Decanter World Wine Awards
Bordeaux 2010 report: Fatigue, readjustment, and a missed opportunity
- Tuesday 19 July 2011
They are pleasantly surprised. 2010 was quietly – almost sheepishly – hyped as a vintage to rival 2009, and merchants were always doubtful how it would play with clients who had filled their cellars last year.
But they are also frustrated. Traditional customers have baulked at the high prices of the top wines, even as they realise, after two huge vintages, that properties they have bought for years are now permanently beyond their reach.
Some merchants – like Gary Boom at Bordeaux Index – say customers who have been loyal for years ‘are now deserting us in droves’, but others took solace in the fact that 2010 has still been the second-most successful vintage of all time, 2009 being the record-breaking best, 2005 in third place.
Stephen Browett at Farr Vintners, for example, said sales are just above £30m – compared to around £45m this time last year. Most merchants sold about half the volume of compared to 2009, and a bit more than half the value.
For Farr, it’s not a question of desertion, but readjustment. ‘People are buying the best value wines. We’ve sold loads of Haut Batailley and Grand Puy Lacoste. It’s a simple trade down: those who used to buy first growths are now buying super seconds, those who used to buy Leoville Barton are now buying Grand Puy Lacoste, and so on.’
Most big merchants agree, although William Gardener at Midlands merchant Nickolls and Perks in Stafford, told Decanter.com it was the opposite: it was the lower growths that were ‘thinning out’.
‘We’ve sold a lot more of the key wines and there’s been less uptake at the lower end.’
The reason, Gardener said, was simple. ‘2009 was the vintage of the century so people bought far more than they wanted to. I have clients who normally spend £100,000 who haven’t bought a single case this year.’
In the United States it’s the same story: reduced demand and buyer fatigue.
‘There is a noticeable decrease in demand for 2010s. Maybe it’s hard to believe in another great vintage right after 2009,’ Devin Warner of the Chicago Wine Company said.
But that lack of demand is highly selective. As another Chicago merchant, Ben Nelson of Hart Davis Hart said, ‘we lost out on some sales because we ran out of stock.’
Allocations on the top wines were tiny. The first growths held back two-thirds of their stock in their first tranches, and Latour was reported to have released between 1,500 and 3000 cases, out of production of around 10,000.
Simon Davies of London merchant Fine & Rare told Decanter.com, 'Margaux, Mouton and Lafite "played the game" as they say, and released 80 to 85% of their stock over three tranches. Haut Brion and Latour didn't. Latour released 2,000 cases, I'm told on good authority, and kept back 8,000.'
So while in the initial phases merchants had far less wine to play with – Berry Brothers were allocated 400 cases of Chateau Margaux compared to 1000 of the 2009 – the top wines were easy to sell.
‘I was amazed that we sold 1500 six-bottle cases of Mouton in the first 24 hours,’ Simon Staples at Berrys said. ‘Haut Brion sold far better than I expected.’
The most significant effect of 2010 has been to finally draw a line between the premier league and other wines – and while most properties have judged nicely which division they belong to, others have not.
Highly-regarded properties like St Emilion first growth Cheval Blanc, its near-neighbour Figeac, Rauzan-Segla in Margaux, and Smith-Haut-Lafitte in the Graves caused controversy with their prices.
‘Woeful – lovely wine but it just won’t sell’, was Staples’ verdict on Figeac. Gary Boom said he wasn’t even offering it.
There is much head-shaking at properties that did not realise that joining the premier league is not simply a case of sticking a €1000 price tag on your wine – ‘you have to take the market with you. It will take years for the market go get used to Smith-Haut-Lafitte at that price,' Staples said.
LVMH-owned Cheval Blanc provoked a veritable storm on Twitter and amongst merchants. One – anonymously – told Decanter.com he thought Cheval’s pricing policy was aimed directly at the Chinese market, ‘and they may well see that they are being fleeced and lose face and turn a very cold shoulder towards Bordeaux.’
Prophetic words indeed. Some days later, Aussino, a major retailer, announced it would not to promote the Medoc Cru Classés on the basis their prices were ‘too dangerous’.
For some merchants, however, it was not prices that slowed things in China this year (although Cheval has done badly), but the allocations.
The first growths, Cos d'Estournel, Lynch Bages, Pontet Canet et al were snapped up. But it could have been a good deal better, if prices had come out quicker and allocations had been bigger.
The campaign was indeed slow, with negociants complaining at the end of May that 100 fewer wines had been released than at the same time the year before. Selling did not start in earnest until 7 June, when Gruaud Larose released, then there were long, dry periods followed by avalanches of releases, in which some properties inevitably got forgotten.
‘It was a missed opportunity,’ Don St Pierre of Shanghai-based importers ASC Fine Wines said. ‘The fact the campaign dragged on so long, the negative publicity about prices, gave some people doubts. Then allocations were small. If we had had decent quantities it had the potential to be a big improvement.’
