Bordeaux 2007: exchange rate worries for en primeur

The weakening pound combined with an historically weak dollar is proving a threat to the Bordeaux 2007 en primeurs.

As the pound this week dropped below €1.30 producers and industry-watchers at pre-en primeur tastings in London, Paris and Bordeaux were low-key.

Many said that, despite the quality being better than expected, unless wine producers take real notice of international currency issues, this will be a very hard vintage to sell.

Neil Somerfelt of London merchants Jeroboams told decanter.com, ‘Ex-chateau prices are of course the first hurdle to get over, but the general economic instability, together with the exchange rates, can only compound the problem.’

With low yields for the 2007 vintage, prices are not, however, expected to move much from 2006.

Alain Raynaud, director of the Cercle du Rive Droite grouping, told decanter.com he is ‘worried’ by the exchange rate and what it would do to the market.

‘It is not favourable. The main En Primeur market is made up of 50 Bordeaux properties that have become luxury brands, and are not affected by the vintage or the exchange rate. Their market is one of speculation rather than consumption.

‘In our case [the Cercle du Rive Droite], our wines are made to be drunk, not for speculation and the current situation leaves me a bit worried.’

Later he told Bloomberg News how difficult he found it to bring down prices. ‘Our own production costs are soaring. Transportation costs have risen 15% in two years, and we don’t have the cheap labour other countries have to pick our grapes. If a bottle of our wine costs US$10 to make, we can’t sell it for US$15 retail and make any profit.’

Dominique Vrigneau of Thierry’s Wine and Food, who buys less wine at en primeur than throughout the year, has found some flexibility with his long-term partners in Bordeaux.

‘The exchange rates crisis has come at the same time as the duty increases, which puts even more pressure on margins. But we have found negociants understand the market, and try to help where they can. Whether the chateaux owners will do the same remains to be seen.’

Read Alain Raynaud talking about the forthcoming En Primeur tastings in the May issue of Decanter magazine, out 2 April

Written by Jane Anson in Bordeaux