Will Brexit suck the energy out of the 2018 En Primeur Campaign?     

We publish this month’s Vin-X Fine Wine Market Report at the time of year when the industry’s focus shifts to the new In-Barrel Bordeaux vintage. Merchants and critics from around the world will be packing their notebooks and heading off to Bordeaux next week for the 2018 en primeur tastings. For the region, it is the first real public indicator of the quality of last year’s crop, and is strategically an incredibly important stage in determining the overall value of a vintage for the Chateaux owners. And all this with the backdrop of extreme political uncertainty in the UK, the key market for Bordeaux futures!

Whilst values since 2015 have, on average, recovered much of the lost ground following the market peak of 2010, the broadening fine wine market has seen a lowering average market share by volume in Bordeaux wines traded on Liv-ex. That is one factor which, in our view, should be borne in mind by the negociants when considering  their release prices for this year’s campaign. But, perhaps more significantly in the short term there is also another, extraordinary influencing factor in Spring 2019 and that is Brexit!

Right now, nobody can really comment with any level of authority about the impact of Brexit on 2018’s en primeurs campaign. The UK Parliament has wrestled the reins, whether that is temporarily or not, out of the hands of Theresa May and nearly 3 years on from the Referendum we are not that much clearer on our future relationship with Europe and what impact that may have on the key market for Bordeaux en primeur wines this Spring.

With all of this going on, Liv-ex has set out its current thinking on Bordeaux 2018 in a special trade report ahead of the 2018 en primeur tastings. The key observations are:

  • Market status: The 2018 campaign will take place in a market strongly affected by Brexit uncertainty – the UK is the foremost market for Bordeaux en primeur sales and currency dynamics may have an impact
  • Demand: Bordeaux’s reducing market share (not price) may impact on demand especially as the consecutive excellence of 2015 and ’16 and lesser appeal of mid-vintage 2017 has resulted in sizeable volumes of young Bordeaux in the market.
  • Supply: 2018 production was of a decent size but some key appellations; Pauillac, St Estephe and St Julien suffered reduced yields due to frost and mildew. Chateaux are also holding back supply to the market with the aim of achieving higher prices at a later stage, particularly for the Asian market which tends not to buy en primeur
  • Pricing: 2018 is deemed to be a highly desirable vintage in barrel but the negociants must ensure that the release prices reflect the vintage quality AND the current market conditions with deepening political uncertainty in the key UK market.
  • Critical view: Neal Martin has announced he will not be tasting the wines until later in the year so a key critical view will not be expressed during the campaign.

During our visit to Bordeaux in February we got the earliest whisperings on the vintage and for those prepared to comment at all ahead of the industry tastings in April the indicators are that 2018 has the early characteristics of a seriously good Bordeaux vintage. We will expand on the 2018 campaign in our April report post the trade tastings.

Download your free copy of the Vin-X Fine Wine Market Report here and for further information call us on 0203 384 2262.