En primeur, c’est vintastic?
Does buying Bordeaux before bottling really offer the opportunity to drink fine wines at a reduced price?
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