Bordeaux 2009: The Price Speculation Game

Bordeaux 2009: The Price Speculation Game


Bordeaux  En Primeuer Day 1: Sauternes

Day 2: Saint-Emilion and Pomerol

Day 3: Margaux, Moulis, Listrac, Médoc

Day 4: Saint-Julien, Saint-Estèphe and Pauillac

Day 5: The First Growths, Pessac-Léognan and Graves

The annual Bordeaux 2009 pre-release price rumors started even before the first bottles of 2009 Bordeaux en primeur (futures) were opened on Monday.
“Prices will be higher than 2005,” reported one blog. “We hear they will be between 20 percent more than 2008 and 20 percent less than 2005,” one English journalist told Wine Enthusiast. “Prices will be higher than 2008,” the best Bordeaux deal in the past five years, said virtually every chateau owner we talked to during the week.
Price speculation is part of the Bordeaux game. So why is this year different from any other year?
The American market. Because the Bordelais don’t want to loose the American market, they are feeling pressure to keep prices down. At the same time, the vintage is great and the world wants it, especially Asia.
Bordeaux wine has been on a downward track in the U.S. since the first quarter of 2007. “We lost many customers with the (high) prices from 2005 and they are still not buying Bordeaux,” said Clyde Beffa of K&L Wines, an importer and retailer in California, who has been buying pre-release Bordeaux for decades. He is considered one of the most astute American buyers.
Prices will gradually come onto the market with the “firsts” sometime in mid-June.
Beffa claims that “opening prices on the first growths will be a little less than 2005 but with small release for the first round. The ‘firsts’ wines will (cost) more than the 2008, 2007 and 2006. The wines are better than 2005.” After that, Beffa predicts prices at the top will go much higher due to speculation around the world.

Buyers for Sherlock’s wine shops in Atlanta are regular Bordeaux customers. President Douglas Bryant said he got “Lots of smiles but nothing concrete on price. We’re hoping they will be respectful and understanding what is going on in the American market today with Bordeaux and be reasonable and fair in their pricing.”
Will Bordeaux chateau owners see it Bryant’s way? We don’t know.
Here are the issues:
• 2009 is a great vintage. See Wine Enthusiast’s 2009 Bordeaux reviews.
• Record number of buyers came to Bordeaux to taste (some came with checkbooks to buy immediately though that’s not how it works).
• For the American market, the fluctuation of the dollar against the euro is worrying for both buyers and sellers. A slide in the euro (continued turmoil in Greece, Portugal and other EU states) is good for the dollar and therefore the price of French wine in the U.S..
• Mainland Chinese buyers, traditionally hesitant about buying en primeur, have expressed interest in buying this year at the highest levels. How much? Nobody knows.
Bryant said the wines are excellent. “They’ll go over well in America. It just depends on their prices.” Beffa said: “We’ll be talking to the first growths in June. They’re in no hurry. They know they have a good wine.”

Bordeaux En Primeur: The Nuts and Bolts
• Bordeaux wine sold “en primeur” is sold mostly from the chateau to wine brokers (negociants) to importers. Importers sell to distributors and retailers. Retailers sell to you.
• The “firsts”—the top nine or so Bordeaux wines (Mouton, Lafite, Latour, Haut-Brion, Margaux, Petrus, Yquem, Ausone, Cheval Blanc) produce no more than 100,000 bottles for world distribution. The amount has been trending downward; for example Mouton makes about half the amount it did 10 years ago. The next 10 to 50 wines (depending on who you talk to) have varying quantities and quality (from as good as a “first” or “second” such as Leoville las Cases, Pontet Canet, Lynch Bages, Palmer in the Médoc –to wines whose makers really need to consider new careers).
• Bordeaux was caught in the crisis cyclone when the last “vintage of the century”—2005—resulted in extremely high pre-release prices for the firsts and on down the line. Unfortunately, when wines arrived for sale in the bottle, released in 2007, prices were sucked into the global economic crisis. Shelf prices dropped below pre-release and buyers who had paid their money two years in advance felt they had been “had.” Many walked away from buying Bordeaux pre-releases and haven’t returned.
• Meanwhile, millions of bottles of wine are produced in Bordeaux below the wafer-thin top-end segment. When it’s a great vintage at the top, it’s usually a very good vintage all the way down the chain to wines that are $15-25 a bottle.



Published on April 5, 2010
Topics: Bordeaux