafite trade:

Lafite’s price rockets as Parker releases
April 30, 2009
Jane Anson in Bordeaux, and Oliver Styles

Chateau Lafite 2008 has shot up in value after last night’s release of Robert Parker’s scores.

The American critic published his verdict, comparing it to both 2005 and 2000, at around 11pm UK time last night.

He writes in the Wine Advocate newsletter, ‘It did not take me long to realize that the 2008 vintage was dramatically better than I had expected…excellent, with a number of superb wines that are close to, if not equal to the prodigious 2005 or 2000 vintages.’

According to Liv-ex, Chateau Lafite – one of his wines of the vintage – was trading at £2000 per case last night, and by this morning was changing hands for £3,500.

‘It’s down now to about £3000,’ Liv-ex’s Jack Hibberd said. ‘But it shows the Parker effect is still strong.’

Parker’s comments are at odds with the UK trade, which has maintained that the wines are better than expected but not overwhelming. Except for a few exceptions, however, merchants are now endorsing Parker.

Justerini & Brooks and Farr Vintners have published the scores with little comment. J&B said, ‘Mr Parker has presided over the 2008s, and he likes them – a lot.’

But Berry Bros called them ‘bewildering’, and Armit warned ‘correct pricing’ would still need to be applied in order to sell the wines.

Simon Staples, Berry’s sales and marketing director, said he was worried the en primeur campaign ‘could be stopped dead’ if the chateaux that received rave reviews from the American critic decided to increase their prices.

‘No-one else believes this vintage is outstanding,’ said Staples. ‘Parker went crazy about 2003, on his own, and he missed 2005 when everyone loved it and now he is screaming about 2008, when we just think it was better than we had hoped for.’

Parker wrote in The Wine Advocate, ‘[The vintage] appears to be a notch below 2005, but it is better than any other vintage of the last decade except 2000,’

Wines of the vintage according to his scores are Chateau Lafite and Petrus, both at 98-100. Pomerol came in for particular praise, and Petrus was described as better than the 2005.

All first growths got over 94 potential points, with the lowest being Mouton at 94-96. Parker also reviewed a much larger number of wines than last year – over 400 reds and around 50 whites, including Sauternes.

‘Twenty-three wines get in excess of 95 points, which is a big endorsement of the vintage,’ said one well-placed Bordeaux negociant. ‘Leoville-Las-Cases got a better score than three of the five first growths (95-97+), and Pontet Canet got a particularly good score at 96-98+.

‘Chateau Haut Bailly got 95-97, and all three are yet to release their price. This may well affect their decision-making.’

James Wormall, director of private sales at Jeroboams told decanter.com, ‘The scores are a double-edged sword. They will help the campaign on wines that are already out – people who thought Palmer was overpriced two days ago, are now wading back it.

‘But I am worried about wines that are not yet released, and the second tranches of the top wines. It remains a drinker’s vintage not a speculator’s vintage, and if the prices are incorrect, the campaign will grind to a halt. We have seen some very sensible pricing so far, and let’s hope it continues.’

Parker Likes 2008 Lafite

Robert Parker, the man who almost single handedly moves the wine market, has spoken. He has rated Lafite 98-100 points. Wow. That is on the level of the 2005 vintage…

Yay! Now that the points are in, time for the market to work the rest.

The 2008 Lafite Rothschild is one of the most profound young wines I have ever tasted. From a taster’s perspective, it is reminiscent of a blend of the 1996 and 2003, but when you compare those vintages analytically, that makes no sense whatsoever. Representing only 40% of the production, this blend of 83% Cabernet Sauvignon, 13% Merlot, and 4% Cabernet Franc boasts an opaque ruby/purple color (one of the darkest Lafites I have seen in 30 years) as well as an extraordinary, blockbuster aromatic profile of lead pencil shavings, forest floor, black fruits, licorice, and a hint of unsmoked, high-class cigar tobacco. In the mouth, a massive richness is accompanied by a freshness, delineation, nuance, delicacy, and mind-boggling density. Even after three decades of tasting, I am still astonished when tasting such a prodigious wine as this. Full, inky, and rich with creme de cassis and spice box characteristics as well as a length that I stopped measuring after a minute, the wine reveals a sweetness to the tannin and an opulence to the fruit that suggests a hot, sunny vintage, but again, that was not the case. There wasn’t a great deal of heat, but there was more sunshine than the negative press reported at the beginning of September. This is a great, great wine. The harvest at Lafite took place between October 1-7 for the Merlot grapes, the Cabernet Franc was picked in mid- October, and the Cabernet Sauvignon between October 7-14 – an unbelievably late harvest for this estate. This wine should evolve for 30-40 years and last 50 or more. As I have indicated before, Lafite’s second wine is now one of Bordeaux’s finest second wines, and is made very much in the Lafite style.

