Jury's still out on future of Bordeaux

THE Bordeaux 2015 en primeur campaign closed last Monday, with the announcement of the en primeur price of Château Lafite 2015 at 420 euros (S$640) per bottle! Notwithstanding the price, it would not be a surprise if it was not instantly snapped up!

History of Bordeaux en primeur

Before the practice of en primeur sales, it was very difficult for the wine trade in England to purchase Bordeaux wines from the Châteaux while they were still maturing in barrel. It was not till the 1982 vintage that the modern Bordeaux en primeur campaign began, and it was to a large extent the publication at the same time of Robert Parker's report on Bordeaux 1982 in his wine periodical The Wine Advocate, which helped to get it going. (I had the good luck that my interest in wine began in 1983, spurred by reading his report.)

First, a quick explanation of the "Bordeaux en primeur campaign". It refers to the brief campaign during the period of June annually, when the Bordeaux Classified Growths announce the "opening prices" of their most recent vintage, in this case the 2015 vintage.

The opening price refers to the price per bottle (to the Bordeaux negociants) of their wine when it is finally bottled and released two years later. (Châteaux do not sell direct to private customers, except to a select few of their best friends.) The Bordeaux negociants then release their "opening prices" to their trade customers (wine merchant firms) in England and Europe, who in turn release their (marked-up) prices to their private customers. There are therefore two "mark-ups" between Chateau price and price to end-customers or "private consumers".

Opening prices are payable within a specified period (well before the wines are released), usually within three to six months. The wines are released from the Châteaux two years after the vintage, that is, in mid-2017, and are ready for collection/shipping soon after that, usually in the second half. As shipping costs are not included in the opening prices, there is an additional cost to pay when the wines are collected/delivered.

En primeur prices are usually announced at the beginning of June and are over by the end of the month. That 420 euro Château Lafite Rothschild, priced at the close of the 2015 en primeur campaign last Monday, is being offered for S$720 in Singapore.

It was the 1982 vintage which really marked the beginning of the popularity of the en primeur campaign. In the April/May 1983 issue of Parker's Wine Advocate, the 1982 wines were widely reviewed (and scored). There was an immediate escalation in both end-consumer interest as well as final retail prices for the wines, especially those with scores in the high 90s, and especially for the 100-pointers. (I happened to be fortunate in that I was propitiously encouraged to start my private collection with the 1982 en primeur vintage. Pure luck.)

Why buy en primeur?

The most cogent reason is that it enables the wine-lover/collector to purchase the best (or personal favourites) at opening prices, thus making not inconsiderable savings from buying on retail release.

The second and perhaps more important reason, in some cases, is that it enables purchase of the vintage's best or favourite wines at opening prices. Thus for instance, while the price of a bottle of Lafite at S$720 may appear very expensive, it will be considerably higher when purchased two years down the road.

What if one buys later after the wines are released for retail sale? In light of the preceding paragraph, it will be clear that buying later may mean that one's favourites are also others' favourites, and have therefore been bought up. No stock left!

Also buying en primeur ensures that you receive/collect your wines soon after release and are therefore able to store them under ideal conditions thereon, ensuring that they mature properly and fully. Wines purchased en primeur and properly stored also fetch the best re-sale (and auction) prices because of their provenance history.

There is also a commercial reason for those who use wines as their investment vehicle. The final retail prices for Bordeaux Châteaux after the en primeur campaign may show considerable increases commensurate with the quality of the vintage.

And this is where the scores of Wine Advocate, Wine Spectator, and Stephen Tanzer come in. A score of 100, particularly by Wine Advocate, immediately sets a premium on the final retail price. I have noted a marked increase in pricing as soon as any wine obtains a Wine Advocate 100-point score. (This is another reason to buy such wines - one does it before the scores are announced in Wine Advocate.)

What of the future?

The Bordeaux market virtually collapsed in 2011 due to the poor vintage and also to the unfavourable economic situation in China, at the time the biggest market for Bordeaux wines. The poor 2011 vintage followed two highly successful vintages in 2009 and 2010.

The depression in the Bordeaux market finally began to show struggling signs of recovery late last year, so the timing of the 2015 vintage and Bordeaux 2015 en primeur campaign could not have been more propitious.

The key question? What of the future? That depends on whether sufficient rationality and common sense return to the Bordeaux market. The answer and the responsibility lie with the Châteaux.

We shall see.

Favourite buys of 2015 futures

Pauillac:

Châteaux Pontet Canet, Pichon Baron, Lynch Bages, Pichon Lalande; Mouton Rothschild, Lafite Rothschild

Saint-Julien:

Châteaux Leoville Barton, Langoa Barton, Leoville Poyferre

Margaux:

Palmer, Rauzan Segla, Margaux

Saint-Estèphe:

Cos d'Estournel, Montrose

Graves:

Haut Bailly, Domaine de Chevalier rouge, Domaine de Chevalier blanc, Pape Clement rouge, Pape Clement blanc, Haut Brion, Clarence de Haut Brion, La Mission Haut Brion

Saint-Emilion:

Figeac, Angelus, Carillon d'Angelus, Ausone, Chappelle d'Ausone

Pomerol:

Vieux Château Certan, L'Eglise Clinet; Clinet, Conseillante, l'Evangile, Lafleur, Le Pin

Lalande Pomerol:

La Fleur de Bouard, Le Plus de la Fleur de Bouard