To all ITBers: How are your Bordeaux 2010 sales going?

WINE TALK
41

I have a war plan and I’m executing it with precision, except for the known unknowns of course. :slight_smile:

42

Hi Todd,

You wrote “The Bordeaux system is inherently flawed, as any negiciant can buy and sell in any region to any retailer, as opposed to the much more efficient system that Burgundy and most other European regions employ - that of specific regional reps
There needs to be a shake up in Bordeaux but the negociants will fight it every step of the way. One huge and powerful Chateu needs to lead the way”.

My answer to that would be: you can’t quarrel with success!
I’m in my fifties, and there has only been one instance in my lifetime that the market has bottomed out (in the middle seventies). The distribution system is centuries old and marvelously efficient. With regard to the famous châteaux (only a tiny part of production, but often the primary concern on Wine Berserkers), their job is to make the wine, not sell it. Those who have tried to go it alone have fallen flat on their face. No château can achieve the sort of worldwide distribution the Bordeaux négociants can. Heck, even if Latour has stopped selling en primeur, they will still go via the Bordeaux trade for the wine they keep back!
Of course, “corrections” need to be made to the market. This happens all the time. The Bordeaux trade is remarkably resilient and adaptable.
Let’s not forget too that it’s the châteaux who have been calling the shots on the impressive price increases of recent years, not the negociants, who reflect the prices they are given. If there is a consumer backlash down the line it will hurt the négoce more than anyone else. It’s a question of “pipeline”. To keep their allocations, the négociants must buy. They can lose money on a politically incorrect year, but are likely to gain it back in a well-reputed year. Should the market back up significantly, the négociants will be left holding the baby and could take a heavy loss. The châteaux would react the following year and be forced to lower their prices, but a lot of damage would be done in-between time.
The system has its checks and balances and there is no equivalent anywhere else in the world (outside Champagne, but that is often sold via spirits distributors and concerns brands, a different kettle of fish).

All the best,
Alex R.

43

Greetings Alex,
You outline a good defence of the Bordeaux system. Indeed, it is interesting how higher prices are always accepted by new generations of fans - which could turn out to be the case for 2010.
But I wonder about the bar being set too high in recent vintages, meaning that it has come to the point where stellar back vintages that are now closer to maturity have been available for just as much - if not less - per bottle than until recently en primeur 2010, for example. And that merchants can obtain 2010 now in bottle for about the same price as in futures (begging the question: what was the point of buying futures?).
But it may be that this is the new price range/the new “reality” for upper crust Bordeaux, for the time being.
I recall how a previous generation was “shocked” with the pricing of 2000 en primeur. When compared to say 1990 en primeur, to say nothing of 1982 en primeur… 2000 en primeur was the first year I seriously started buying Bordeaux, and I loved the GPL at $30 per bottle. So I suppose it is all relative. In any case, we shall see in the Spring what will happen once Robert Parker issues his scores.
Cheers Panos

44

Shhhhh. Let’s just keep saying it is a minefield. [cheers.gif]

45

Burgundy may or may not be a minefield quality wise, but pricing wise it is in a similar situation with Bordeaux. E.g. the NSG premiers (and not just Les Saints Georges) from better producers are now approaching or over $100 in a good year, same for the best Volnay producers. The recognized Cotes de Nuits premiers from good producers are moving over $100 price wise, and forget the Nuits grands crus. This strikes me as similar to the situation with the formerly bargain second growths. If you stick with e.g. Beaune premier crus from Jadot or Bouchard you are still OK, and Burgundy is big and varied enough that there are still bargains to be found if you dig, but there is recognizably the same process going on.

46

Hi Panos,

You wrote “But I wonder about the bar being set too high in recent vintages, meaning that it has come to the point where stellar back vintages that are now closer to maturity have been available for just as much - if not less - per bottle than until recently en primeur 2010”

I also think the better châteaux are playing with fire.
But what tires me, and what I think is completely erroneous as expressed elsewhere on this thread, is that the system is done for, outmoded, doomed.
Hell no! The people at every level in the distribution chain will react and adapt Perhaps brutally. But that does not mean by any means that the system is fated to come to an end!

As for older vintages of comparable quality - 5 years older - at the same price, you have an excellent point.
I think that moneyed people buy according to two different time frames. Somone in his twenties or early 30s, let’s say, wants to grow old with the wine and a vintage may coincide with a wedding or a birth year. In such instances, a young wine is preferable. Then, there are us old fogies who really don’t want to wait for 20 years.

You also wrote “I recall how a previous generation was “shocked” with the pricing of 2000 en primeur”

Exactly!
People who don’t understand how the system works keep predicting its demise, and also tend to judge the international market based on their small part of it.

The en primeur system is complex, but it’s still going strong. Belive me!
There’ll be fewer people at the tastings in April and interest will be less because the vintage does not start out with good press. So, prices will be changed accordingly. But anyone who leaves the game will find it damned hard to get back in. Checks and balances. And opportunities for newcomers.

All the best,
Alex

47

I do so hope the system is “done for. outmoded, doomed.” But the system wasn’t designed to benefit us; it was designed to maximize return to the producers. And although it is bizarre, it is hard to argue that it hasn’t served this purpose. Will market growth in Asia validate the system into the 21st century? I have no clue. I would love to see it collapse but I wouldn’t bet against it.

48

Some years ago, I went to Bordeaux planning an article on whether or not the negotiant based system could survive. I figured the 2005 vintage had changed the paradigm that the merchants made enough money in great vintages to offset losses or the tiny margins of lesser ones.

2005 came at a particularly interesting time, the first really sellable vintage since 2000, but the profit margin was eroded by much higher prices coming from the estates, and although the vintage sold profitably, the kind of gains which merchants normally expected, were just not possible. And with a trio of hard to sell and relatively expensive vintages following the 2005s, I expected to see some of the less financially stable merchants refuse allocations. It did happen to a small extent, very privately and without fuss, as stronger negotiants took up the slack. In the end, even before the Chinese entered the market, it had begun to right itself, and of course, once the Chinese did come in, the whole picture changed. Nevertheless, we keep looking at Bordeaux in the short term:- this vintage costs too much, this one follows a really successful vintage, this one sucked etc. The Bordelais have enough money that they can look at the market and see what needs to sell over a much longer period. If they make mistakes (and they do) they can always correct them. No need for panic, but it does lead to short term opportunities, which are often passed down to the consumers. Just look at 2008. Lafite was cheap and you could triple your money a few months later selling to the Chinese.

A couple of other things: We tend to focus on the FGs, and here the wines have been particularly volatile, going up to as much as eight times the cost of the seconds before settling down to around three times the cost. Over the same period, prices for a good solid wine like Chateau Lagrange has stayed fairly stable, although the trend of course is up.

Finally, as Alex has pointed out, it’s a system that works, has worked for centuries, and there there is far too much invested to allow it to fail.

49

Well stated, Mark.

The one wine I regret passing on these last few years was the 2008 Lafite. I wrestled with the notion of whether we would ever see Lafite again at $200 per bottle, then decided I did not want to play the futures again.

50

+1

I was told to buy a case of Lafite in 2008 and didn’t. [soap.gif]

Probably the most shocking scenario is that there is a Bordeaux thread with TWO PAGES of intelligent discussion on BurgundyBerserkers.com [oops.gif]

51

I only know it from:

52

Panos, I am still waiting on 2008 Pavie Macquin for PC ($38 a bot.!!). I long ago received all my other 2008s and 2009s from the other stores I purchase from. PC should ask for a “beneficiary” based on their historically slow delivery. [cheers.gif]