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’s big surprise
18 Apr 2009 by Jancis Robinson/FT but this is much longer
See our complete guide to coverage of 2008 bordeaux and more than 550 tasting notes on 2008 bordeaux.

By the end of the second week of last September, when the grape harvest is usually well underway, Stéphane Derenoncourt, Bordeaux’s increasingly powerful consultant winemaker profiled on these pages five years ago, genuinely thought that he wouldn’t be making any wine in 2008. He was far from the only one to suspect that grapes so swollen by summer rains, ravaged by mildew and threatened by rot were unlikely to survive in any healthy, flavourful form long enough to be picked and fermented into wine.

As harvest approached, winemakers found their usual sorties into the vineyard to taste the grapes, and judge when they are sufficiently ripe to pick, very much harder work than usual. The harsh malic acid in them was so high that they tended to taste more like cooking apples than grapes. And even after the grapes had, finally, been picked and fermented into wine, later than in living memory, malic acid levels were still so high that the traditional second fermentation that transforms malic into softer lactic acid was difficult to start and at times seemed almost impossible to complete.

I asked Fiona Morrison MW, who made the delicious Le Pin 2008 Pomerol with her husband Jacques Thienpont, when they first realised the wine was going to be all right. ‘Two weeks ago?’ was her flippant initial response, although Jacques reminded her that when they first pumped the purple juice over the caviar-like layer of grape skins floating on top of the fermentation vat they had been very impressed by the colour and purity of the fruit. ‘I think that we were so battered and bruised from all that sorting we needed to do (wretched Merlot!) that we didn’t pay much attention to the wine at first’, she admitted.

Certainly the 100-odd wine commentators and approximately 4,500 wine merchants who descended on Bordeaux at the beginning of this month to taste the 2008 bordeaux did not expect to find such attractive wines – especially in view of what Baptiste Guinaudeau of Ch Lafleur described as ‘a typically British, sad August’ and an even wetter first half of September.

But in fact most of the reds are now tasting very well, with enough but not excessive ripeness, nice fresh acidity, and tannins that at the moment seem reassuring in quantity and not too abrasive in quality. My first exposure to the vintage, straight off the plane, was a collection of wines from less exalted properties in Pessac-Léognan, as the posh bit of the Graves is called nowadays. Even at this quality level I was thrilled by the purity of the aromas and the harmony between the acid, tannins, alcohol and fruit.

And in St-Émilion, the large region on the right bank of the Gironde which has produced more than its fair share of exaggerated wine styles in recent years (even in a recent blind tasting of 200 top wines from the celebrated 2005 vintage), the 2008s seemed in general attractively succulent, energetic, concentrated and only rarely over-extracted.

In next door Pomerol – crucially dependent on the Merlot grapes which caused so many headaches for Bordeaux vignerons in 2008’s exceptionally extended growing season of 120-125 days – the 2008 success rate was even more striking. The distinctively dry wines from the Pomerol-dependent J P Moueix stable seemed on better form than ever in 2008.

Although the individual performances of different châteaux vary considerably in 2008, particularly among the top wines, there seemed to be no geographical weak spot in 2008. The plateau of Cantenac just south of Margaux was admittedly badly hailed at the end of May, although the resulting crop reduction may have been no bad thing – just as the unsettled, damp weather during the late flowering reduced and possibly concentrated the potential crop, especially for Merlots, and resulted in uneven ripening in virtually all districts.
François Mitjavile observed in his positively burgundian cellar at Ch Tertre Roteboeuf in St-Émilion, ‘Every serious agronomist I have seen says they don’t understand why this year produced such a good wine. Perhaps we can say it was a very good July, or the lowest yields since 1991, but it was rainy and cold pretty much all year.’

Like, 2007, 2008 was a relatively small vintage but, unlike in 2007, July was usefully dry – as dry as in 2005. Jean-Hubert Delon of Ch Léoville Las Cases attributes the success of his St-Julien to a July he describes as remarquable – and also of course to the prolonged fine weather from mid September until mid-October, when, in temperatures too low for rot to spread, the last grapes were picked. Without this saving grace, the vintage really would have been mush.

