En Primeur: Does it still pay to buy before you try?

En Primeur People & Places Articles
  • Monday 24 May 2010

Some brand it an overhyped, overpriced gamble. So, with 2009 the most anticipated vintage for years, richard woodard asks whether Bordeaux’s futures campaign is still a game worth playing

This time last year, some Bordeaux producers were considering the unimaginable: the postponement or cancellation of the en primeur campaign for the 2008 vintage. In a world engulfed by financial crisis and economic meltdown, many thought the annual wine futures gala was ill-advised.

In the event, rumours of en primeur’s demise proved exaggerated, and the campaign went ahead with, by general consent, surprisingly good wines at (initially) realistic prices. So reasonable were the first release prices that châteaux were able to release the second ‘tranche’ of wines for considerably more.

From that perspective, en primeur worked as it should do – buyers were rewarded for getting in early. The 2007s, on the other hand, left many with their fingers burned (see graphs, p52). So in a world of continuing economic volatility, does en primeur still make sense for the wine lover? And what does the campaign for the much-hyped 2009s have in store?

As far as the hype is concerned, it’s easy to be cynical. As one UK merchant puts it: ‘Don’t worry if you feel you missed out on Bordeaux’s “vintage of the century” – there’ll be another one along in a year or two.’ But all the noises from the Médoc, including those lucky enough to have had a sneaky early taste, indicate that 2009 could be something very special indeed.

Better than 2005? An ’82 with knobs on? This generation’s ’61? Take your pick from the superlative comparisons being made, even before the serious tasting gets under way. The only possible downsides are likely high alcohol and the effects of localised hail on the Right Bank.

What does this mean for the potential en primeur customer? Higher release prices for a start. Most UK merchants predict something close to 2005, however fragile the state of the global economy. ‘That’s what I’ve heard and that’s what I’d anticipate – a campaign at the level of 2005,’ says James Snoxell, head of buying and agency at London merchant Armit.

Others are praying for (but not necessarily expecting) an appreciation of the economic situation, particularly the strength of the euro, which has gained enormously against the pound and the dollar since the 2005s were released.

Most château owners in Bordeaux are reluctant to reveal their hand, but wine magnate Bernard Magrez for one is open: ‘Prices should be at the same level as the 2005s for those who have really succeeded in producing quality, but for the others, it will be lower,’ he says.

Hyped. Expensive. And yet buying Bordeaux en primeur arguably makes more sense this year than ever. If 2009 really is the stuff of legend, then history suggests that paying up front while it’s still in barrel is the best – and probably cheapest – way to get a slice of the action.

Market-driven

‘With the really great vintages, if you bought en primeur, you made very good money no matter where the prices came out,’ points out Gary Boom, managing director of Bordeaux Index. ‘Even with the 2005s, everyone said they were too expensive, but – guess what – they got more expensive.’

The case for en primeur is strengthened by the simple mechanics of supply and demand. Despite the economic gloom, in 2010 there are more potential purchasers around the world chasing pretty much the same amount of wine – with the top 100 châteaux producing no more than one million cases a year. You don’t need to be an economist to work out what that will do to prices once people start trading the 2009s.

This increased interest stems from the fact that the Bordelais have been extremely successful in finding new markets for their best wines. Twenty-five years ago, it was the US; now it is Asia.

‘This will be the first great en primeur campaign in the Far East,’ predicts Boom. ‘They’ve never bought sizeable quantities, but they’re ready for this one. That will put enormous pressure on demand, so prices will be moving up quickly.’

Much of this new interest is focused on the top first growths, which in turn have a polarising effect on pricing, driving up the market value of the very top wines. Put simply, the rich are getting richer, says Snoxell: ‘The super-luxurious end of the market will storm further forward, leaving the others behind.’

So where does that leave mere mortals unwilling or unable to spend thousands on a few cases of Lafite or Mouton? The perhaps surprising answer is: better off than you might think.

