Marketwatch spotlight: Bordeaux
With the 2020 campaign due to get underway in the early summer, we consider the strengths and weaknesses of the current en primeur system
Assessing the en primeur system
Bordeaux 2020 en primeur will soon be on the horizon, but what can we expect, and are there lessons for collectors from recent campaigns? Bordeaux négociants recently affirmed their readiness to launch the 2020 campaign at the more usual time of May and June this year.
The Bordeaux Négoce union also praised price cuts for the delayed 2019 releases last summer. Discounts of more than 20% versus 2018 release prices created strong demand for several top names, including Mouton Rothschild, Pontet-Canet, Pichon Comtesse and Lynch Bages. ‘We commend the decision taken by the majority of wine estates to adjust prices last year, emphasising that these were indeed market prices and not “Covid” prices,’ it said.
Is that a sign of how things might play out this year? Not necessarily.
‘It’s too early to talk about prices [for 2020]’ Philippe Tapie, president of the Bordeaux Négoce committee for classified growths, told Decanter. Critics haven’t yet tasted the 2020 vintage, and Tapie added individual châteaux are responsible for their own pricing strategy.
However, he expressed confidence in Bordeaux’s ability to deliver the 2020 campaign, despite Covid-19, and reiterated en primeur’s importance to the region: ‘It’s unique.’
US merchant K&L was among those who saw relatively good demand for 2019s, and co-owner Clyde Beffa Jr told Decanter he hopes 2020 prices don’t go back up. ‘I don’t think a price increase is going to work,’ he said.
Many merchants, including K& L, remain committed to Bordeaux primeur sales, but it’s a smaller part of their overall business than in the past. Despite last year’s success, Liv-ex said ‘merchants reported a narrow campaign with around 30 wines seeing strong demand’.
As widely reported, the financial rationale for buying en primeur has faced questions. While the mid-2011 market collapse hit buyers of 2010 and 2009, in particular, more recent debate has focused on the ongoing availability of stock and price lethargy following release. Yet it’s also hard to generalise, as shown by Liv-ex price data on the highly regarded 2016 vintage. As of 4 February, Liv-ex figures showed the five best performers versus their initial ex-London price were: Château Lafleur 2016 (up 123% to a market price of £11,500 per 12-bottle case in bond); Les Carmes Haut-Brion (up 101.5% to £1,350); Carruades de Lafite (up 67.2% to £2,675); Petrus (up 58.2% to £34,800); and Calon Ségur (up 31.6% to £1,000).
The biggest fallers were: Château Angélus (down 21.7% to £2,800); Pontet-Canet (down 21.2% to £1,080); La Mission Haut-Brion (down 19.2% to £3,200); Troplong Mondot (down 18.8% to £974); and Pavie (down 17.5% to £2,960). That isn’t to say prices won’t rise, of course.
As an example of how wine investment can be a long-term prospect, Patrick Wilkinson, co-founder of UK merchant Wilkinson Vintners, highlighted the acclaimed Cos d’Estournel 2016. It’s barely moved on price, but ‘if you’re taking a long-term view then it’s going to be worth a lot of money [in future]’, he told Decanter.
Regarding en primeur specifically, Matthew O’Connell, head of investment at Bordeaux Index, said campaigns can be a good opportunity to buy the wines you want ‘in quantity’ and in larger bottle formats.
Contextual information is important, such as a château’s release policy, back-vintage availability, comparative vintage ratings and price history. ‘Estates have their own strategies,’ said Will Hargrove, Corney & Barrow’s head of fine wine. In a few cases, such as for Château Le Tertre Rôteboeuf in St-Emilion, a small production means en primeur is the best chance of acquiring the wine, he added.
There have been signs of Bordeaux prices firming up following a sluggish period, yet opinions differ on the scale of momentum.
Bordeaux’s share of trades by value on
Liv-ex dropped to 42% in 2020, down from 54.4% in 2019. ‘First growths in particular have lagged the market’, said Liv-ex in February 2021, yet it also noted a steady rise in bids for Bordeaux on its global marketplace.
‘We expect Bordeaux and Burgundy to see the most interesting price movements this year, with trading volumes in Q4 [2020] particularly encouraging in this context,’ said Matthew O’Connell, head of investment at Bordeaux Index. The merchant highlighted ‘Super Seconds’ as potentially a bigger opportunity in 2021 (see box, below).
Miles Davis, head of professional portfolio management at Wine Owners, said in a market report that he was ‘less certain’ about a recovery for top-end Bordeaux.
In the US, Clyde Beffa Jr, co-founder of K& L Wine Merchants, said Bordeaux demand was strong but that tariffs relating to the EU-US Airbus dispute have hurt higher-end wines.
Will Hargrove, head of fine wine at Corney & Barrow, said customers wanted a balance of regions in their cellars but were also hunting back-vintages to fill gaps. ‘People are being quite opportunistic about Bordeaux,’ he said. Demand isn’t only for top vintages. For example, he believes 2007s coming up for sale would likely ‘get snapped up’.