Retail prices seem egregious right now across the board with few bargains on offer. Considering the dollar is down from a high of 1.39 early in 2014 to 1.22 presently (and was as high as 1.48 in 2011), the costs of Europeaon wines for importation to importers, etc. is dropping fast. I recognize there must be some delay in the reflection at retail with the various ways importers hedge currencies, but a whole lot of what is keeping prices artificially high must be the decision to milk a market more used to higher pricing of late for as long as possible until the next importer/wholesaler/retailer cracks and competition again asserts itself. Until that inevitably happens, I’ve finally just decided simply not to buy anything more at this point, but I’d be currious what everyone thinks.
Also, I don’t care much about Bordeaux at this point (value is just so much better elsewhere), but even there the Chinese economy isn’t what it was even a year ago and the current leadership’s pressure on bribery must be having an impact, too.
My producers are tiny, so when I bought the 2010 Barolo, for instance, I took my allotment and paid about 10 months ago. There isn’t any wine to go back for to average down my costs. Furthermore, these are not super expensive wines to begin with, so while saving maybe 10% on a $20 dollar wine is nice, I don’t have the volume to really notice…that is why my wholesale prices generally reflect an estimated exchange rate that tends to average out so that I neither benefit/suffer from swings in the Euro.
Now, given plummeting oil prices, if we can get the shipping companies and the local delivery folks to roll back their fuel surcharges, then you might be able to see some downward movement on wine at lower ends of the pricing spectrum.
Drew, I always figure that new vintages are paid for about a year ahead. So wines being released next fall should reflect this. Unless where talking about Burgundy then the retailers will tell you that they could have screwed you worse so stop your belly aching or they’ll sell your wine to the Chinese.
In my experience this will best be reflected in back vintage Bordeaux. US importers can now buy Bordeaux from negoc or chateaux 15 percent cheaper.
I do think that it would hit back vintages first precisely because new vintages (current available stock already in the chain to retailers - not the unsold backlog) may have been paid previously. Almost to 1.21 today. No sign the euro will be moving higher any time soon so I’d think it would hit peicemeal over the coming six months. Just a guess, but I’m sitting on the sidelines right now.
Nick, except perhaps at the very high end, I don’t think Burgundy is immune to what air is coming out of the China bubble.
“The U.S. currency climbed versus all of its 16 major peers in 2014 and extended those gains today as two manufacturing gauge signaled expansion. The euro slumped to a 4 1/2-year low after European Central Bank President Mario Draghi said he can’t exclude the risk of deflation and signaled the likelihood of quantitative easing is increasing.”
Your plan only works if you can live without what is coming on to the market. Like Nick said, if you are buying 2010 Barolo, you plan is flawed. If you are talking about buying good wine to drink, then you may be right. However…The other thing that happens too is that when the currency is weaker, producers (I can’t qualify it any better than ‘some’) will adjust their prices to compensate for the deflating currency. Their is a buying ‘window’ that happens, but to be honest, I’m not sure their is a savings that will be passed along on the top wines (maybe some, but not all).
Drew - I don’t know about other threads, but there are companies that specialize in overseas shipping of wine. It doesn’t really make sense unless you are buying in quantity, in my opinion, but it’s not difficult. Sometimes you have to wait for them to have a full container, if you’re using a smaller outfit, though the bigger ones have containers going regularly. You can start with stores that list themselves as “World Wide Delivery” on Wine Searcher Pro (choice on the drop-down menu). Those stores will always have a method in place.
It’s akin to airlines raising fares because fuel prices go up 5%, but when they drop 50%, no change. The prices likely won’t drop much until they HAVE to
The euro move isn’t really that exciting. The move from 1.33 to 1.2 is like a 10% off sale. Nice, but for wines that have doubled in price over the last 5-7 years, not too helpful
Another factor that could delay price reductions: Some importers buy currency futures so they know what their landed costs will be. Those people may be stuck with higher euro costs until they run through those futures.
It’s not like gasoline, which very quickly reflects oil prices.
Unfortunately, in Burgundy you’ve had a string of very small harvests back to back which has decreased supply substantially. So the euro will only help offset the pain a little there.
Why are people excited about this rate? What about parity or the ratio it was at in 2001 when we bought futures.
My guess is that it will go down to parity in a year or two. Germany can’t keep holding it up forever the way things are over there.