Now the scrum of the main trade En Primeur tastings is over, I am in Bordeaux as usual at this time to talk to chateaux owners on a one to one basis. This year, I am working with Renaud (our Bordeaux Director) on positioning our clients for 2014 futures ahead of the impending release of prices for the key investment-grade wines. The relationship between the UK buyers and Bordeaux is a little unsettled as each side plays a psychological war trying to convince the other that their price regime is the way forward. High prices have resulted in estates struggling to sell their wines En Primeur in the last 3 years and one prominent chateau Managing Director is keen not to repeat those mistakes again.
There are only 2 reasons to buy Bordeaux En Primeur, rather than waiting for the vintage to be bottled; scarcity and price. Scarcity is currently perceived to be less of an issue with Bordeaux for buyers of fine wine and the market has more than sufficient capacity, hence the price trend on back vintages currently being witnessed. But let’s not forget that supply has to satisfy a global market and with more than 1,000,000 millionaires in China a shift in their habits could soon impact on scarcity and therefore price.
With price, we are reminded that En Primeur was intended primarily as a cash flow vehicle and in return for handing over their money consumers used to be guaranteed the lowest price on the market. The pricing strategy of the last three campaigns has failed to deliver this benefit to the consumer. Our view is matched by other UK merchants in that the 2014 Bordeaux vintage has to be cheaper than any other comparable vintage that is already on the market for it to sell. The current weakened euro may soften the blow should the courtiers and negociants release to reflect the quality of the vintage, which they are under pressure from the chateaux to do, rather than try and correct price performance. There is probably headroom in that for a 4 – 7% uplift on 2013, but we wait to hear. 2014 is a good vintage that shouldn’t be overlooked but if it is to have any investment potential then the price will need to be right.
I set out my thoughts on this during a call with Harpers Magazine from Bordeaux yesterday so please click on article for more detail.