Vin-X examines how Château Latour’s withdrawal from the en primeur system may affect the prices of its wine both now and in the future
In 2012, Château Latour announced its withdrawal from the En Primeur system after the 2011 vintage. This was unprecedented and Latour now stands alone as the only major Château in Bordeaux which does not take part in the seasonal vintage tasting phenomenon. The château’s motivation for this move is easy to understand: by holding their wine back until it is ready to be consumed, Latour are able to price their product not as a speculative en primeur allocation, but as a fully-developed wine which is ready for immediate consumption. This then removes the need to “leave cash on the table” by allowing negociants, merchants and investors to capitalise on any increases in price between the wine’s debut at en primeur and its release from the châteaux upon bottling. It also allows Latour to carefully control the supply of its wine available in the market by staggering how much wine they release into the market, which gives them greater ability to control the price of their wines.
While that’s all well and good for the château, what about the investor? Certainly in future it means that Latour will become less attractive to buyers who see wine purely as an investment, as Latour’s strategy means that potential capital gains will be reduced as the château looks to retain more of the profit in its initial release price. However, for those holding vintages of Latour prior to 2011, it could be very good news indeed, especially in the next 5-10 years. Normally, in the en primeur system, all of the wine from a particular year would have been released on to the market by now. However, because Latour are holding back their supply, this has not been the case. Additionally, this wine will not be ready for consumption for quite some time, and we mostly likely won’t see any new Latour hit the market until around 2020. In the meantime, as other vintages of Latour are consumed and supply diminishes, prices should inevitably rise given the supply/demand dynamic which will begin to kick in. Wines from the 2000, 2003, 2005 and 2009 vintages will be particularly sought after as some of the best Latour have produced in recent years, though there will no doubt be a scramble to get hold of these wines, which are not only exceptional in themselves, but will also represent a clever play by wine investors looking to capitalise on Latour’s new strategy.
While it remains to be seen how the château’s strategy will work out in the long term, wine investors with insight into the dynamics of the market will be desperate to get hold of at least one case of pre-withdrawal Latour for their portfolio. With supply constantly dropping and no new wine on the horizon for at least the next few years, investors currently holding Latour have a lot to be pleased about.