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Bordeaux: wine boom may be over
February 18, 2009
By Oliver Styles
The boom of blue chip Bordeaux wines may be over, according to senior industry commentators.
The economic downturn, inflated pricing and lack of interest in recent vintages could also herald a significant shift in the power-politics of the region.
One industry commentator even suggested that the boom in top Bordeaux wines was finished.
'The speculative bubble of Bordeaux's great wines is currently exploding,' Cesar Compadre, wine journalist for regional newspaper Sud-Ouest told decanter.com. 'It's the end of the Belle Epoque.'
Compadre, who has been covering the crisis in the region, said negociants (intermediaries between the chateaux and the wine retailers) were struggling.
'Some [negociant] firms have called the banks to try to get lines of credit,' he said. 'They've sold very little wine for months.'
Simon Staples of London wine retailer Berry Bros & Rudd also believed there was 'huge pressure' on the negociants. He said the market was in a fragile position.
'All it needs is a chateau or a negociant to go bust and it all crumbles,' he added.
Emmanuel Coiffe at the Salin negociant house said he couldn't speak for all the negociants in Bordeaux but maintained there were at least ten companies that could provide an en primeur campaign this year. He admitted, however, that it was a 'difficult market'.
Wine sales between Bordeaux properties and negociants dropped by over a third in the last five months of 2008, reported Compadre in the Sud-Ouest last month. The wine market was 'stuck in a ditch', said the newspaper.
'Customers from the four corners of the globe have shut their chequebooks and tucked their credit cards safely away,' it added.
'It's difficult to comment [on what will occur],' said Sylvain Boisvert of the Conseil des Grands Crus Classes. 'I don't have the impression that it's collapsing. There's a crisis worldwide – all products, not just wine, are being affected.'
In October last year, Fabrice Bernard of Millésima, one of Bordeaux's major negociants, said the slowdown in interest was the worst for 25 years.
'This is the first time since we went into business in 1983 that we have witnessed such a slowing of orders,' he told news agency AFP.
According to news agency Reuters, the value of Vintage Wine Fund, one of the largest wine investment funds in the world specialising in Bordeaux, fell 33% last year.
This year could also see the end of the dominance of the chateaux over the negociants and wine merchants. Previously, the former dictated the price of their wines. Now, Compadre said, there was a great amount of discussion between negociants and proprietors over the pricing of the 2008 wines.
Compadre said prices would have to fall to the point where 'consumers would say to themselves "I'd be stupid not to buy".'
When asked about the balance of power in Bordeaux, Coiffe said the impact would be industry-wide.
'The market is all-powerful. Everyone will have to adapt,' he said.
Have your say...
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 Everyone knows this already...except the Bordelaise (and certain other area winemakers) whose heads remain firmly planted in the ground.
A. Skroback, New York City, USA
I think your should say Bordeaux Primeur: Wine boom may be over. Your title is wrong - again.
There are plenty of Bordeaux and other blue chip wines from older vintages on the market; true their prices have been affected with a 20 to 30 % drop. However correctly priced; If you play the game - as a Wine Merchant or Chateau or Auction House and despite the global recession- those wines will find buyers.
Frederic Guyot
I am glad to see that the Bordelaise are at last recognising the reality of the market place. Life has changed with the world wide recession and it is not before time. They will otherwise go out of business and if they don't change they will suffer any go out of business.
Michael Day, UK
Hardly surprising – hopefully the super rich are feeling the pinch and maybe some of us mere mortals may soon be able to afford the occasional 2nd growth claret (1st will probably continue to be out of reach)....Also, hopefully, this will push the price of Burgundy down as well.
Andy Whiteman, Okehampton, Devon, UK
The Bordeaux "boys" have been living in the past and its now coming home to roost. It needs one or two big vineyards and dealers to go bust and then we can all start over again in a "new" and sensible world of pricing...I hope...
Barrie Hoar, UK
Ah, yes, the gravy train has ground to a halt on its track. But it's hardly the fault of the Bordelaise. The luxury and collector genres everywhere have been hit – hard – and it's already trickled down to the super-premium and premium sectors; look at the headlines from Napa and Sonoma, for example. This painful and unfortunate economy may, however, provide a “market correction” that injects a bit of sanity. None of us wants the Budwesier-ization of wine. But if wine became more affordable and approachable for more people, the entire industry would benefit and many more consumers could enjoy the pleasures of wine.
David Gaier, Metuchen, NJ, USA
I agree with Barrie. Bordeaux's arrogance will not change until some major player(s) will go bankrupt. Let's hope it will happen!
Filip
Come on, Filip, no matter where you stand on this issue, wishing redundancies on people is rather harsh.
If you've been in the wine trade for over 10 years, this might sound all sound rather familiar: check this out (don't forget to look at the dateline...)
Oliver Styles
A consummation devoutly to be wished. Get rid of the speculators, as happened with the single-malts, and let real people buy decent wine again.
Lewis C Taishoff
So the downturn of prices will begin for the first growth. But never forget, that there are also a lot of other wines with prices comparable to other wineregions with a similar quality. The prices of the first growth were held high by many many investors - the same with the bubbles on the stock exchanges and financial markets. Now we will face a correction here, which is not bad. I am sure the biggest share of the Bordelaise will not be hurt at all. And we will drink the wines from Bordeaux also in the future.
