Colin Hay, a professor of political economy with a special interest in the Place de Bordeaux, considers the different ways of approaching en primeur purchasing, as the Bordeaux 2017 campaign gets underway.
En primeur is a rather strange and, arguably, arcane system of buying and selling wine in which the consumer purchases the wine typically in the early summer following the vintage even though it will not be bottled and delivered for a further 12-18 months.
It is, in effect, a futures market. Money changes hands and a stake in a wine is purchased before the commodity has become a finished product.
In the period between purchase and delivery the price of the wine is likely to change, giving this market (like other futures markets) a certain speculative character.
People buy en primeur for rather different reasons. Amongst these it is easy to differentiate between the following:
- (i) for investment (the aim being to secure a return on the outlay between the point of purchase and delivery);
- (ii) out of a sense of emotional attachment to the property or properties one is ‘backing’ by buying en primeur;
- (iii) to guarantee securing a case of a rare commodity for which demand is high and/or to guarantee securing a case in an unusual format (halves, double magnums etc.);
- (iv) to secure a wine which is ultimately for drinking at the best available price;
- (v) some presently unresolved combination of the preceding factors (‘I am almost certainly buying this wine to drink and I have an emotional attachment to the property, but it is likely to prove a sound investment anyway’).
Of these reasons arguably the second is the best – and this article has least to say to those of you whose en primeur choices fall primarily into this category. My advice, in so far as I have any for you at all, is to carry on doing what you do – and perhaps not to read any further. This article is really for the rest of us (for what it is worth, my own rationale for en primeur purchases is in fact a combination of all five).
Let’s perhaps begin with the third motive – the acquisition of a rare commodity whilst it is still available. This is certainly a good motive (if wine is rare, supply limited and demand high, the sensible choice is to acquire it whilst supply is at its greatest).
But for the majority of en primeur purchases this is simply not the case. Properties typically do not sell out en primeur and those that do tend to do so because they have strategically managed supply by holding back wine for subsequent release. In short, it is a myth (if, sometimes, quite a convenient one) that one needs to by en primeur to secure a case of the one craves from any given vintage.
Yet there are exceptions to which we will come back to in a moment. But to understand those exceptions it is useful to consider the first and fourth motives in my list. These might not seem connected, but they are. Buying exclusively for investment and buying to secure a wine for the best price it will ever be available rely on the capacity to differentiate between those wines that will appreciate in value (because supply at the release price exceeds demand) and those that will not.
This is the holy grail of the en primeur market. A reliable mechanism for identifying what to buy does not exist. But there are a number of things one can say about wines that have proven to be good en primeur investments.
Five factors stand out from the academic analysis of this that I and others have conducted.
1. They need to be well-backed by the critics – and, ideally and increasingly, by a range of critics.
2. They will ultimately need to be backed again by the critics once re-tasted in bottle. In order to retain their value – and hence their investment potential – a high scoring wine en primeur will need to have it score confirmed once the wine is in bottle. One-off high scoring wines en primeur tend to peak in price just before they are re-tasted.
3. Wines from up-and-coming properties are more likely to be under-priced relative to their value and to represent a better investment. Look out for properties on an upward curve in terms of the critical evaluations they have received in recent vintages but whose release prices still have yet to catch up with their new found status.
4. The case for purchase is stronger if there is a compelling story to tell about the quality trajectory of the property. Where a property has changed hands, wine-maker, consultant oenologist or, more simply, style to critical acclaim, the upward trajectory in quality would appear to be less of a one-off.
5. Scarce wines for which one needs an allocation are likely to be sure-fire investments. There are a number of wines ostensibly offered en primeur which it is practically impossible for you or I to buy if we do not have a history of buying them (an ‘allocation’ is the term typically used). Some of these are long-standing (such as Petrus, Le Pin and Lafleur in Pomerol). But a number of new cuvees (especially in Pomerol and St-Emilion) have similar characteristics (tiny properties sparing no expense to make the best wine possible). Identifying these is not always easy. But clear examples include L’If in St-Emilion and La Violette and L’Enclos Tourmaline in Pomerol.
These five points hopefully provide useful guidance in how to think about en primeur from the consumer’s perspective.
But the brutal reality is that most of us will not make money – or certainly not very much – from our en primeur purchases. That is not an argument for forgoing en primeur; but it is an argument for going into it with open eyes.