Bordeaux En Primeur Leaves a Bad Taste

My grandmother used to say when you're in a hole, stop digging. There may not be an equivalent of that saying in Bordeaux.

But the chateau-owning part of?Bordeaux ?does not seem to think it's in a hole; and from its point of view, it's not. It sold its 2022s – or at least that portion of them which it released – and now they're somebody else's problem. And it was a great vintage: those people who bought the wines can pat themselves on the back for owning some excellent bottles.

The problem, from the point of the view of the non chateau-owning part of the trade, is that not enough people did buy them. "A small, uneventful campaign," says Matthew O'Connell of Bordeaux Index. "A complicated campaign," says Jean-Christophe Mau of Yvon Mau Grands Crus, one of the few Bordeaux négociants prepared to comment on the matter. "A bit of a struggle; a missed opportunity," says Tom Jenkins of Justerini & Brooks. Others, speaking off the record, say "they're killing en primeur", "the whole en primeur thing is killing itself", or "too expensive, is the headline".

The gulf between Bordeaux and the rest of the world,?which we noted ?back in April, seems only to have widened. The wines are very good; nobody disputes this. Nobody disputes, either, that they were a triumph in a hot, dry year that could have produced very different flavors. There are some terrific wines. But the Bordelais, to quote one source, "think they’ve made the greatest-ever wine in history…. The vintage was more in the classic style than they feared, so they say it's a miracle. It's a miracle that it’s not sweet and opulent like 2003, but that doesn't make it the best ever."

Prices were up on average just under 15 percent, but for the top chateaux they were up 20-40 percent. Collectors who buy every year bought again this year – but there were fewer of them, and many of them bought less wine. Some wines seem to have been a particular struggle;?Figeac ?was singled out by everybody I spoke to. The quality was fine. "A fantastic wine", says O'Connell. "But the market had already adjusted to the new price [after Figeac was promoted to Premier Grand Cru Classé A in 2022] and they were trying to take that adjusted price, put a very significant premium on it, and take it to a new level."

The UK trade, remember, wants to sell wine. Yes, you could argue that for as long as anyone can remember some merchants have issued annual warnings about price rises, and then gone ahead and bought the wines and sold them to their customers. Perhaps crying wolf is their forte. But when one leading merchant points out that "in 10 years, en primeur has worked properly in only two", perhaps we should remember what en primeur is supposed to be for.

Happy chateaux

For the chateaux, en primeur was originally a way to get cash flow. Now, the chateaux for which en primeur works well – which is usually only the top names – don’t need that cash flow nearly so urgently.

For consumers – and this model no longer exists – if they bought three cases of something, they could expect the price on the secondary market to rise steadily over the 15 or 20 years in which the wine matured in their cellars; they would then sell one of the three cases, and that probably paid for at least one of the other two.

But even if you accept that that is outdated, you still have to question why you would want to pay more for wine en primeur, which you can't yet drink, than you would pay for a mature vintage of the same wine. The chateaux' answer to that is that they're making better wine now; and indeed they are. It was pretty good back then, but now it's even better.

In the case of?Angelus , you have to go back to 2005 to find a vintage that is currently more expensive than its 2022 en primeur. The 2022 is around ￡4290 to the consumer for a case of 12 in the UK; the 2019 is available for ￡3000, the 2010 for ￡3600, the 2009 for ￡3800.

Or?Ducru-Beaucaillou : as a UK consumer you will pay around ￡2240 for a case of 2022. The 2019 is available for ￡1700, the 2016 for ￡1980, the 2010 at ￡2250, the 2005 at ￡2500.

Or?Léoville-Las Cases : around ￡3100 to a UK consumer for the 2022. The 2019 is ￡1850, the 2016, which got several 100-point scores, ￡2790, the 2010 ￡2000, the 1989 ￡2550.

Says one merchant: "Asking people to pay more for 2022 than they can pay for a known great year, which is ready to drink, defeats the whole purpose of en primeur. The idea of en primeur is that you buy an immature wine at much less than the mature price, keep it 15 years and then sell or drink. If they break the rules, it becomes pointless. And the consumer has got such a bad taste in their mouth that they won't want to buy en primeur any more.