In the end, Chinese importers are satisfied: the top wines (what merchants call ‘the usual suspects’) the first growths, Lynch Bages, Pontet Canet, Beychevelle, Ducru-Beaucaillou, Grand-Puy-Lacoste did well, the overpriced and the less well-known were stagnant.
‘Far too many wines priced themselves out the game,’ Adam Bilbey at Berry Brothers in Hong Kong told Decanter.com. ‘To name but a few: Lascombes, Smith-Haut-Lafitte, Figeac. There were a lot of wines left in the middle ground that priced themselves too high, thinking they could get away with it like the key chateaux. No-one bought them here.’
The picture that emerges from the three great markets – Europe, the US and China - is one of merchants looking relieved, but slightly peeved. They could have sold more if the prices had been more moderate.
But, as Sylvie Cazes, managing director of Pichon Lalande and president of the Union des Grands Crus said, ‘If they respond to the market, and they sell, then they are the right price.’
Perhaps the last word should go to Will Gardener. ‘Overall we’re pleased. The profits margins are low, but we have sold everything we had. There’s no doubt it’s a great vintage, but it’s bloody hard work.’
Additional reporting by Panos Kakaviatos
Have your say!
Mark
July 21 09:46
The problem, surely, will be 2011, and in setting 2010 prices the Bordelais could already see what was happening in their vineyards. Of course, some did behave accordingly, but many, or rather most others didn't.
As for 2011: the winter spring of 09-10 and 10-11 were very similar except that, for the 2011 vintage, it was slightly warmer, more consistent, and a little drier leading to a very early flowering and fruit set. Since the drought broke at the beginning of June (with some hail in Margaux), there has been modest but regular rainfall and, apart from a 2 day temperature spike at the end of June, the temperatures have been low-mid 20s with cooler nights. In other words, the summer looks more like 2009 than 2010.
Hence, we are now 5-6 weeks away from harvest and, provided the weather holds through August with a similar pattern of rainfall and temperature as now, we are on target for an ample vintage with good acidities, ripe fruits, and solid tannins that looks as if it will be a blend of 2009 and 2010. What will they call it: the best since 1868? Of course it is not over until the grapes are in, but the odds in the past few months have strongly been on the side of this being the third great vintage in a row, and they are shortening all the time.
What needs to happen is for the 2011 en primeur campaign to be delayed until 2013. Of course, the Bordelais won't do that; they will probably try to increase prices again for the 2011s. The campaign this year may have been a limited success, but I don't think there is much tolerance out there for more of the same.
Thomas
July 20 10:01
Jules, I so agree with you! Prices may be ridiculously high compared to earlier en primeur campaigns, and none the least considering that we are still talking about a fermented grape juice beverage, but they do reflect the actual price level those wines are now traded at. And why should that profit not be the winemaker?
So lets hope this is the beginning of the end of wine as a vessel for investments, and leave those who can afford it to buy and actually drink the top bottles. In fact, Id much rather see the first grows drunk bottoms up with coke by wealthy Chinese while they learn than it ending up as trophy bottles or worn out investments.
James Swann
July 19 12:24
I would be quite sympathetic to a more balanced approach than simply blaming chateaux – no one complained as trading made 2008 (a low-priced vintage) shoot through the roof less than 12 months ago - as Jules points out above.
As highlighted in a previous Decanter article, en primeur is an imperfect but, thus far, necessary system in that no other can sell large quantities of high-priced wines in a matter or hours.
Typically, it is a trade-off between a buyers and a sellers market, today, off course, it is very much the latter (although that does not mean that they are getting their pricing right and the system must benefit all for it too be sustainable in the long-term).
However, as we see through the numerous Chinese purchases of Bordeaux properties to date and the Aussino move reported here yesterday. The Chinese, as Bordeaux’s biggest importer, may just have decided to develop their own system.
James Swann
Tuggy Meyer
July 19 12:02
I would have to fundamentally disagree with the comment made by Sylvie Cazes: "If they respond to the market, and they sell, then they are the right price." A given Chateau selling their stock in 24 hours, based upon traditional allocations, does not automatically mean that the Market has successfully sold through. Take 2009, one of the greatest ever vintages, the most hyped, the most in demand. It must be all sold then? No. You can still get every single Chateaux from 2009 on the London Market and 80% of these at the same opening price 12-13 months ago (some lower) so that does not qualify as all sold. If they had and they were genuinely hard to find then Sylvie Cazes would be correct in her assertion and the Bordelaise can ask whatever price they like. The fact is, they haven't. The traditional allocation system actually masks the true success or sale of a given wine. Conclusion - selectively, much of the Bordelaise have simply been more greedy than they should have been in pricing their 2010's.