No change in Bordeaux prices leaves campaign moribund
May 23, 2008
Jane Anson in Bordeaux
The Bordeaux 2007 en primeur campaign is looking increasingly moribund as prices are released with little or no change on 2006.
Recent releases include Chateau Gruaud Larose (€29), Chateau Talbot (€24) and Chateau Phelan Segur (€17.10), all a reduction of less than 5% on 2006.
Chateau Pontet Canet came out today at exactly the same price as last year.
With exchange rates, this means price rises across the board on a vintage that is widely regarded as best for 'early drinking'.
At Berry Bros, wine director Simon Staples told decanter.com they had 'walked away' from their entire allocation of Chateau Talbot, and 'halved our position on Gruaud Larose.'
'Considering that nothing has sold on, I am really amazed that the big names are still coming out so high. 2007 needed to be a bargain, and it's not a bargain by any stretch of the imagination.'
The major concern reported by UK merchants is that customers are not interested in new offerings because the prices have written off the vintage.
Many merchants are waiting until all the prices are released and will just send out one overall offer, rather than sending offers on an ongoing basis as in a normal year. There are even discussions over whether it is worth the risk of buying first growths.
Simon Quinn at Bordeaux Wine Investments said, 'Prices are very disappointing, and customers are staying away. Either the Bordelais really do have other markets picking up the slack from the UK and the US, or they are sticking up two fingers at the lot of us. Even those who have dropped their prices are suffering the fall-out from the rest.'
And UK critic Neal Martin, writing on erobertparker.com, said, 'Chateau X tells me that they sold their entire stock of 2007s within two hours. The following day I ask merchants how Chateau X is selling? The reply is often a paltry 1 or 2 cases whereas even in 2006 they sold 200 to 300 cases - what appears to be a complete snub from consumers. Oh, and Chateau Y and Z and [sic] exactly the same.'
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It's no wonder the Bordeaux chateaux so far haven't dropped their prices, and we shouldn't expect that trend to change regardless of what you think about 2007.
It seems as if the wine trade gives a lot of mixed (if not highly questionable) messages when it comes to assessing the quality of a vintage (in this case 2007). From this one can't help but feel that a final published vintage assessment may be based on many things other than the actual quality of the wines that are produced.
I would caution any consumer upon referring to (let alone basing purchase decisions on) a vintage assessment put forward by a party that also has a financial interest in selling such wines that they are also writing regional assessments on. Fine wine merchants appear highly concerned with not rocking the collective boats of the chateaux for fear of retribution in the form of reduced future allocations.
When one looks at the huge volumes sold and big markups earned from a vintage such as 2005 no fine wine merchant wants to do anything to risk their share of the pie next time Bordeaux produces a “Vintage of the Century”. This means that they have to continue buying a minimum amount of wine irrespective of quality. The problems with the vintage then become the problem of the merchants as they need to find a way to move the stock of such lesser vintages so they can try and make a buck and heaven forbid won't get stuck with it.
These factors seem to now be prevailing above and beyond the integrity and accuracy of their vintage reports.
Unfortunately (very), the Bordeaux chateaux seem to take it far too personally when a vintage is considered anything less than very good. The fact that what happened in 2007, with respect the growing season, was beyond their control and therefore they could not be blamed for it, seems to matter little. Maybe it would help if the vintage assessments were put forward more in this light. However their unwillingness to acknowledge a below par vintage obliges them to not act as such by lowering prices.
Put all these pressures together and it is unlikely that wine merchants who are perpetually committed to purchasing large inventories of wine would have the slightest interest in providing the innocent consumer with an accurate picture.
The large and established clients of fine wine merchants already know what the state of the vintage is, so they will not be affected as they won't be buying. The void has to be filled somehow, so it makes commercial sense (at the expense of integrity) to bend or stretch the truth. Enthusiastic, but uninformed, wine consumers who would be influenced by such assessments become the innocent victims. Pity the poor unsuspecting fellows who are seeking to expand their palate's experience and grow their enjoyment of wine, by making a foray into purchasing some Bordeaux, to find out down the track that they have been “duped”.
One could argue that this was always the case and maybe to a certain extent it was. However in years past any possible “stretching of the truth” was barely evident as generally the media and merchants overall vintage assessments were fairly consistent, with differences arising on a chateaux by chateaux basis, which one (such as I) would chalk down more to palate preferences.
But when looking at Bordeaux assessments for 2007 it appears that the global wine media, or at least the sources I have read, are universal in their disappointment with the vintage, in many cases noting that the chateaux have done as best as could be hoped under the circumstances. So how then can a merchant claim it to be equal in quality to vintages such as 2001, 1999, and 1994 and be better than 1997? A chateaux owner who hears criticism of his prices need only refer to such questionable assessments as justification to continue doing exactly what they are doing.