"The 2019 was released in Covid and people got back into en primeur, but the Bordelais thought that they’d been ripped off that year." Prices, you will remember, were lower because of the interrupted market. "Now the Bordelais want to get back, but people thought that 2019 prices were where they should be in the first place."

The trade really wanted the campaign to be a success. A good en primeur campaign is not just a six-to-seven week trade focus on Bordeaux, and thus the sort of publicity for the region that money cannot buy; it also drives interest in Bordeaux for the rest of the year. And ideally, just as that interest begins to flag, there's another successful campaign to rev things up again. The 2019 campaign worked like that: there was huge interest, and the price seemed to consumers to be right. This year, though, "we're not seeing any spike of interest in back vintages," said one merchant. "This campaign hasn't helped to drive interest in Bordeaux. They overlook that."

Négociant blues

But one does increasingly get the impression, from talking to chateau-owners, that some of them resent the profits made by négociants, and by extension perhaps retail merchants. Sometimes the attitude seems to be that the négoce make money in good years, and if sometimes they have problems, too bad.

All négociants are not the same: some are huge, and can afford to keep stock and sell it over the longer term. Others are not huge, and cannot afford to keep much stock. These do well in years when they can sell everything on straightaway; or if interest rates are 0.8 percent, as they were last year. Now, at 4-4.5 percent, if they have to fund their purchases for two years, that's more than 9 percent. "Most négociants make a margin of 3-12 percent, probably," says Mau. "Some top ones – perhaps the top five or 10 – make more, but for the rest, the margin is short."

Many négociants, it seems, voluntarily reduced their allocations of some wines this year. This is risky: for the top chateaux, if you don't take up your full allocation, you won't get it back. They have one month to decide, after the offer is released by a chateau. "We have a lot of decisions to make this week," says Mau. "It's very complicated."

And as he says, it was a complicated campaign. Some wines sold out: demand for these was high, and collectors swallowed the price.?Cheval Blanc , for example: "It was highly praised, they'd been around and done a successful PR campaign, and by Bordeaux standards it wasn't highly priced,” says one merchant. "It was 30 percent down in volume, and so it was possibly worthy of the price." "I like what LVMH do," agrees O'Connell. "They release early, they price seriously – though this year it was more balanced – and there was demand for Cheval Blanc."

Léoville Barton ?and?Langoa-Barton ?also get plaudits.

"The Bartons understand that customers need to be looked after", says one merchant. "I tend to find that chateaux that are owned and managed by humble people who travel the world tend to understand and not rip customers off. Chateaux managed by professionals on behalf of absentee owners don't care that much." But before the latter category reach, as one, for their lawyers' telephone numbers, let me add that there are exceptions. In both categories, indeed.

It was not all bad news this year. Some wines were oversubscribed and the merchants couldn't get enough; and if you're still thinking of buying, there are some less-famous wines at reasonable prices, with a good ratio of score to price; but, says O'Connell with some surprise, these have not been snapped up.

"My gut feeling," says one merchant, "is that if this campaign had been 12 months earlier it would have been a great success. Whereas the 2021s this year would have been a disaster."

Several sources point to the low quantity of wine released as being a factor – a positive factor, if it meant that the wines sold through. It was a small vintage, of course, but in addition to that some chateaux released as little as half their wine. "If they'd released on an earlier model [ie released more]" says O'Connell, "the wines would not have sold through in 95 percent of cases."

But this new model of releasing so little also makes one wonder about the future of en primeur. It's probably only the top chateaux that keep so much back, but are they trying to discover how much they can stress the en primeur market and still get away with it? Are they trying to imitate Burgundy, with extremely small quantities of wine for sale? If your chateau has 80-100 hectares of vines, that takes some doing. Have they just misread a market that in the UK at least has been largely flat for a year and in which interest rates are rising?

Or are they happy that they've benchmarked new en primeur prices and shifted enough volume for it to be counted – for them – a success?

#beverageindustry #beveragenews #drinksbusiness #drinksnews ?

Credit:

https://www.wine-searcher.com/m/2023/07/bordeaux-en-primeur-leaves-a-bad-taste?utm_source=Newsletter&utm_medium=Newsletter&utm_campaign=12%2F07%2F2023