As for the vinifications, most thoughtful winemakers seemed to be aware that these super-fragile grapes needed delicate handling without extracting too much of the grapes’ considerable charge of tannins. Mathilde, daughter of Burgundy’s Etienne Grivot, was doing a stint with Alexandre Thienpont of Vieux Château Certan in Pomerol and apparently assured him, ‘we know how to save the fruit from grapes like this’. Macerations were short – just 12 days here. And clearly the key everywhere was selection. Many producers sold off significant quantities of substandard wine in bulk.

It seems that in this era of climate change, the old sayings need to be rewritten. It used to be said that a fine August made the flavour of the wine, but, as Denis Durantou of Pomerol’s Ch Église Clinet pointed out, ‘in the recent past it has sometimes burnt it whereas in 2008 the cool weather just kept it nice and fresh. I’ve never made such good wine from such a late harvest.’ Not far away at Ch Cheval Blanc, Kees Van Leeuwen said that they realised quite early that 2008 was going to be good ‘because the analysis after fermentation was very like 2005’s’. Certainly, there is no shortage of tannin, or acidity, in these 2008s and it could be that, for once, the primeurs tasting season six months after fermentation caught the youthful fruit in these red wines at an ideal point in their evolution for tasting. They may well firm up over the next year or two.
The dry whites are still chock full of acidity and grapefruit-like aromas, which bodes well for their longevity, while the sweet whites (which I have not tasted myself) are said to be lighter and fresher than the 2007s – apéritif Sauternes?

Modest triumphs in 2008
Below, in recognition of the supreme efforts they must have made to produce such quality, are some of the lowlier successes in 2008 red bordeaux, although, even more than for the smarter wines, there should be no need to buy them before they are bottled.

Jancis Robinson on the 2008 vintage, before the release of prices of most chateaus:

Difficult for Bordeaux to swallow
By Jancis Robinson
Published: April 11 2009 02:08 | Last updated: April 11 2009 02:08
The trouble with the 2008 vintage Bordeaux that I tasted last week, along with many from Britain and Asia though fewer from the US, is that it looks really rather good – certainly very much better than the wildly overpriced 2007s, even though last year’s summer was scarcely more propitious.

In at least one important way, it would have been much more convenient for many interested parties, and especially the top Bordeaux châteaux owners, if 2008 had been even less successful than the 2007. That way, in recognition of these extremely straitened times, they could easily have dramatically reduced the opening prices traditionally announced at this time of year, or even abandoned altogether the relatively recent tradition of the primeurs campaign, whereby proprietors manage to sell the new vintage two years ahead of delivery. There would be no loss of face and no knock-on effects on the prices of other recent vintages.

Proprietors of the very few dozen most sought-after wine names in Bordeaux are still flush with the proceeds of their sales of the last few vintages. The 2005s were a soaring success and the wines are now sitting in temperature-controlled storage around the globe, losing value after an extraordinary peak in prices last year. The ambitiously priced 2006s were much less popular with final consumers. As for the rather scrawny 2007s, partly because they were offered this time last year while prices of the 2005s were still sky high, and partly because of the “tradition” that Bordeaux’s principal middle men, the négociants, keep their allocations only by continuing to buy, the châteaux owners managed to sell their 2007s and move them notionally (they are yet to be bottled) as far as the merchants’ warehouses around Bordeaux. But a vast proportion of these 2007s are still sitting on the merchants’ books, unloved, unwanted and, if Bordeaux gossip is to be believed, threatening the very existence of several négociants. More than ever in Bordeaux wine everything, but everything, is for sale.

The global economy is such that it is difficult to see these 2007s finding a ready market in the near future – especially at the inflated prices at which they were offered, which made them costlier than many a fine mature vintage. The only ready markets for the 2007s seem to have been emerging wine-consuming countries, such as South Korea, whose big companies’ leap into the fine wine market most unfortunately coincided with a vintage such as 1997 that more experienced buyers could see was overpriced.

