Bordeaux 2014: 25% discount the key?

Is a 25% discount to the current prices of the 2006 and 2008 vintages the best way for Bordeaux estates to find a receptive audience this campaign or are buyers’ hearts over-ruling heads in some cases?

With the campaign well underway – though with some big names still to emerge – how does the Bordelais’ pricing strategy look to have worked so far?

In general prices appear to have risen back to 2012 levels with only two big name estates (l’Evangile and Duhart Milon) so far offering any cuts.

The going rate for the first growths, as set by Mouton Rothschild and Haut-Brion, is €240 a bottle ex-négociant, an 11% rise on the 2013 release price and exactly match the 2012 price. Expect Margaux to be the same and Lafite to be slightly more expensive (it was €335 p/b in 2012).

It is no great surprise that prices have risen on the 2013s given the undoubted quality of the vintage which is, as critics and the merchants have all said, the best since 2010 and probably better than the 2008s even.

Nonetheless, the argument still swirling around en primeur is the relative value of releases to back vintages.

Liv-ex has been particularly focused on this aspect arguing in its recent cellar watch report that: “What really makes a new release compelling is how it compares to vintages of a similar quality already in the market.

Of the 26 big estates that have released so far, 20 have a discount to the current prices of their 2008 and 2006 vintages on the secondary market – even if they’re more expensive than the 2011s and 2012s.

Liv-ex has noted that Beychevelle and Mouton have already appeared on its marketplace. With reports that Lynch Bages has also worked well it has picked out a “sweet spot” where the better performing wines so far tend to have a 25%+ discount to those 08/06 wines.

Conversely, wines with a lower discount or even a premium on those two vintages have not sold or will not sell well.

But is this true? To a point yes it is. Speaking to Will Hargrove of Corney & Barrow and Joss Fowler of Fine & Rare, both told the drinks business that Mouton, Lynch and Talbot (all wines with respective discounts of 26%, 25% and 27%) have sold strongly.

Likewise, Hargrove said Corney had sold “diddlysquat” of Palmer and Angélus (wines with a 28% premium and 8% discount on those back vintages respectively), they weren’t considered an attractive price and so weren’t offered.

But there are inconsistencies too. La Mission Haut Brion for example. Released with a 20% premium on the 2013 bottle price, €145 p/b and £1,420 a case, it has a 20% premium on the case price of its 2008. By Liv-ex’s estimation this should make it a bust but both men said it had sold well.

Likewise, Haut-Brion was also counted as a success yet it only has a 6% discount on its 2008/2006, while Climens apparently bucked the trend that no one buys Sauternes and sold very well at Corney & Barrow, and it’s the one Sauternes so far to have actually raised its prices (up 13% to €43.8 p/b).

Although Hargrove and Fowler both thought Liv-ex’s analysis interesting and relevant they also argued that it could be a little too cold in its reasoning at times. “It overlooks the fact that people like to buy things,” thought Fowler.

Both mentioned the word “fun” several times in relation to selling certain wines. They said buyers were engaged with wines at the right price and even if some wines do have a premium or only very slight discount to back vintages they feel, as Hargrove said, “a lot more wines are in the bracket people associate them with.”

Hargrove said Corney & Barrow’s daily offers were selling out and commended the pacing of the campaign which has so far seen no mad splurge of releases coming in one on top of the other as happened in 2012 and 2013.

After the horror shows that were the 2011, 2012 and 2013 campaigns, the 2014 seems to be hitting a gentle but rather constant stride.

“We’re getting a glimpse of what it used to be like,” said Fowler. What is more both Hargrove and Fowler said that they got the feeling this is a buyer’s vintage not  a speculative one.

“It’s a more ‘real’ market than ’09 and ’10 when people were punting,” said Hargrove. “This year people are buying to drink.”

“Very few [people] are speculating on these,” agreed Fowler, “they’re going to end up on tables.”

Again, both said there have been misjudged prices and those wines have struggled but it appears, even if there’s no stampede, more wines are hitting home than has been the case in the past few campaigns.

“It’s so easy this year,” said Fowler and it’s been a while since anyone heard that.