A month in wine
Price cuts and good ratings sparked strong buyer interest in several Bordeaux 2019 en primeur wines, beating low expectations for the campaign in some quarters.
Bordeaux 2019 en primeur arrived amid Covid-19-related disruption to the tasting schedule and fears of a global recession, and against a general backdrop of young Bordeaux wines struggling for price momentum. The usual early-April tastings had to be cancelled, though some smaller-scale tastings were later organised in Paris and other cities in France.
But, with price cuts averaging 21% compared with the 2018 releases, this year’s campaign brought back ‘some of the magic of the past’, said a Liv-ex report. It added that the top 20 UK merchants reported sales revenue down by 10% on average versus last year, but volume sales increased by an average 15%.
‘Châteaux that made the correct [price] reductions sold well and quickly,’ Farr Vintners buyer Thomas Parker MW told Decanter. ‘Lots sold out to pre-orders and we had to go back to Bordeaux and ask for more.’
While other wines didn’t sell so well, Parker said that ‘it has certainly been a success for us, especially when you consider the mood leading up to the campaign’.
Liv-ex said: ‘The stand-out successes, according to merchant members polled, included Châteaux Pontet-Canet, Lynch-Bages, Mouton Rothschild, Mission Haut-Brion, Pichon Comtesse and Clinet.’
However, a major talking point was the amount of wine released. Matthew O’Connell, head of wine investment at UK merchant BI Fine Wine & Spirits, told Decanter: ‘The dynamics around pricing and demand were generally positive and the main limiting factor for the campaign was available quantities.’
Liv-ex said: ‘Many châteaux chose to ignore the opportunity to sell greater volumes.’
While some châteaux dropped prices by up to 30% on the 2018 release, buyers needed to consider the back-vintage availability and pricing history of individual estates, according to Will Hargrove, head of fine wine at Corney & Barrow. He highlighted Calon Ségur 2019, rated 97 points by Decanter’s Jane Anson, for which the ex-London price was down by 10% versus the 2018 release. Price increases on the secondary market for Calon Ségur wines have meant that, in recent years, ‘en primeur has been the cheapest place to buy their wine’, said Hargrove.
In the US, Clyde Beffa Jr, co-owner of K& L Wine Merchants, described the campaign as ‘so-so’ overall. ‘Properties that lowered their prices from the lofty 2018s by 20% or more did well,’ he said. Top sellers at K& L included Pontet-Canet and the first growths, along with Châteaux Léoville Poyferré, Lynch-Bages, Pichon Comtesse, Ducru-Beaucaillou, Léoville Barton and Phélan Ségur. ‘We bought much less than we did in 2009, 2010, 2015, 2016 and 2018, so we sold less than in those vintages,’ said Beffa.
The campaign went very well under the circumstances, said Shaun Bishop, CEO of US merchant JJ Buckley, yet buyers focused on a narrow band of top names. ‘Three best sellers were Pontet-Canet, Lynch-Bages, and Cos d’Estournel,’ he said. ‘Other top sellers included Lafite Rothschild, Ducru-Beaucaillou, Figeac and Léoville Las Cases.’
Did the 25% US import tariffs implemented in October 2019 dampen buyer enthusiasm in the US? Beffa and Bishop said they gave customers fall-back options. Tariffs may no longer apply when the wines are shipped, scheduled for 2022. ‘If there are tariffs, we will charge at delivery or customers can cancel their order,’ Beffa said.
‘Buyers were given the right to cancel orders if tariffs increase at time of shipment,’ said Bishop, although he said ‘some négociants refused to sell under those circumstances, so many allocations were cut’.
Alower rate of value added tax (VAT) will apply to meals in restaurants, cafés and pubs until 12 January 2021 in the UK, but the change does not include wine.
UK chancellor Rishi Sunak temporarily cut the VAT rate from 20% to 5% on out-of-home food, as well as hot takeaways and soft drinks, as part of measures to help the hard-hit hospitality industry reopen in the wake of Covid-19.
Kate Nicholls, CEO of trade group UK Hospitality, said the support package was a ‘huge bonus’. Around 1.5m hospitality workers were still furloughed in July.
Miles Beale, CEO of the Wine & Spirit Trade Association, welcomed the help for hospitality but said it was disappointing to see alcohol excluded. ‘Suppliers are again left with little to cheer about,’ he said.
Not all venues planned to pass on the VAT cut directly to diners. It may instead help venues to retain staff and
remain open for business. Chef and London restaurant group owner Adam Handling told Decanter: ‘We won’t be passing on the lower VAT rate in menu prices, as we need this support to help us through the reduction of covers, due to social distancing, in our restaurants and bars.’