As I reported three weeks ago, the British fine wine trade, usually the most active buyers of Bordeaux en primeur, insisted that there will be no primeur campaign at all this year unless 2008s are priced considerably lower than the 2007s. Despite this, Bordeaux châteaux owners were trying to convince us tasters last week that they could not reduce the price of their 2008s because that would be an insult to those who had bought the 2006s and 2007s.

But on Monday, Hubert de Boüard of St-Émilion, whose empire has been rapidly expanding lately, took everyone by surprise by announcing an opening price for his Ch Angélus, at 40 per cent less than his 2007 was offered, making it, along with the 2004, the cheapest vintage available (though still more than £700 a dozen for those paying in sterling). Since then there has been stasis while the Bordeaux gossip machine grinds at full tilt in an effort to fully digest the implications of this dramatic gesture – and the even more significant news that – even at this price – Angélus 2008 is proving far from an easy sell.

Last week, Jean-Guillaume Prats of Cos d’Estournel, one of the most ambitious second growths, had carefully told the large group of British wine writers with whom I tour the tasting rooms of the Médoc, that he was inclined to sit out the 2008 campaign. “People can buy it if they want,” he said. But if the négociants choose to avoid the 2008s, they will not prejudice their allocations of the 2009s and 2010s, which will be based on how much 2007 they were good enough to take off his hands. After all, the châteaux owners need to finance the 2008s at only the cost of production, which is a very modest fraction of any likely selling price. As for what price the 2008s might fetch, according to Prats, it was all down to the first growths, who shoulder an enormous responsibility. In fact, this is probably the only time you will ever hear him say that he is happy not to have first growth status.

The first growths could well afford to sit out a 2008 primeur campaign altogether, but there will be pressure on them from below to announce opening prices for some wine – however small a portion of this relatively small crop – just to get the market going for everyone else. Part of the problem for the first growths is that where they decide to pitch the prices of the 2008s will affect both the négociants – who will find it so difficult to borrow money to buy this new vintage – and those properties lower down the feeding chain whose prices have failed to increase as dramatically as those at the top. These are the Bordelais who, with the négociants, are under real pressure at the moment, caught in a vicious circle whereby in many cases their wines sell at too low a price for them to be able to justify the immensely detailed upgrades in technology, personnel and rigorous selection that the most glamorous châteaux have been able to afford.

This makes it all the more remarkable that some of the most exciting wines among the hundreds I tasted last week came from relatively modest addresses. I shall give more detail on the wines themselves (which are, alas, mere bit players in the Bordeaux market) next week, and try to unravel just why such a miserable summer produced such cheer in the thousands of tasting glasses emptied last week.

Bordeaux’s 2008 Vintage Gives Chateaux a Headache:
Elin McCoy

April 9 (Bloomberg) — Last week, I sipped and spat out more than 300 barrel samples in Bordeaux’s annual en-primeur tastings, and the number of rich, ripe, complex reds and bright whites took me by surprise. That’s a problem for chateau owners.

While this isn’t a stellar vintage like 2005, nobody expected the 2008s to be any good at all after a poor summer. So buyers were hoping the futures for the latest vintage would reflect economic realities. But dropping prices dramatically in a good vintage? It’s not in the Bordelais DNA.

That’s why for the media and merchants in attendance, the mood of the week flip-flopped between certainty that sanity would prevail, and concern that it wouldn’t.

Like the other journalists, my days were split between morning tastings organized by the Union des Grands Crus, whose 131 members represent the top Bordeaux estates, and afternoon appointments at the first growths and others that snobbishly refuse to show their wines outside the chateau.

At every stop, tastings were followed by talk centering on how soaring prices over the past five or six years for the 20 most-in-demand chateaux badly need adjusting down. Naturally, almost none of the chateaux think they belong on that list.

Buyers agreed that the exclusive first-growth properties have to lead the way by releasing their wine for much lower prices as soon as possible to keep the fine-wine market moving. In Chateau Latour’s elegant, modern tasting room, where you spit their ultra-pricey juice into a discreet stainless trough washed by constantly running water, I sampled the perfectly balanced, smoky-fruity first growth and listened to managing director Frederic Engerer.

