The polemic over the Bordeaux primeurs increased this month with publication of an article saying prices of €500 a bottle for the 2007 vintage would be 'immoral'.
Alain-Dominique Perrin, former head of the world's second biggest luxury group, Richemont, told French magazine la Revue du Vin de France that first growth pricing must fall.
Speaking of the 2007 harvest, Perrin said, 'are they going to try and sell us bottles at €500 (£371, US$724)? If there is a moral in this wine world, all the top ones must go back to €100 (£74, US$145).'
The article goes on to claim that the production costs of a bottle of first growth wine is around €12 (£9, US$17).
'To make a bottle of Chateau Mouton Rothschild or similar, all payments included, it comes down to between €10 and €12 at most,' Perrin said.
In total, he said, consumers were paying about 80 times cost price for top Bordeaux primeurs, when the most expected in the luxury industry was 17 times cost of production.
Perrin, who is now executive administrator of Richemont – which owns Cartier, Van Cleef & Arpels, Montblanc, Piaget and Dunhill – has several wine estates of his own, including the much-lauded Chateau Lagrezette, in Cahors.
He owns no properties in Bordeaux.
When asked about production costs the five first growth chateaux mainly declined to comment.
'I don't want to get into a polemic with him [Perrin] but it is evident the costs of production are much higher than that,' said Paul Pontallier of Chateaux Margaux.
Asked for an estimate of costs he said it was impossible.
'It depends so much on the vintage, the proportions of first, second and third wines, the treatments, it depends on what costs we include. I cannot give a number without giving a three page explanation,' he said, adding that some vintages cost two to three times more than another.
Herve Berland, commercial director of Mouton Rothschild, also refused comment on the costs of premier cru production.
However insiders in Bordeaux confirmed that the €12 was 'about right', with the maximum cost of around €15 per bottle.
When asked about pricing strategies for 2007, both Pontallier and Berland said it was impossible to talk about prices before the annual April primeur tasting.
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The hubris of the Bordelaise never ceases to amaze me. I plan to sit on the sidelines of the 2007 futures campaign, just like I did with 2006. My dollars will explore other regions.
Andrew E. Skroback, New York, USA
Mr Perrin is quite true saying "consumers were paying about 80 times cost price for top Bordeaux primeurs, when the most expected in the luxury industry was 17 times cost of production". But those Châteaux are selling only one brand, and one product a year... I am wondering how many different watches the Richemont Group has been producing in 2007... Cartier all by itself has got a massive range of products. On the other hand, there are only ten Bordeaux brands reaching those prices. Saying Bordeaux En Primeur Prices are crazy, makes me laugh. There are about 7000 châteaux in Bordeaux, and most of the prices do not reach 10 Euros, and looking at Lagrezette prices (Mr Perrin's own estate), I find them quite high also, much higher than the average Bordeaux prices in fact.
So please do not include all Bordeaux wines in the same basket.
Basile Tesseron, Château Lafon-Rochet, Bordeaux, France
Yes let's spend our money on good other regions...Cahors malbecs? Philippe Lejeune
What can one say? I have always viewed en primeur as paying for the wines that I will eventually enjoy. 2006 kicked that into touch! This years piggy bank has already gone elsewhere. What is appreciated there will hopefully go into a few lesser chateau, if they will have the sense to bring their prices back to 2004 levels. As ever Bordeaux we wait with bated breath. Sean Hardon
One must remember the vintages of the 1990s in Bordeaux. Many estates were recording major profits during the decade despite prices being much lower than today. The 2000 vintage was the beginning of the price gouging which continued in 2003 and 2005. These estates need to decide who they are marketing their wine for: a small portion of ultra-elite consumers who purchase the wines mainly for the name prestige, or for a broader consumer base who can periodically purchase a bottle and enjoy the wine on a special occasion. Let us all remember that wine is a beverage best shared among friends. Christopher Barrett, Houston, Texas
Only the French could possibly speak of "morality" in connection with gluttony, prostitution and alcohol. Dan Friedman, New York City
Mr. Alain-Dominique Perrin's recent comments are amusing to say the least, and laced with bitterness. Having led the Richemont group to the pinnacle of the luxury goods pyramid, certainly few people know better than he that the pricing of luxury goods has little, if anything, to do with their actual production cost. In fact, as with the Bordeaux first growths, what is being sold to the consumer of such luxury goods is "the dream factor" and, at least in the case of the first growths, "the rarity factor".