Interestingly, Lafite Rothschild’s manager, Charles Chevalier, told me there was not much flavor in the grapes in mid-September, but a month later, after four weeks of extraordinary weather, they believed something profound may have happened given the flavor development. Again, the historically long period between flowering and harvest, and very low yields are part of the secret to the great success of wines such as this.

The case for Lafite

After much deliberating, I bought a case of Lafite. If I could have afforded it, I might have bought two – one potentially for my own consumption, and the other to cover the cost for my own consumption (at least, that is the hope).

What pushed me to go for it?

The case for Lafite:
1. Pretty compelling case for appreciation, over the longer term. As an example, I will compare it to the 1998 vintage, using data provided by Wine Spectator (alas, I am too cheap to purchase the subscription to Liv-ex to gain access to the detailed price charts). Wine Spectator rated the 2008 vintage in the range of 91-94 points; the 1998 vintage was rated 93 points. The 1998 Lafite was released at $135, and in 1Q09, the average WS auction price per bottle went for $410, down from $671 in 3Q08; wine isn’t immune to the broader stock market after all. Still, that’s a 204% gain over a 10-year period, or a respectable 7.4% annualized return. And at $671 a bottle, that would have spelled a 397% gain, or a 14.8% annualized return. As point of comparison, the Dow was down 13.5% over the same period (1Q98-1Q09) and the S&P down 28.0% over the same period. WOW.

The following table charts the Liv-Ex Fine Wine Index vs. the Dow Jones and S&P from July 2001 through March 2009 (I could only get data from Liv-Ex from that date). As the chart shows, if you had invested $100 to track the Liv-Ex in July 2001, you would have $223 at March 2009, vs. $72 if you had tracked the Dow, and $66 if you had tracked the S&P:

2. Prices have come down 36% compared to the 2007 vintage, which was only awarded 89-92 points by WS. Of course, that means that investors who bought into the 2007 vintage are screwed – at the moment anyway; they might still stand a chance for price appreciation when the market does turn back up.

3. I like to see this as an investment with limited downside risk. If in the end I don’t make anything, I could still pop open the bottles, one every year, and enjoy them over 12 years.

4. It’s a sexier investment compared with a CD. And also sexier than the stock market, without the volatility – ie. I won’t see my investment go down to zero, unlike some alternative energy and financial stocks…

Potential downside risks:
1. The 2008 vintage, is not, by any stretch of the imagination, one of the best vintages of the decade. The 2005 vintage takes that prize, followed by the 2000 (Robert Parker’s Vintage Chart for years 1970-2007; he has yet to release scores for the 2008 Bordeaux vintage). Thus, if the 2009 vintage turns out better than the 2008, we could see a repeat of what has happened to the 2007.

Liv-ex 2008 Bordeaux Prices

Following up on the previous post, here’s a table from Liv-ex, showing the current London release prices for the 2008 Bordeaux:

	Critical acclaim			London release price (GBP / cs)
	RP	JR	WS	2008	Date	2007	2006	2005	2004
Angelus		17.5	89-92	725	06/04/2009	1,000	1,125	1,400	540
Ausone		18.5	93-96			5,000	7,500	8,500	1,450
Beychevelle		17	83-86			260	240	270	175
Branaire Ducru		16.5	88-91			270	275	350	165
Brane Cantenac		15.5+	86-89			210	245	300	180
Calon Segur		17.5+	88-91			320	300	470	215
Cheval Blanc		18-	92 -95			3,600	4,250	4,500	1,275
Conseillante		16	87-90			595	650	800	325
Cos d’Estournel		18	91-94			650	720	1,120	425
Ducru Beaucaillou		17	90-93			540	750	990	360
Evangile		17	90-93	720	16/04/2009	845	900	1,120	495
Grand Puy Lacoste		NA	87-90			320	305	420	195
Gruaud Larose		17	88-91	260	15/04/2009	300	270	330	210
Haut Brion		18	93-96			2,450	2,950	3,800	950
Lafite Rothschild		17.5+	91-94	1,590	17/04/2009	2,500	3,200	3,900	950
Lagrange St Julien		16.5	88-91			250	225	265	155
Langoa Barton		16.5+	89-92	240	15/04/2009	280	300	400	185
Latour		18.5	91-94	1,590	14/04/2009	3,250	3,250	4,500	1,200
Leoville Barton		16.5+	90-93	330	15/04/2009	395	395	550	240
Leoville Las Cases		18	91-94			900	1,150	1,680	450
Leoville Poyferre		16-	90-93	305	16/04/2009	355	355	495	220
Lynch Bages		16.5+	89-92	360	17/04/2009	360	470	240	240
Margaux		17.5+	90-93	1,590	17/04/2009	2,450	2,950	4,500	950
Mission Haut Brion		18	91-94			2,000	2,950	1,550	580
Montrose		16	88-91			450	465	635	300
Mouton Rothschild		18.5-	91-94	1,470	15/04/2009	2,450	3,600	3,500	880
Palmer		18	89-92			1,175	1,150	1,370	480
Pape Clement		16.5	89-92			720	750	850	385
Pavie		17.5+	92-95			1,225	1,495	1,800	660
Pichon Baron		17+	88-91			520	520	720	320
Pichon Lalande		17.5	89-92	465	17/04/2009	595	650	750	385
Pontet Canet		17+	90-93			440	395	480	240
Talbot		16	86-89			250	220	265	165
Troplong Mondot		16.5	91-94			430	650	900	220
Vieux Chateau Certan		17.5	88-92			620	810	980	450