Portents of Disaster

All business in a gray hand-stitched suit and skinny French eyeglasses, he spun the tale of a poor spring, a warm, humid July and cold August, clear portents of disaster. Then a late September and October Indian summer saved the day for those, like Latour, who wisely waited to pick the grapes.

But with price trumping quality this year, would he confirm the rumors that Latour would offer 2008 futures at 100 euros ($133) a bottle, half the initial cost of the unloved 2007s, which were nowhere near as good?

“Whatever I decrease, it will never be enough in this environment,” Engerer said. He might release a very small amount to start and if Latour didn’t sell at the price asked, “we’ll hold the wine for three, four, five years, until people smile again.”

The picture wasn’t much clearer at Chateau Margaux. As owner Corinne Mentzelopoulos’s lively beagle, Zorba, dashed around the tasting room, winemaker Paul Pontallier philosophized about the market, observing that in wine and life, there are no certainties.

Back to Basics

At second-growth Chateau Ducru-Beaucaillou, owner Bruno Borie warned, “We have to go back to basics, go back to the consumer, instead of the speculators.”

At his gates, the flags of China and Japan flapped hopefully next to those of the U.S. and the U.K. to welcome international buyers.

Many worried that low prices for the 2008s would hurt sales of the higher-priced, but much inferior 2007s.

The crowds were significantly thinner this year, down 10 percent according to the Union des Grands Crus, and 25 percent at some chateaux. Last year’s 200-strong Russian contingent was down to one person this time, but the number of Japanese increased.

The tasting room at Jean-Pierre Moueix in Libourne is usually jammed with people crowding in to taste Chateau Petrus. I had the room to myself with one other journalist. At Mouton- Rothschild, in a grand room hung with a medieval tapestry, I tasted alone until two Germans arrived.

Many U.S. retailers didn’t show, reeling from the money they put out for the last two Bordeaux vintages, both priced while the economy was booming. Mark Wessels of Washington D.C.’s MacArthur Beverages Inc. said he saw no point.

Negative Cashflow

“We’ve only sold half our expensive 2006s, so I’m cashflow negative to the tune of $300,000 to $400,000,” he said.

Farr Vintners Chairman Stephen Browett, who said his London-based firm sold 35 million pounds ($51 million) of 2005 futures, postponed his usual trip because he didn’t get the assurance he wanted that prices would drop 50 percent.

“The chateaux don’t understand who buys futures,” he explained. “It’s the bankers, whose pockets have been hit hardest.” Plus, the euro is up 14 percent against the pound in the past 6 months.

“Any chateau who is not hearing what the merchants are saying is completely ignorant, blind or deaf,” said Laurent Ehrmann of Barriere Freres, a negociant that markets wine from many different chateaux.

The fine-wine market could use a glass of classic claret right now — if the price is right. Reds were variable, some overwhelmed with tannin, but about 30 wines really impressed me, all from properties that could afford the kind of selective picking and sorting that makes good wines.

Top Picks

My favorite first growths? Latour was tops, followed by Haut-Brion and Lafite. I gave high marks to Pontet-Canet, Palmer, Leoville Las Cases, Haut-Bailly, Leoville Poyferre, and many of the wines of Pomerol, especially big, brooding Petrus and silky, seductive La Conseillante.

A few Bordeaux chateaux aren’t playing the waiting game. Chateau Angelus rolled out its 2008 offering to merchants on Monday, three weeks earlier than usual, at 50 euros a bottle, 40 percent off the 2007 price. Alas, the popular St. Emilion red isn’t one of the year’s many successes.

Will the gloomy global economic outlook force a serious attitude adjustment on the first growths? We’ll know if Bordeaux prices come under the guillotine over the next few weeks.

(Elin McCoy writes on wine and spirits for Bloomberg News. The opinions expressed are her own.)

