Purchasing Wine Futures
What is the history behind En Primeur?
The principle of buying fine wine ‘En Primeur’, otherwise known as ‘future wines’, was developed by the Bordeaux chateaux and merchants in the 20th Century, whereby a future position of a vintage wine was made available for sale by the Château and allocated to a buyer whilst the wine was still in the barrel.
The original purpose to this was to provide the chateaux with some degree of cash flow for product that previously they had had to hold for at least two years before getting payback. From the buyers’ point of view this enabled them to be in a position to acquire the wine at release, at theoretically, the lowest price possible and to guarantee supply. This rationale is perhaps less evident today as the En Primeur market has matured to be very active in its own right due to the significant demand for these highly sought-after fine wines.
How does buying En Primeur work?
En Primeur allocations are generally made available to the market in the first spring after the vintage wine is harvested in the autumn and goes into the barrel. The chateaux normally make these first vintage wine allocations available for sale weeks after the wines have first been tasted and rated by the trade and influential critics.
Dependent on the industry critics’ view and our own analysis we may on occasion recommend that clients invest in wines En Primeur. Many merchants may be obliged to take a sizable allocation of wine at this stage, as an independent broker we are free to guide our clients only to those few select wines that offer the best opportunity for future growth.
For clients that do acquire wines En Primeur receive a certificate of allocation at the time of settlement and this is replaced with a certificate of ownership once the wines are shipped into their storage account. En Primeur allocations are often traded on the secondary market and after two years the allocation is bottled and shipped. At this point, we welcome our clients to visit the storage facility to see the wine.
The benefits of En Primeur:
- Purchasing at the best price – Buying En Primeur investment grade wines this early in the lifecycle, i.e. pre-bottling, should guarantee that it will always be the lowest market price.
- Youngest age – Being in ownership of a wine at the youngest age means the maximum period for potential returns.
- Securing highly sought-after wines – Simply put, fine wine investment is supported by a supply and demand imbalance. Premium brands and vintages are in high demand and it may be very difficult to obtain them after release, as a consequence the price also reflects this. Buying wine En Primeur guarantees a supply of the wine of choice.
- Ensured Provenance – When it comes to purchasing wine, provenance is of upmost importance. Owning an En Primeur wine means it will be delivered by the most direct route from the Château to storage, ensuring provenance.
The risks of En Primeur:
- Financial security – We recommend to always buy wine En Primeur from agents or merchants with sound financial standing and good reputation. The risk is that should the agent fail the investor may not receive their wine and lose money. At Vin-X, our management fee covers an insurance facility, which guarantees the client’s cost of investment for peace of mind.
- Performance potential – Investment in any type of future presents the risk of the investment not performing to expected potential over time. It is important to realise the value of an En Primeur investment can go down as well as up.
- A longer investment term – When you invest in En Primeur, you are not purchasing the finished product. As it takes roughly two years to be bottled and transferred to storage, a longer period of time must be taken into consideration.
The Latest En Primeur Campaign
Bordeaux’s En Primeur 2019 Campaign
Whilst the producers, negociants and the wine trade had to adapt to the unprecedented challenges brought on by Covid-19 in order to make any sort of campaign a reality, Bordeaux’s 2019 En Primeur Campaign is one of the most unique and opportunistic we’ve witnessed since the last financial crash.
Indicators suggest promising returns for fine wine investors as release prices were reduced by up to 30% on 2018 vintages and critical scores are high. Ultimately, this is a rare opportunity to purchase Bordeaux’s best at the prices currently available for the 2019 vintage.