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En primeur: the Bordelais’ perspective

Thomas Duroux of Château Palmer, Xavier Sanchez of Pichon Baron, Veronique Sanders of Haut-Bailly and merchant François Thienpont give their views on en primeur and next year’s campaign.

Francois Thienpont, director of Wings

En primeur finds itself at something of a crossroads, with Liv-ex director James Miles warning Bordeaux they will “kill the golden goose” if the 2014 campaign goes awry because of misjudged pricing.

The last three en primeur campaigns have already been declared failures by the trade, this year’s seemingly barely worth anyone’s time and while the wines have not always been damned for their quality they most certainly have for their prices following the staggering heights achieved by the 2009 and 2010 vintages.

One merchant the drinks business spoke to on the subject compared the situation to a party that’s approaching 2 or 3am and winding down but where, rather than going to bed, the revellers crank up the music and crack open another bottle of vodka, determined to ride the party vibe no matter what the consequences when it finally does finish – as it ultimately must and always does.

“In 2011 prices should’ve come down to 2008 [levels],” thinks Sanchez, “but people were confident.”

That confidence is likely to be somewhat lacking as next year’s campaign comes around, the négoce are in “bad shape” according to Thienpont who also notes that the waning buying power of the French supermarkets due to the faltering economy in the country means that they will not be able to ride to the rescue as they have done in previous campaigns.

“[They] Can’t afford not to sell,” he continues, “but cannot afford to have two campaigns in a row like ’13.”

Although prices have gradually dipped in each successive campaign since 2010 there are still calls to drop pricing for the next campaign by some 30% in order to re-energise and entice a market that has been tired of Bordeaux for some time but is showing signs of coming back to it.

Frustratingly for Bordeaux’s producers, the 2014 vintage is so far looking as if it will be the best vintage since 2010 but, rather than being able to charge a price corresponding to its quality, they may be forced to lower prices once more regardless.

“Today we have a problem,” admits Sanchez. “The ’14 should be better than ’11, ’12 and ’13 and by that measure should be more expensive but the market demands a decrease.”

Xavier Sanchez, sales director of Pichon Baron

“There is a dilemma,” agrees Thienpont, “the fact we had ’09 and ’10 changed the mindset and some now think that should be the level of pricing.”

“That” level of pricing is always put down as a product of the “huge demand” from Asia that began to surface with the 2008 campaign, a market new to en primeur, hungry for wine and, most importantly, happy to pay any price – a price far above what old markets like the UK or economically crippled US could afford meaning they were left behind.

“It’s not our fault,” says Duroux, “it was a classic case of supply and demand.”

However, in 2011 when the 2010 campaign was conducted Asia’s demand for en primeur was already on the wane. A long-winded campaign meant that the wines were being pitched to a market that was already on its way down, a descent only hastened when the prices were revealed.

The 2010 campaign, for all the undoubted brilliance of the wines, was not up to the heights of the 2009 – Berry Bros & Rudd for example saw a £115 million 2009 campaign give way to a £65m 2010 campaign. The market has struggled almost ever since.

“The whole thing starts with ’10,” states Thienpont. “It was a nonsense to increase the price again on ’09.Ten is the equal of ’09 no doubt, but to have two big vintages in a row? Had to readjust with ’11 and it was not enough. The main thing is that people don’t buy en primeur because there’s no money to be made.”

As Thienpont concludes and as many commentators have pointed out, people have turned their backs on Bordeaux because they have lost money (while the chateaux have profited enormously) and, as they see it, there is no value in buying a vintage en primeur anymore as wines can often be found cheaper later on.

Thomas Duroux, CEO of Palmer

“Cheaper? I don’t know,” queries Duroux, “It’s very rare to find it cheaper. The same perhaps.”

The prices of the 2005 first growths have certainly declined – all the way to their release price in general – and many of the 2010s, 2011s and 2012s from a great many estates have declined in price since release too but it is also important to look at wine appreciation in the long term and this is what Duroux stresses.

“With the top wines of Bordeaux we’re not talking five years, it has to be longer,” he says.

“Look at the long term and you make money,” adds Sanders though she admits that there have been losses made in the short term with the last few vintages.

Both Duroux and Sanders also question the claims Bordeaux is actually that expensive.

It should be remembered that the vast majority of Bordeaux wines do not command the prices of the first growths and other top Left and Right Bank estates around whom much of the speculation and ire of en primeur chatter is directed.

Yet it is also true that compared to other, less publicised, wines from around the world even an expensive first growth can look reasonably priced.

“There’s a perception that Bordeaux is expensive,” states Sanders, “but compare the top wines of Bordeaux with top Californian wines (for example) and we’re not expensive. We are babies in Bordeaux compared to other regions.”

“In the past 15 years Bordeaux has made money and invested that money in quality,” continues Duroux, “the consumer wants quality but for the same price. Look at the top wines of the world – are we expensive? I don’t think so.”

Indeed, a quick look at Wine-Searcher’s “50 most expensive wines of the world” chart shows that there are only two Bordeaux wines amid a plethora of Burgundies, Napa Cabs and a few trockenbeerenauslese from Germany and Austria.

The two Bordeaux in question? Le Pin and Pétrus, an unsurprising pair but interesting too. Rubbing shoulders with Domaine de la Romanée-Conti and Screaming Eagle, the two Pomerol estates are relatively rare among Bordelais estates in that they do not announce their release prices each year – and attract little attention as a result despite their astonishingly high prices.

Does then Bordeaux’s price transparency count against it? It does at least allow customers to see the price, criticise it if they like (sometimes quite rightly) and then choose to buy it or another that suits their budget.

“Transparency of pricing makes it a problem for people to sell Bordeaux,” thinks Sanders. “It makes it difficult for distributors to sell and make margins.”

Would the system work better if it were less open? Le Pin and Pétrus can, admittedly, get away with not actively participating in en primeur campaigns in a conventional way as their production is so small.

Their rarity makes them behave more like Burgundies than most Bordeaux which is produced in larger quantities which is what makes it perfect for a liquid secondary market but also bad for short term investment and speculation as there is usually a lot of it – it’s not until 15-20 years down the line (as Duroux and Sanders suggest) that they can begin to attract justifiably high prices.

Veronique Sanders of Haut-Bailly

“Transparency is part of the problem but more is [that] people don’t think they’re going to make money on it,” thinks Thienpont.

So should buyers accept that perhaps it’s not too bad or should the Bordelais not try to kid themselves that their wines should command high prices upon release? Or perhaps a bit of both?

Despite it all, the Bordelais still see en primeur as the best way to present their wines to the market and have no intention of pulling a Latour, “I think it’s a fantastic system,” enthuses Sanders.

“You always win with en primeur,” says Duroux, “you secure an allocation, you’re guaranteed the cheapest price – even if the price stays the same for several years and – for the fun of it. It’s like a gift two years later. It’s not just money but the pleasure of collecting.”

Amid all the talk of points, profits and losses, Duroux’s comment about “fun” is possibly the one aspect that gets overlooked the most regarding wine today.

As a wine journalist, whether going well or ill en primeur is, without a doubt, the most exciting, and dynamic period to cover of the whole year. It’s fun.

Wine was never meant to be an investment asset, appreciation on a case of good wine was a welcome side effect to actually owning that case in the first place.

It would be nice if the pursuit of money was not the only draw to buying and selling en primeur but perhaps it’s too much to hope otherwise.

For now though, as Thienpont, declares: “We have the quality and the volume, there’s no reason not to make a good campaign. It’s down to owners to be reasonable.”

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