And from The Times:

April 18, 2009
Bordeaux 2008: the grape escape
Despite last year’s appalling weather, the region still managed to produce some very appealing wines

Jane MacQuitty
The 2008 Bordeaux vintage won’t be the no-go area that economic pessimists feared. Even the usually circumspect Christian Moueix, from Pétrus, the most celebrated and costly château in Bordeaux, felt sufficiently emboldened to declare: “If it had been a great economic period we would have said it was a great vintage.” Admittedly he quickly tempered that by saying that it was an uneven vintage and certainly not in the same league as 2005, 2000, or even 1995 or 1998. But even so.

Having spent the best part of a week in Bordeaux tasting hundreds of the precocious ’08s, the big surprise was just how good some of the wines are. The finest 2008 clarets are attractive, deeply coloured wines with surprisingly sweet, floral and vibrant fresh red fruit ripe flavours (cherries and violets to the fore), with good alcohol and acidity levels. There were plenty of disappointments too, though. The worst were hard, hollow, watery, over-extracted wines with harsh green tannins.

Given the appalling weather last year it’s a wonder that there were not more of the latter and fewer of the former; 2008 is not a right-bank merlot success, nor a left-bank cabernet victory. Its successes are peppered throughout the region, with the finest wines being made by well-funded producers from the greatest terroirs who, crucially, took the time and trouble to leaf-pluck and crop thin and then, with nerves of steel, waited for that last mid-October blast of heat before harvesting.

How fine the slow-growing Bordeaux 2008 wines are is causing heated debate. Robert Parker, the world’s most influential wine critic, has let slip apparently that 2008 is better than the excellent 2006 and 2004 claret vintages and nudging the great 2005. Absurd. Last year’s is a miraculous, weather-defying vintage of just above average quality, made and saved by a small crop (half the usual harvest for many), late-season sun and a fruit-concentrating northeasterly wind. This is not to devalue the best wines of 2008. Occasionally last month I tasted some gorgeous clarets that were very good indeed, but, overall, while the vintage is much better than the lacklustre 2007, it is somewhere between 2001 and 2006 in quality.

The big question now is how the blinkered Bordelais will pitch their 2008 campaign prices. With large quantities of unsold 2007s in the hands of French négociants and British merchants, and a strong euro and weak sterling, a 50 per cent cut on 2007 prices is what’s needed for an active and relevant 2008 en primeur campaign. I wouldn’t hold my breath. Look out here for Bordeaux 2008 bargain-buys and best clarets when the prices are released in a few weeks’ time.

And from Decanter:

Busy week of releases sees Bordeaux campaign off to a mixed start
April 17, 2009
Jane Anson in Bordeaux

With another busy day of Bordeaux wine releases, the second week of the en primeur campaign has seen a significant proportion of high-profile wines on to the market, many at large drops from 2007.

Chateau Lynch Bages has come down 20% to 32 euros ex-chateau (equivalent to around £385 per case in the UK), while Chateau Pichon Comtesse de Lalande has come down 40% to 33 euros ex-chateau (around £465). Chateau Margaux yesterday became the fourth of the Premiere Grand Cru Classes to come out yesterday, at the same 110 euros as Lafite and Latour (around £1,590).

‘It’s a total relief that for once they have just got on with things – and to a certain extent listened to the market,’ Simon Staples at Berry Bros told decanter.com.

‘And there are healthy signs that the campaign is attracting normal buyers – we have sold the same amount as d’Angludet on the internet as we have Lynch Bages, which suggests that people are buying to drink not speculate. And wines are going to private customers this year in the UK, not all immediately going abroad.’

Stephen Browett, at Farr Vintners, was also upbeat. The firm had declared before the en primeurs week that they would not be going to Bordeaux, nor recommending that their clients buy the wines unless prices came down significantly.

‘We’re feeling a lot more positive than we were a month ago,’ said Browett, ‘and there are definite buyers for the well-priced wines. I’m surprised that no one has waited for Parker scores, but it’s a good thing, as people are buying on the reputation of the chateaux themselves.’

‘The problem might be that the campaign will run out of steam once all the first growths are out,’ added Staples. ‘If I was a smaller property who hadn’t released yet, I would be worried.’

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