En primeur, c’est vin­tas­tic?

Does buy­ing Bordeaux be­fore bot­tling re­ally of­fer the op­por­tu­nity to drink fine wines at a re­duced price?

The Field - - Content - writ­ten BY pa­trick sch­mitt

Why buy Bordeaux be­fore its been bot­tled? Pa­trick Sch­mitt ex­plains

There are things that, rightly or wrongly, are used to in­di­cate one’s so­phis­ti­ca­tion. Among men, these in­clude a knowl­edge of clas­sic cars, field­sports and pri­vate clubs, along with wine – and, im­por­tantly, how one buys it. A suc­cess­ful fund man­ager I shared a drink with pro­fessed his grow­ing in­ter­est in wine and told me proudly, “I buy mine en primeur” – pay­ing for wine well in ad­vance of de­liv­ery and, in the case of Bordeaux, be­fore it is even bot­tled.

It would have been bad man­ners to seem unim­pressed but I did won­der why he as­sumed that buy­ing wine en primeur is best. Per­haps he didn’t know that this way of pur­chas­ing Bordeaux might not al­ways be the most eco­nom­i­cal. Or per­haps he didn’t care, see­ing it as a sign of savoir-faire.

He had cho­sen to sup­port a sys­tem that orig­i­nated in Bordeaux a lit­tle over 50 years ago when the châteaux of the re­gion were re­cov­er­ing from the war and strug­gling to meet the costs of wine pro­duc­tion. The lead­ing mer­chants set up a sys­tem of down pay­ment in ad­vance of bot­tling.

To­day, if you buy the 2017 vin­tage en primeur, you won’t re­ceive the wine un­til spring 2019 at the ear­li­est when, as they say, the claret be­comes “phys­i­cal”. This not only means com­mit­ting money to some­thing not yet fin­ished but also giv­ing up the in­ter­est that could be earned on it. His­tor­i­cally, this has out­weighed the costs. Some wine col­lec­tors boast that they “drink for free” by pur­chas­ing many cases en primeur from a sought-af­ter château and sell­ing half of them 10 years later when the price has dou­bled, fund­ing the other 50%.

To­day, how­ever, such a re­turn is hard to achieve. Top Bordeaux is re­leased at much higher prices, some­times even higher than those of older, ready-to-drink vin­tages. While buy­ing en primeur was un­doubt­edly the most ef­fi­cient way to in­vest in claret un­til the high-pro­file 2000 vin­tage, since then it has not out­weighed the costs. In­vestors in cru classé claret – which rep­re­sents around 60 of the top es­tates – have suf­fered neg­a­tive re­turns in six out of the past 10 vin­tages, ac­cord­ing to Liv-ex, the global mar­ket­place for fine wine. Di­rec­tor Justin Gibbs says, “The 2010s are prob­a­bly only just get­ting back

to their re­lease prices, so it has taken a hell of a long time.”

Wine funds, which are es­tab­lished purely to gen­er­ate in­come from the great es­tates, gen­er­ally steer clear of en primeur. Wil­liam Grey, an in­vest­ment man­ager for The Wine In­vest­ment Fund, de­scribes it as a “sub-op­ti­mal way to in­vest in wine, and some­thing that we have never done in the 13 years of pro­fes­sional man­age­ment of fine wine as an as­set class”.

Nev­er­the­less, many claret lovers be­lieve it can of­fer a sav­ing in the long run. Max Lalon­drelle, the fine wine buy­ing di­rec­tor at Berry Bros & Rudd, which buys more en primeur claret than any other mer­chant, says, “There are many rea­sons to buy en primeur but the first is that you get a deal for fi­nanc­ing the net­work, for pay­ing the châteaux up­front.” There are risks from changes in ex­change rates be­tween pay­ing for the wine and tak­ing de­liv­ery of it, but there are still times when the consumer re­ally pays the low­est price by pur­chas­ing it in ad­vance of de­liv­ery. “If you look at 2014, you would prob­a­bly look at pay­ing 15% to 20% more for the wines if you had had them de­liv­ered re­cently. Twen­ty­fif­teen started to be de­liv­ered in Septem­ber and the wines have all gone up in price by 20%, if not more, and the 2016 have al­ready gone up in price in an­tic­i­pa­tion of re­lease. Even a vin­tage like 2013 – which was prob­a­bly the weak­est [in terms of qual­ity] of the

past 20 years – is more ex­pen­sive now, and the wines have dis­ap­peared.”