Wouldn't it be interesting to compare the cost of production of a Cartier watch with its retail price? And to look at how many were produced of any given model to determine their rarity . . .
Clearly, the interest and substantial investment of luxury business leaders like Bernard Arnault and François Pinault in the first growths of Bordeaux has propelled these latter into the elite domain of the world's most sought after luxury goods. For Mr. Perrin to bemoan this reality is ironic.
While hardly supporting the high prices of the first growths and the arrogant image with which they tarnish all of Bordeaux, one can't help but wonder if Mr. Perrin's real, and arguably understandable, grudge is the fact that the wines of Cahors, including his own Ch. Lagrezette, cannot break into this very closed category of luxury wines. Jeffrey M. Davies, Bordeaux
Pricing is not a “moral” issue. It is a market issue, first and last. If consumers choose to buy bottles of wine, any wine including wine from Cahors, for hundreds of Euros or dollars a bottle, that is their right. It is not healthy to confuse moral issues which can be quite important with market issues. Also, personally, I find it disingenuous when proprietors outside Bordeaux comment on Bordeaux pricing and it is ironic the commentator in this case ran a luxury goods company. What is the real cost of a Cartier watch, by the way? Martin Sinkoff, New York
The price of top Bordeaux wines has nothing to do with cost. It's a simple matter of supply and demand. Peter Thomas, London
M.Tesseron is, of course, absolutely correct when he says that it is only the very few names in Bordeaux which command the very high prices. Those are the household names that even those with little interest in wine know to be great wines and the reasons for drinking them will vary from the wine lover seeking a great experience to the man seeking to impress his contacts with his wealth and apparent discrimination. There are, however, many other wines from Bordeaux which are excellent and offer good value. The tasting of Saint-Émilions in the current issue of Decanter, although in my view possibly open to criticism for obviously concentrating on current drinking merits, shows how many excellent value wines there are amongst the relatively unknown Grands Crus Classés and even Premier Grand Crus Classés of the Jurisidiction. At an even lower price level that is true of many excellent Grand Crus as well. They may not be Cheval Blanc or Ausone but they will be superb drinking especially for those of us — which, if we are honest, is probably most of us — who could not on a blind tasting tell the difference between, say, Lafite and Latour of the same vintage. Timothy Hartley
I also don't want to get into a polemic - nor do I defend the prices charged by the top Bordelais - but to take correspondent M. Tesseron's point a bit farther, perhaps M. Perrin would be willing to share the margins earned on various Richemont products, particularly those with components (or components of components) and assembly that are oursourced to countries with poorly enforced (or non-existent) labour laws viz. minimum wages, child labour, working times, occupational health and safety records. name and address supplied
It's all about the laws of supply and demand. The power of the First Growth Bordeaux brands are truly awesome and can only help the other growths be discovered and more appreciated. The trend toward wine collecting and “investment” is driving this demand. It is the same market effect that drives prices in the art and antique collectables world. There are now enough unsophisticated wine buyers who buy now only for investment and prestige for their collection. There is plenty of great wine available from Bordeaux and elsewhere at reasonable prices and these will be discovered and appreciated by collectors and investors as well. See Mahesh Kumar's book WINE INVESTMENT FOR PORTFOLIO DIVERSIFICATION to understand what is driving the high end prices. The same thing is happening with California cult wines. A market is evolving for second and third level “investment grade wines. But the good news for wine drinkers is there is plenty of great drinking wine that has not yet reached collectable status. The wise beginning collectors will find those wines. Elliott Mackey, San Francisco
I agree with both Mr Perrin and Mr Tesseron. On one side, profit margins of higher growths of Bordeaux have been quite excessive in recent years, but at the same time they respond to world demand, not only ours in Québec, Europe and other western countries. Also, it is a fact that bad climate conditions can be disastreous when you have just a few brands to market after a full year of hard work and high expenses to fight it.