Anyone wanting proof, start browsing the internet…
David York
Rumours abound that Eurozone supermarkets are buying up large volumes of 2007s at discount prices. Rumours also abound that the correct release price is being largely ignored, and discounts apply in order to get some business. Rumours also abound that Asia is buying large volumes.
We all remember 1997. After 1991/92/93/94 there was a large demand for the 1995 vintage, followed by the 1996, and then, with Bordeaux overheating and merchants wanting to keep allocations, the 1997 was bought heavily at prices which were outrageous. The rest is history. Many wines were subsequently sold off at cheaper than opening prices, and many merchants caught a cold. The wines were easy drinking, early drinking, and, to start with, overpriced. The merchants have learnt their lesson. They are not buying for stock in the UK and the US, and sales are poor even in Eurozone Ireland. Merchants are simply offering the wines, and if they have a sale, and the stock still exists, then they buy the wine. Those merchants that follow Chateaux for Restaurant lists and need continuity have bought smaller than usual amounts. Sauternes has certainly been a success story, and 2007 must be seen as the vintage for both dry and sweet white Bordeaux.
Why are prices of the 2007s not as the UK/US market wanted? The market for older vintages is hot. The 2005's are still on the rise, especially after Uncle Bob's recent reratings. The Chateaux have had a very good and long run. Stocks are low in Bordeaux right now, and there is huge business being conducted in Fine wines from older vintages. The questions being asked are" How far can the prices of the 2005 vintage go? At the present rate, will many of them ever be drunk, or are they paper transactions? How much of an effect will the 2005 vintage have on the following vintages? Well, the 2006 vintage turned out better in quality than many expected, and En Primeur sales in the UK were better than expected. One could say that the prices did not come down far enough for the 2006 vintage to be a huge success, but is was a good campaign with a strong exchange rate in favour of the £. The wines of 2007 are early drinkers, easy drinkers and overpriced (see 1997!) The cellars are low. The £/$ are weak. There is no incentive for the Bordelais to give the wines away at 30% less than the 2006 prices, which is what is/was needed for there to be any market in the UK/US, but prices should have come down to the 2002 release prices. However, the CIVB has just released figures announcing that exports in the calendar year of 2007 were excellent, with the UK being the largest market in value, and Germany the largest market in volume. One presumes that the UK buys a lot of Fine Wines from Bordeaux, and has supported Bordeaux since the early days of En Primeur in the early 1960's.
Rapport qualite/prix is a phrase often used in French parlance. The 2007 Bordeaux reds do not offer rapport qualite/prix, and many of the previous vintages are fetching silly money, and they will also cease to offer rapport qualite/prix. Roll on the next great vintage in Bordeaux and we will all see where the wines end up. If a Merchant in Asia has bought heavily in 2007, he will expect a good allocation in 200???
Leigh Claridge
I have been an avid BDX En Primeur buyer in recent years. Of 2007s I have bought none. Reasons: price vs quality, fantastic 2005s which are in the bottle, great 2006s (I have relatively big positions in Mouton of both years). I just do not need to buy 2007. Good luck to the Chateaux and the poor Negociant which are obliged to buy. So Chat. X, Y and Z may have sold their wine, but its stuck in BDX. Their problem is that they have created a false market, where they are not at all in touch with the ultimate buyer-the consumer. This will come home to roost. And if they decide to bouycot the merchants who do not buy, by cutting their future allocations, I am very happy to move onto buying more Burgundy and undervalued Italians, whose quality is ever increasingn to name a few The market always wins in the end-Dear Bordelais/e do not forget the rules of supply and demand.
Sam Fazeli
Why is anyone surprised by current 2007 pricing? To me, it makes perfect sense.
Each time prices are increased, it puts upward pressure on older vintages. This in turn permits the current valuation of older stock stored by both Chateaux and Negociants to increase, thereby balancing the negociants' books. Because French negociants feel presured into taking up their "allocations", there is no presure on the Chateaux to reduce current release prices. Everyone wins: even the end purchaser, provided that they have older stock. One attractive way to ensure that the market will bear these price increases is to restrict the availability in the weaker vintages by, for example, claiming that "selection this year has been exceptionally vigourous".
The obvious flaw in this scheme occurs when the market value of the lesser vintages inevitably declines. Then the Negociants' accountants might insist on more realistic valuations of the stock, and the continued viability of these companies might be in doubt. At that juncture, it would be most unwise for wine lovers to be holding en primeur contracts. Notice that the en primeur scheme largely isolates the Chateaux from these problems; indeed, they get the chance to sell the wines a second time to other, solvant, negociants.
For UK and US merchants the choice is stark: buy these loss leader vintages in order to remain "well-placed" for subsequent vintages or await the good vintages and buy on the secondary market. I would have thought that many are considering the second option; especially as "well-placed" merchants often find that their allocations are reduced in the better vintages to ensure that other merchants - who are prepared to pay more - get what they want.
Are French, British and American merchants (and their customers) immune to the credit crisis? I think we will all find out over the next eighteen months!
David Lester
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