Manfred Sedlak
I wonder how many Decanter readers have bought 1e cru Bordeaux after 2004? Precious few I suspect, apart from investment bankers. And now in 2008 we have yet another cold, wet and rot-filled summer miraculously 'saved' by a dry autumn, low yields and modern winemaking technology. If they released at the 04 prices maybe, just maybe, some of their once faithful long term customers could actually afford to buy the odd bottle, but no doubt greed will win again and they'll pin their hopes on rich, but naïve label hunters further East. Personally I hope the market does crash, and the chateau owners reap the rewards they deserve.
Adrian Latimer, Paris, France
Dear Mr Styles,
In feeling sorry for the Bordelais, you appear to be in a minority of one.
Unfortunately, as Stephen Brook's wonderful "Bordeaux People, Power, Politics" makes clear, boom and bust is what Bordeaux is all about. They like it that way! So, far from having to feel sorry, one should congratulate any Bordeaux Vinerons on having their deepest desires met. It just wouldn't be a great _en primeur_ campaign if there wasn't that frisson of catastrophic failure lurking around the corner would it?
As Mr Latimer suggests, I bowed out of First growths with the Latour 2004, at £90 per bottle. I was prepared to go to £300 per bottle for the 2005s, but as the best offer was £330, I walked away. Obviously, I have not yet been vindicated, but I remain optimistic that these prices will be achieved once again in a few years time.
I'm not out of the fine wine market, as I have just bought Anne Gros' Richebourg 2007 at £130, and Lafon's 2006 Montrachet at £220.
For your and the Bordelais information: historically First growths went at a third of the price of the equivalent red burgundy. This would indicate a price of £43 per bottle for the 2008s.
At that price (and £20 for the seconds), we'd have a market for the 2008s. However, I suggest instead that the Bordelais start digging bigger cellars, as their desire for better prices and a preparedness to wait out the recession, suggests that wine-lovers have a long -- but ultimately rewarding -- hiatus until Bordeaux prices bottom out.
David Lester
Hoping that companies go bankrupt so that prices may drop is an appalling way of looking at this. Workers further down the scale will inevitably lose their jobs, and the richer people will survive. It is funny how the Bordelais seem to always bear the brunt of arrogance and high/overhigh prices. There are many wines around the World that are rare/in short supply and are very, very expensive. There are many non-wine goods around the World that are not even rare but are extremely expensive. So what. People have had the choice whether to buy expensive wine or not to buy. The choice is still there right now. People are still buying Fine Wine, Fine food, Fine Art, Fine cars etc etc. This is not just about Bordeaux. This is a Worldwide correction, a pay--back time of increasing debt over many years.
There is absolutely no point in harping on about Bordeaux and the Bordelais. The Wine Trade has changed many times over the years, and will continue to do so. Bordeaux will survive, and there will be some casualties, but it is not just a Bordeaux problem. We are all seeing the worst financial crisis possibly ever known. Every industry is affected. Housing has continued to rise Worldwide and yet people Worldwide invested heavily in housing. Prices are coming down, and Wine prices will also come down.
Tracy Claridge
Dear Mr Lester,
I never said I felt sorry for the Bordelais. It's their system - and they choose to be part of it. At En Primeur last year, I sat at a table where a Medoc chateau owner bemoaned the fact that a certain wine writer had produced early, but low, ratings for the 2007 vintage. The proprietor, getting ever more flustered, said it was damaging just as the Primeurs campaign was getting under way. Whereupon Stephen Brook (also at my table) simply said: 'Well, you sent him your samples, didn't you? You've only yourselves to blame.'
As Tracy Claridge points out, however, bankruptcy goes hand in hand with job losses. Wishing redundancies on those in Bordeaux is, I find, somewhat insensitive.
Oliver Styles
Unfortunately Bordeaux Grand Cru pricing is a bit like global warming - if only someone could tell us where the datum is we might be able to know if it's getting 'hotter' or 'colder'
Philip Styles, St.Gaudent, France
The true value of any product or service is how much money a seller is willing to sell it for and how much money a buyer is willing to buy it for. This is indisputable economics 101. The price escalation for Bordeaux in recent vintages was the result of demand; specifically demand pressures were rising because of emerging economies. Countries like China and Russia were coming into great wealth and for some, the status quo meant acquiring luxury goods like First Growth Bordeaux, which definitely contributed to the ever-increasing prices of all classified Bordeaux.
Hopefully the châteaux were aware of this being a temporary market condition and anticipated that the meteoric rise in their prices simply could not be sustainable. I cannot find fault with these fine estates for charging whatever the market will bear - this is just good business. But a correction was inevitable and welcome for many, although I certainly do not want to see any estate shutter their
doors or be auctioned off to some insurance company (again).
All of this represents an excellent situation for those in a position to buy and I predict that even more bargains will be forthcoming. Still, managing a wine estate that produces some of the world's greatest wine is not inexpensive and never will be. It would be an extremely tragic loss to witness Bordeaux recede into the depths of producing average wines and because these estates contribute to my
own quality of life, I selfishly wish all of them the very best.
David Boyer, classof1855.com
Why should Bordeaux producers lower their prices if they're still selling their wines?
A year or two of sales decline wouldn't affect them so much, but a 10 year decline will. So they might be playing the game of time so not to lower much their prices, because once you'll lower it so much, it's hard to raise it significantly in the coming years. But this year was the first year that Bordeaux wine had dropped significantly, with some first growths dropping from 20-30%, especially the 2005s.
So Bordeaux can absorb this year and hope for the best in the coming years. It would take more years of decline, to really make them seriously think of drastically dropping their prices.
I hope that prices will fall but I don't think that Bordeaux producers will give this incentive, altough I think that en primeur prices will fall by a small margin.
Brendon Borg, Malta
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