‘When you take the snobbery out of it, the gap between the top guys and the smaller ones is getting smaller and smaller,’ says Sebastian Payne MW, chief buyer at The Wine Society, the world’s oldest wine club. ‘In certain vintages there are more wines lower down the scale which give an enormous amount of pleasure.’

‘There’s an advantage in setting up and buying en primeur [this year] because, frankly, Bordeaux’s making the best wine it ever has,’ adds Simon Davies, head of marketing at London wine broker Fine & Rare. ‘A wine like 2001 Pontet-Canet might be great value, but the quality is much better now.’

Boom sings a similar tune. ‘If you’re an average guy who likes laying down a bit of wine, wait for a really great vintage, and then get in even at the lower levels – the Cantemerles and Beychevelles and some of the smaller wines. They might seem expensive now, but they’ll look cheap later – they’re great bargains.’

Lesser vintages

The overriding message is that 2009 is almost certainly not the vintage to give up on en primeur. But not every year is a 2009. Sometimes when lesser vintages, such as 2007, are priced too high on release, the value of the wines can fall following the campaign.

‘It wasn’t an ideal purchase,’ recalls Snoxell of 2007. ‘Prices have softened on some wines. [The Bordelais] simply got the prices wrong.’ Cheval Blanc, for instance, was released at £3,600 a case, but within a year that price more than halved to £1,750; over the same timescale, Ausone had plunged from £5,000/case to £3,900 (see graphs above).

Few châteaux, among them the über-fashionable Lafite, have gained in value since their release, and many merchants expect 2007 prices to continue to fall this year, as other, better vintages come on stream and demand drops further.

Thankfully, such occurrences are pretty rare. ‘By and large, if you’re a drinker, it’s only in about one out of 10 vintages – such as 1997 or 2007 – where it goes wrong,’ says Payne. ‘Even in ’97, people may have paid too much, but they were happy with the wines – it’s a vintage that people liked, but they could have paid less if they’d bought it later on.’

‘The worst thing is that it stigmatises a vintage which is actually very attractive,’ argues Simon Staples of Berry Bros.

‘[In the US] virtually no merchants or consumers bought the 2007s, and they still won’t place an order now because it’s been stigmatised. People don’t want to feel slightly embarrassed putting a bottle of ’07 on the table at dinner.’ The upside – if that snob factor doesn’t bother you – is that pricing remains relatively reasonable, making one person’s embarrassment another’s bargain.

How you feel about your en primeur purchase in the future depends greatly on your reason for buying it in the first place. Pure speculators and investors might be looking for financial return, but they remain in the minority, according to Staples.

‘Don’t forget that the majority of customers who buy en primeur do it because they want to drink it,’ he says. ‘They might be happy to see that Léoville-Las-Cases has gone up, but they don’t sell it – they just enjoy the bragging rights. Perhaps the best way is to do a bit of both: buy 10 cases of Cos, sell two or four and then drink the rest.’

Mathieu Chadronnier, general manager at négociant CVBG Dourthe-Kressmann, sums up the case for the defence. ‘Overall, it clearly still pays to buy en primeur,’ he says. ‘There’s no better way of building up a cellar.

You are buying when the focus on the vintage is at its maximum; when there is the most information available on that vintage. You can buy what you want, in the bottle size you want, in the quantities you want, with the best guarantee of origin – straight from the château to you, through your merchant.’

Chadronnier’s comments require a couple of qualifications: en primeur wines are so young on release that nobody can be 100% confident of how they will develop; more information is available further down the line.

And some châteaux offer – how shall we put it tactfully – slightly more ‘polished’ samples of their wines during en primeur tastings, although experienced merchants are generally wise to this. Lastly, you can only be sure that your wine comes direct from the château if you take ownership of it immediately on delivery to your merchant.

Yet for all its attendant frustrations – the hype, the uncertainty over pricing, the often tediously long campaign – in good years at least, en primeur remains a system that works well for pretty much everybody in the chain: the château owners, négociants, merchants and us, the end consumers. Yes, some vintages may be more attractive than others, both in quality terms and as investments, but it’s not time to give up on en primeur just yet. Not this year, anyway.

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