Are en primeur prices ‘compelling enough’ to tempt buyers?

Well over a month into the latest en primeur campaign and with more estates releasing every day, it’s time to ask if the “punchy pricing” of this year’s vintage in certain quarters is putting customers off, or is the undoubted quality winning through?  

After a relatively slow start, the releases of the 2022 vintage have started to come thick and fast, and the initial analysis of pricing is seeing some quite high price rises.

After the first two weeks of the campaign, a Liv-ex update on 7 June showed that prices were roughly up between 5% to 25% on the opening price last year – and since then, some have veered into the mid 30s and one – Château Rauzan-Ségla  – was released on Friday up 40% on last year’s offering. A Liv-ex update on 13 June noted that the average increase across price release had gone from 16% average to tp 19%, “putting the sustainability of the campaign in question”.

“These price hikes have led to a situation where some individuals are still participating in the campaign, while others simply don’t have the funds to do so,” it said, reiterating earlier concerns that traders were finding it “challenging” to sell many of the wines from this campaign, and that according to its Fair Value methodology, “most releases do not offer a compelling proposition to buyers”.

But is this proving a big stumbling block for producers and how happy are merchants with the campaign so far?

Speaking to db last week (bearing in mind that around 25 more chateaux have released in that time) Jack Chapman head of private client sales at Lea & Sandeman said the extensive and positive press coverage around the 2022 vintage has been a definite boon this year, generating a lot of excitement among fine wine buyers.

“When you have a vintage with a lot of slightly tepid press, you get maybe a third of your customer base switch off [straight away],” he said, pointing out this was largely the case with 2021. “[This year] there’s a lot of very very positive sentiment out there people looking for things to take home.”

He argued that while the prices have undoubtedly gone up compared to the ’21 vintage, “the quality is so high that actually most of them can be sustained and we’re doing good business and people are happy to buy,” he said. .

Beth Pearce MW, buying director at Lay & Wheeler, agreed about the excitement around the quality of the vintage amongst the team and among customers. “The prices are up, but when managed carefully by the estates in the context of the wider market for their wines, it has not hampered demand significantly,” she said, adding that some long-standing customer favourites” which have very strong brands in the UK, such as Grand-Puy-Lacoste and Branaire-Ducru, have been “particularly impressive” on release.

Goedhuis’s fine wine buyer Arthur Coggill also told db last week that while some prices may seem punchy “on paper”, it’s worth remembering that some châteaux, such as Branaire-Ducru, “never really upped their price from the discounted low of 2019”.

“And while a château such as Château Beychevelle may have released 20% up in GBP terms, the release price remained below “every physically available vintage”, meaning “the price is justified” he said. He also pointed to Château Langoa-Barton, which had sold “extremely well”, having been “well within some of the price rises”.

However, this premise cannot be applied across the board – some increases made “no sense” and were pitched “where they thought they could”, Coggill argued, and these particular châteaux had suffered as a result, especially where there were back vintages freely available on the market.

“I think it was just too much for most people to stomach” he explained. “We probably could have sold twice as much, if they’d been a slightly more reasonable.”

Chapman noted that while “everyone wants a slice of 2022”, but there is undoubtedly some evidence that price is proving to be a barrier for some consumers, especially around the middle of the market. Medium-priced wines that appeal to the well-informed and most price-sensitive “squeezed middle” tend to  suffer the most, he argued, especially if the timings of  release comes amid a flurry of others or is overshadowed by a larger, more prestigious estate.

“It’s so sad when it’s just the release day and things don’t align,” he said.

He pointed to Château Pédesclaux  “which I adored it and thought was absolutely fantastic”, but which suffered largely by coming between “two pretty big releases”, even though it was “still a fair price”.

“It’s a decidedly mixed campaign so far,” Coggill admitted. “We’re being selective and offering those wines that we believe in quality or value or both – but this is definitely not the year to buy across the board.”

Goedhuis, he said, was being more selective in the number of en primeur wines it is offering this year, offering around 10% fewer wines than a normal year in order to devote more time to those they are getting behind.

“We haven’t pulled too many chateaux we were going to offer, but we have pulled one or two,” he said.

Guy Seddon, associate director & head of fine wine buying at Corney & Barrow, agrees that prices being “at the punchier end so far” had dissuaded some customers from jumping in – however, he was quick to note that this was not a trend that could be applied across the board.

“Where wines are perceived to have been particularly strong in 2022 and the price rises more reasonable – such as the Langoa-Barton wines and Branaire-Ducru – we have sold out quickly,” he said. Other successes have included the “astutely priced” Cheval Blanc and Carruades.

Back vintages

Seddon argued that with many of the big names still to be released (at the time of our conversation), customers will be looking at market prices of vintages such as 2019 and 2016 for comparison.

“Where 2022 pricing is above these levels, people may well choose to wait rather than buy now,” he said.

Coggill noted said that some châteaux were also “very much in danger of missing the global macroeconomic picture”.

“I think people like buying off and they’ll have saved up money to do so. But as soon as they see that it’s no longer worth that time, they just won’t buy anything and then I think those who who did come out early and those châteaux sold well because people had budgeted for a certain amount.”

He pointed to David Robert’s previous warning that “if the prices keep going up, we’re in danger of losing customer confidence”.

“I’ve already seen someone today who would have bought La Lagune, but then thought ‘why should I bother?’ Even if it is very good, I’ll buy the 2019 as it’s significantly cheaper!’’”

As a report published by Liv-ex in April pointed out, this campaign was effectively on a knife edge, with the power to “give impetus” to the fine wine market or “stops it in its tracks” and in many ways, the more the price rise as the campaign continues, the more exposed it is, as Liv-ex noted. It argued that “while these increases were expected, the direction of travel has raised eyebrows” pointing to an unnamed  merchant who commented that “20+% increases do not a campaign make”.

This was seen last year, according to Chapman, who noted that 2020 “started quite nicely” with every0ne excited, but slowly “morphed” into more dangerous territory. “There were these 25%, 30% 40% price rises in the last week and that’s when it all went to pieces”, he warned.

“There is always that little anxious voice in the back of your head asking ‘What’s the next few weeks going to be like?”

Estates would also do well to learn from the 2019 ‘Covid discount vintage’ campaign, Seddon argues, which was “a great example of how momentum and excitement can be injected into Bordeaux season”.

“Prices of the 2019s have risen in the market subsequently, meaning those who bought feel good about their decision and enthused to continue buying the same wines in future vintages. This, after all, is what we all want!”