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Rising tide of unsold Bordeaux

In its members’ price guide for 2014 Bordeaux, Liv-ex point to mounting stock levels of recent vintage, and a distribution chain struggling to cope.

Justerini & Brooks’ chairman Hew Blair

“It’s the last chance saloon for the Bordelais,” declared Justerini & Brooks’ Chairman, Hew Blair, though you wouldn’t guess from the pictures tweeted of smiling chatelaines watching as this year’s en primeur tastings kick off. Yet behind the scenes there is a lake of unsold wine from the last few vintages that may conceivably encourage sensible pricing. Then again …

Liv-ex has just published a detailed 68-page report on Bordeaux 2014 for its members, including the graph below showing the current stock availability as of 31st January this year. Based on data supplied by Liv-ex members and split by vintage and Bordeaux sub-index, it shows the extent of oversupply. According to the report: “The failure of recent campaigns has resulted in a build-up of unsold stocks from 2010, 2011 and 2012 vintage in the supply chain. Moreover, while yields in 2013 were small, the level of stocks showing in the supply chain outside of the First Growths are much lower than one would expect.”

“Apart from the First Growths, availability of the 2013s is well below average,” said Liv-ex director Justin Gibbs. “That’s not because it sold through. It didn’t even get to the market as the merchants and négociants didn’t buy any. In fact it didn’t get out of the château door. Overall there’s a lot of stock in the distribution chain, and the merchants and négociants cannot afford to absorb any more. Their balance sheets won’t support it.”

Stock levels from data supplied by Liv-ex members, by vintage and sub-index
Stock levels from data supplied by Liv-ex members, by vintage and sub-index

Gibbs accepted that the profit motives of the producers and the desires of merchants to sell the sock through at attractive prices will never be wholly aligned, but said: “It’s important for the Bordeaux châteaux that the distribution system makes money and remains broad-based and well-financed so that it can absorb the occasional off vintage.” He also felt they shouldn’t underestimate the reticence of collectors who have lost money for five vintages in a row.

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