Such van­ish­ings are a re­cent devel­op­ment. BI Wines & Spir­its founder Gary Boom as­cribes this to the new Bordeaux mar­ket of China, where great clarets are con­sumed younger. The Chi­nese consumer won’t pay for some­thing that isn’t “phys­i­cal”. “The Chi­nese mar­ket in en primeur doesn’t ex­ist. But the mo­ment the wine hits the bot­tle and gets de­liv­ered, there seems to be a jump in price. The Chi­nese are drink­ing 2014 [Château] Lafite now.” Prices are ris­ing within three years, not 10. “If you had bought the first growths in 2014, ’15 and ’16, then you will have done ex­tremely well out of this.”

Boom ad­mits that some clarets in those vin­tages were “too ex­pen­sive”. To pick the winners, one needs to look at the re­lease price rel­a­tive to the cost of buy­ing the same wine in bot­tle from a vin­tage of sim­i­lar qual­ity, as well as rel­a­tive to the key crit­ics’ scores on the wine. If it gets 95 points or higher from lead­ing Bordeaux com­men­ta­tors such as Neal Martin and James Suck­ling, and its price is lower than phys­i­cal wines with sim­i­lar scores from the same prop­erty, then prob­a­bly it will rise in value. You can check prices of older vin­tages at wine­searcher.com and see how they are drink­ing now with cel­lar­tracker.com.

Lalon­drelle as­sures that a rep­utable mer­chant such as Berry Bros & Rudd can be trusted. “When we re­lease the wine, it’s al­ways with a com­ment about the wine and we will tell our cus­tomers that they should buy it be­cause we be­lieve it is very good and the price is cor­rect for the vin­tage. If the price is too high, we will say that.”

He warns, “Al­ways read the tast­ing notes and don’t buy a wine based on the scores and views of one critic. Con­sider the over­all view and look at pre­vi­ous vin­tages on the mar­ket. If you think the price is over­in­flated, then speak to your wine ad­viser or mer­chant.”

Boom stresses that he wouldn’t buy wines for his cus­tomers that he be­lieved were over­priced or over­hyped. “With the 2008s, we bought £4m [worth of Bordeaux en primeur] and in 2009 we bought £30m.” The for­mer was over­rated, the lat­ter a leg­endary har­vest.

For Lalon­drelle, buy­ing en primeur of­fers the thrill of se­cur­ing some­thing at the out­set. “I al­ways re­fer to en primeur as be­ing like a new iphone re­lease – peo­ple queue round the block for it in the shops and then it’s re­leased on­line and you have to wait two weeks for de­liv­ery. In 10 years’ time the wine will be more ex­pen­sive what­ever. If all we did was look at prices and whether we were get­ting the best deal for ev­ery­thing then we wouldn’t buy many things.”

Yet no-one likes to feel they paid more for a prod­uct than nec­es­sary. There is plenty of ma­ture Bordeaux avail­able at prices com­pa­ra­ble to cer­tain re­cent en primeur re­leases, which can be drunk right away. Many châteaux are hold­ing back stocks of re­cent vin­tages, so there will be a sup­ply of these, too, when they are ma­ture.

Buy­ing en primeur is ex­cit­ing but if you are the sort of per­son who wants ma­ture Bordeaux for the din­ner ta­ble, don’t feel you have to buy it on first re­lease. There is plenty of ready-to-drink claret in the sup­ply chain and, rel­a­tive to young Bordeaux, the cost of se­cur­ing ma­ture wine is far from pro­hib­i­tive, so it’s not vi­tal to buy the wines be­fore they are bot­tled and wait for 10 years or more.

If you are look­ing at claret purely as an in­vest­ment, bet­ter to buy it just as it’s start­ing to en­ter its “drink­ing win­dow”, which be­gins af­ter the wine is four to nine years old, depend­ing on the pro­ducer and vin­tage. It is at this point that corks start to be pulled, so the sup­ply di­min­ishes and the prices tend to rise. Such an ap­proach will also en­hance the po­ten­tial for a de­cent re­turn within three to five years, and not the en primeur buyer’s more tra­di­tional 10.

If you want the thrill of be­ing the first to se­cure the lat­est vin­tage, buy­ing en primeur is for you. And, as long as you con­sider the method as an in­vest­ment for the long term, pay­ing the château up­front should ben­e­fit you, too.

Pa­trick Sch­mitt is ed­i­tor-in-chief at The Drinks Busi­ness and a Master of Wine

Buy­ing en primeur of­fers the thrill of se­cur­ing some­thing at the out­set

Above: bot­tles of 2016 Bordeaux en primeur from the Pes­sac Léog­nan ap­pel­la­tion in the Graves re­gion ready to be tasted. Right: Bordeaux bar­relled – it’s gen­er­ally shipped at least 18 months af­ter pur­chase

Vines in St-emil­ion, one of the prin­ci­pal red wine ar­easof Bordeaux

Above: the price for en primeur rises when corks are pulled. Above right: Château Canon is worth con­sid­er­ing as an in­vest­ment

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