Bordeaux 2024: Market conditions and pricing strategies
A small crop of uneven quality and unsettled economic forecasts do not bode well for a successful en primeur campaign. Let's assess the market conditions ahead of this year's releases and what pricing may look like.
The poor 2024 vintage is not even a year old and risks being written-off before the first hopeful offer wings its electronic way to inboxes at some point in the coming week.
As a vintage it was… difficult. There was a lot of rain (as much as 50-70% above the 10 year average) and crop losses were considerable due to poor fruit set and then mildew and other disease pressure.
The final crop is the smallest since 1991.
Small doesn’t mean bad quality of course, sometimes quite the opposite. Nonetheless, early reports such as from our own Bordeaux editor, Georgie Hindle, suggest quality is uneven.
Worse, however, is that this vintage is sailing into conditions that commentators like to call ‘market headwinds’.
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Writing in a report for Bordeaux Index, Oliver Sharp, the merchant’s Bordeaux buyer, remarked that: ‘There’s an eerie quiet over Bordeaux right now… Normally, by this time, there’s at least some positive buzz – someone, somewhere, trying to prime the market. Instead, there is a palpable sense of disquiet among the world’s top châteaux.’
As usual there’s already commentary on what all this means for Bordeaux and what producers ‘should’ do – but will they?
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Let’s lay out some of the background against which this campaign will play out, what other commentators are saying and what it all (potentially) means for anyone thinking about buying the 2024 vintage.
T*riffs, Tr*mp and T*rbulence
Dare we mention any of the above words out loud?
At the time of writing, the worst of the current White House incumbent’s promised tariffs bonanza appears to be on hold.
The shadow of trade wars and reciprocal tariffs still looms however. And the antagonism between the US and China continues to ratchet up.
But who really knows what might happen next? The president may revel in chaos and uncertainty to get what he wants but markets hate it.
As WineCap noted in its latest report: ‘The threat of added import costs, even if delayed, puts further pressure on producers and négociants to rethink pricing strategies.
‘With confidence in en primeur already eroding, this year’s campaign faces a delicate balancing act: justify pricing amid broader market weakness, or risk alienating already-cautious buyers.’
Even before the recent ups and downs the global economic outlook was somewhat precarious, weighed down by the post-pandemic slump, currency fluctuations and snarled up supply chains.
Not ideal circumstances for splashing out on high-priced wines, as any one keeping an eye on the secondary market recently is well aware.
A secondary market in decline
The fine wine markets – primary and secondary – boomed thanks to a turbo-charged period of growth in the low interest rate, high boredom days of the early lockdown.
By 2022 the market was at an all-time high, but also showing tell-tale signs of running out of steam. And the market did indeed turn.
Liv-ex is an international trading platform for fine wine. Its indices chart the progress of the most in-demand fine wine labels.
Its Liv-ex 1000 index (following 10 vintages of the 100 most-traded wines) is down 24.1% over the last two years.
Looking at Bordeaux specifically, the Bordeaux 500 index is down to its 2020 levels, leaving those pandemic gains a distant memory.
The Fine Wine 50 – the ‘first growth tracker’ – has fallen 25.3% since March 2023 alone and the index following the movement of the second labels has fallen 30.2% over the same period.
There have been signs that the decline has slowed in more recent weeks and months. Market sentiment appears more positive according to Liv-ex and a few indices – notably the Left Bank 200 – have been holding steady.
Looking back – looking forward
When setting the scene for a new campaign, it’s worth reminding oneself of how it went the year before.
In truth, last year’s campaign was relatively unremarkable. It was a surprisingly early and very fast campaign, with some hefty price cuts thrown in for good measure.
Writing for Corney & Barrow, Guy Seddon, noted: ‘The lower prices of last year’s 2023 vintage found some favour, but far from universal success. Outcomes were split between châteaux who got the pricing right and sold reasonably well… and those who didn’t and fell flat.’
The rumour mill suggests that, given the size and quality of the 2024 vintage, we might see something similar this year as well.
Pricing dilemma
Price is one of the great driving factors behind the success (or otherwise) of an en primeur campaign.
Those who have been following campaigns since the 2011 vintage was offered will be well aware of the howls of frustration and finger pointing that has taken place after a series of offers that have had middling-to-poor performances.
Liv-ex is ever vocal in calling on châteaux to ‘heed the market’ and this year is no exception.
As it laid out in its pre-campaign report: ‘With the broader wine wine market continuing to decline… participants in the En Primeur system can no longer afford any missteps.
‘This year, prices will need to be attractive, or allocations will be left on the table.’
The grim irony is that harder vintages often cost more to make than good ones. The cost of extra labour and hiring of expensive machines to help with harvesting and sorting means the 2024 vintage was around 40% more expensive to produce than the 2023 in some cases.
Yet the expectation is undoubtedly for there to be further cuts on top of the average 22.5% drops that were offered last year.
As Liv-ex notes, however: ‘These decreases were generally insufficient – there remained better-rated, ready-to-drink vintages available on the market. To increasingly savvy collectors, the 2023s were a hard sell, despite being cheaper than the 2022s.
‘Moreover, with demand declining, there is no shortage of Bordeaux available once physical – buyers will almost certainly be able to obtain these wines at a later date, and, importantly, at lower prices.’
Factory reset
It may just be that producers decide to take the hit on 2024, essentially write it off and hope for a rebound in 2025.
Vintages ending in ‘5’ have a good track record after all.
As Liv-ex again notes: ‘Just as the underwhelming 2013s allowed for châteaux to take a hit on a small vintage that was unlikely to perform well anyway, it is perhaps a blessing that the 2024 will not go down as one of the greats.
‘Bordeaux’s châteaux have again been presented with an opportunity to reset the market.’
The report noted that if a first growth, such as Château Lafite, released its 2024 wine at around €288 per bottle, there would be enough wiggle room to give the supply chain its necessary margin and still make that wine the cheapest available to collectors.
‘In other words, it would present serious value to buyers at each step of the supply chain,’ notes Liv-ex.
No absolute strategy
In summary therefore.
We have a small vintage of uneven quality. We have a secondary fine wine market recovering from a long decline but still at a low ebb.
And the primary market is eyeing up a horizon of great economic uncertainty and (presumably) has a low appetite for risk.
There is no absolute strategy for how the châteaux need to price their wines. Different estates have followed various courses over the years and some have managed those more adroitly than others.
A 10% cut at one estate might be sufficient where a 25% cut at another still looks too mean.
Estates that obstinately stick closely to their 2023 prices will probably come in for a lot of flak. Those that position their wines well in relation to current back vintages will see greater backing.
Ready, set…
In instances where there are price cuts, there may very well be some good opportunities for buying wines for short-to-mid-term drinking stock.
Readers interested in buying wines this year would be well-advised to read the reviews and reports as they come in and identify the estates they would like to follow.
Given the size of the vintage, there won’t be much stock being released so anything that has good reviews and is well priced, probably won’t hang around long.
It might have been hoped that the châteaux would give collectors the time to absorb some of the reviews and draw up their wish-lists. Unfortunately, early indications suggest that this is not going to be case.
There are already several big names that may announce prices before the end of this month. However, due to this (slightly unexpected) alacrity on the part of the Bordelais, don’t be surprised if you see a lag between release announcements and offers to allow time for merchants to weigh up what they would like to support.
As Bordeaux Index notes in its pre-campaign report: ‘For collectors and drinkers alike, 2024 could offer well-made, age-worthy wines at fairer prices – if producers align ambition with market mood.
‘And while the drums may not yet be beating, the stage is quietly being set for a campaign that rewards both patience and pragmatism.’
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