Buying Fine Wine En Primeur
The principle of buying fine wine ‘en primeur’ 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 Chateau 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 and from the buyers’ point of view 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 wines.
The 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. En primeur allocations are traded on the secondary market and after two years the allocation is bottled and shipped to the current owner.
The chateaux normally make these first vintage wine allocations available for sale weeks after the wines have first been tasted and scored 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 sizeable allocation of wine at this stage, as an independent broker Vin-X is free to guide its clients only into those wines that offer the best opportunity for growth.
Vin-X 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. At this point, the client can choose to visit the storage facility to see their wine.
Investors should be aware of the following benefits and risks of acquiring en primeur:
The benefits of En Primeur
- Best price – Buying wines this early in the lifecycle, i.e. pre-bottling, should guarantee that it will always be cheaper than the future price on the open market. Some wines have had outstanding investment performances from en primeur acquisition but others have realized little advantage.
- Securing wine – 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.
The Risks of En Primeur
- Security – 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 never receive their wine and lose money. The Vin-X management fee covers an insurance facility, which guarantees the client’s cost of investment.
- Performance – Investment in any type of future presents the risk of the investment not performing to expected potential over time and the value of an investment can go down as well as up.
En primeur prices in recent years have been increasing, partly as a result of two extraordinary vintages, 2009 and 2010 occurring consecutively. Prices have been slow to come back in line with critics’ scores in vintages since and this has potentially had a detrimental effect on the marketing of en primeur campaigns since then. We continue to monitor en primeur opportunities carefully for our clients.
For information on current en primeur opportunities please contact us on 0203 384 2262, or alternatively visit our contact page.