RP = Robert Parker; JR = Jancis Robinson; WS = Wine Spectator

More on 2008 Bordeaux Futures

My wine broker has been calling me again – this time with an opportunity to buy some 2008 Bordeaux first growth en premiers. The good news: prices have dropped 40% y/y, and entry prices for investors are much lower, at $6,000 instead of the minimum $13,200 last year. The bad news: because of the drop in prices, and the brokers’ nervousness of the market, investors wanting to lay their hands on the first growths must buy an allocation of second growths wines as well.

Took a quick look at the reports on the second growths, and I’m happy to say that the 2008 second growth Cos d’Estournel raked in quite rave reviews; up there with first growths.

But will it be an attractive investment? I’d dredged up two reports cautioning against it in an earlier post, but here I’m attaching a few more articles for comparison sake:

Jancis Robinson weighs in on the surprising 2008 Bordeaux vintage:

2008 Bordeaux Futures Not Worth a Bother

Vinfolio talks down the 2008 Bordeaux Futures:

The 2008 Bordeaux en primeur tastings are under way and, not surprisingly, trade attendance is down almost 10% (see Decanter.com story) and this year has its own issues as the market struggles to adapt to the realities of the current economy (see NY Times story).

Why should collectors bother to buy Bordeaux futures this year?

They shouldn’t.

Here are the typical reasons cited to buy futures, none of which apply at the moment:

Secure your supply – Your favorite wines won’t sell out in this economy and with an average vintage. Availability of different bottle sizes later shouldn’t be an issue either.
Obtain better pricing by buying early – All signs are that the chateaux are going to set unrealistically high prices. Wait it out; they’ll come down later. Moreover, why tie up capital for 18 months when you can buy other (better) vintages, all of which have suffered price declines in the past 6 months?
Ensure perfect provenance -They’ll be plenty of original wood cases to buy later as soon as the wines are bottled that come straight through the distribution chain to you.
Moreover, why take the risk that your retailer, or someone in their supply chain, goes out of business in the 18 months to 2 years before you take delivery? Anything can happen in the current environment.

Bottom line: Ignore the 2008 Bordeaux futures campaign

Bordeaux Wine News has similar warnings:

The Bordeaux wine world woke up with a start yesterday, as, immediately after the close of the 2008 Bordeaux future tastings, a famous name released its 2008 future price.

The future wine market is a specific one, unique to Bordeaux, in which buyers can purchase wines in anticipation – at a reduced price. These wines will not be delivered to buyers until Winter 2010, as they are still undergoing their ageing process in oak barrels.

Usually, producers wait several weeks for the critics’ tasting notes to be published before releasing their official futures price. This year is different : Hubert de Boüard, who is the owner of Château Angelus, one of most precious jewels of Saint-Emilion, was the first to make public his 2008 future price this Monday.

Priced at 50 euros a bottle (1), Château Angelus 2008 registers a reduction compared to 2007 which was released at 85 euros last Spring.

Evidently, Monsieur de Boüard does not believe in half measures :”Either wine growers can spend their time navel gazing, or they can analyse the markets. America and Britain are in recession and the rest of Europe is faring no better. In Asia, where few consumers buy wine via the futures market, Japan and South Corea are in serious financial difficulty,” he explains.

“Angelus 2008 is on the market at the same price as 2004. At that time, the property was doing well, as was the merchant and distribution business.

Customers would buy cases of 12 bottles for drinking not for speculation. However, these same bottles have been boomeranging back into circulation recently – sometimes at prices lower than their original future prices. I am worried about the future of this “primeur” market system and I want to renew contact with the customers.”

Will this dramatic change of strategy set the tone for the Bordeaux futures campaign? Probably. One wonders however, if the price cuts will be enough to motivate buyers and customers will be patient enough to wait for their wine.It is clear that older vintages will be coming back on the market, and at bargain prices too….Hubert de Boüard is proceeding with caution : only 50% of his 2008 production is available for sale on the futures market, compared to 95% in the past few years.

(1) Professional (wholesale) price. The retail price for such a bottle in France will be around 80 euros.