Such risks have their price, sometimes reflected in better millésimes after or before bad ones.
Personally, I won't mind at all paying a right price for the honest efforts of true growers like the many we find in Bordeaux, especially those who put their heart and hands, not machines and shavings, in the soil and barrel. Michel Constant, L'Île-Bizard, Quebec
Why doesn't Decanter put pressure on the Chateaux of the first, second, third, fourth and fifth to tell us exactly how much it actually costs them?
They should have nothing to hide. Their products are top wines in the rights years, and not so in others. I think it right that prices should fluctuate, and like companies they should have to tell consumers of the real cost of making a wine. I am intrigued.....
I for one am thinking of spending my money on the top Italian wines and Bandol. E T M-M-Crichton
Here we go again. Every year it is the same old story. One cannot generalise about En Primeurs, and one cannot generalise about each individual vintage/harvest. Every vintage is different in Bordeaux, and within Bordeaux there are many micro-climates, and within those micro-climates there are 7,000 or more producers, a fraction of which sell en Primeur. They all have own recipe for production, they all have their own agenda, and if the paying public are willing to pay the asking price, whether it be €10 or €500 per bottle, then sobeit. There is no point in the discussion until the wines have been tasted and retasted, from April onwards. If Ch Lafite for example wants to produce and release 20% of their 2007 vintage under its first Grand Vin label, of very high quality, then that is their choice, and the price is their choice. They have a product that many people desire and are willing to pay for that product. Leave that choice to them. Bringing the top wines down to beneath the €100 mark for the 2007 would certainly bring them closer in line with Domaine Lagrezette 2001 Le Pigeonnier AOC Cahors @ € 84.00 per bottle currently available from Estate. I have not tasted either, and so I am unable to question the morality or immorality of the prices. I look forward to April 1st with an open mind! Leigh Claridge, Maison Sichel, UK
First growth Bordeaux is no longer made for real wine lovers, but for speculators and millionaire label collectors – it is now merely yet another luxury commodity, and will be priced as such. No doubt 2007 will be another dreadful summer 'saved by a miraculous autumn' and due to winemaker's technical skills, the vintage will be exceptional. Sadly for us, people who have bought and enjoyed the odd bottle for years, we are now priced out of the market and will never buy it again, and until the nouvelle riche demand matures, nothing will change. When the Asian boomers realize that rain and rot do not necessarily equal top quality wine, and that for the price on one Latour you can get a whole case of Beaucastel, a couple of DRC Grands Echezaux, half a case of Ridge Montebello or a trio of Parker 100 scoring Ermitages, perhaps they'll spend their money more intelligently. But if there are enough people who neither care about the price nor know about the price:quality value, the First Growths can continue to charge sums that surpass mere financial greed.
Adrian Latimer, Paris
Monsieur Perrin's selective hypocrisy takes top prize for being the most immoral. Montblanc pens, which sell for a minimum three to four figures, the majority of the parts are made of plastic. Not to mention that they are probably out sourced to some anonymous factory which also produces pens for other brands. At least when we drink a Bordeaux, it is an authentic product identified to a designated vineyard from a demarcated commune of a certain chateau. Unless of course the material used to produce Montblanc pens are Plastic Appellation d'Origine Controlee.
In which case I apologise to Monsieur Perrin for calling him an hypocrite.
CH'NG Poh Tiong, Singapore
When you're just starting out in business, it's a safe bet that you need more clients buying up as much of your goods or products. But what if you have been up and running for a while, and you're still not making as much money as you would like to have? Do what most luxury products are doing – justify your prices at the most ridiculous explanations you can find till somebody start calling you names or when there isn't a demand for your products out there. What Bordeaux primeurs are doing are sheer marketing and pricing strategies - let the market place do the talking.
Eldric Ko
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The hubris of the Bordelaise never ceases to amaze me. I plan to sit on the sidelines of the 2007 futures campaign, just like I did with 2006. My dollars will explore other regions.
