True or False: No Such Thing as Burgundy Futures

WINE TALK
1

I was recently told by an expert and someone in the biz that only Bordeaux (and some CA wineries) offer futures. I mentioned that I had purchased 2009 Faiveley futures this year but was told that Burgundy technically is not a future since it is already in the bottle when offered. Yet, Wally’s Wines in LA and Barry Bros in the UK offer their 2009 Burgundy as “futures” or “en primeur”. Is this just sloppy use of the term “futures” and “en primeur” by these two merchants? Anyone able to clarify this some more for me? Thanks.

2

We asked a famous Sagrantino producer how a store in Fla sold his wine for significantly less than we bought it for and he said “they bought 200 cases each of three vintages in advance and paid cash”. Is that a futures transaction?

3

People usually say “pre-arrival” with burgundy

4

This.

Futures usually means that you’re paying for the vintage just passed. More generally, you’re paying for a wine still in the process of being made and not yet bottled. The reason to do this is, supposedly, that you secure a better price than you’d get on release. There are ancillary benefits such as being able to order bottling in rare sizes (magnums, etc). A wine that’s bottled but not yet available at the retailer would be pre-arrival. There’s not a price break over the release price since the wine is, in fact, released but neither are you committing funds 12-24 months ahead of time.

5

[thumbs-up.gif]

Peter…cheer.

6

[scratch.gif] [head-bang.gif] [help.gif]

7

Futures mean, or at least is it supposed to, that you are actually buying the wine. You pay for it, and it is yours. When it arrives in the future, you get it. Pre-arrival is when the mechant estimates the cost and availablilty of a wine. You pay now, and IF that merchant gets the wine, they will give it to you. It’s really a hopeful promise rather than an IOU.

8

Here is what I understand :

Future and/or Pre-Arrival purchase…is actually a transaction of busienss and it really comes down what is written on the agreement. [cheers.gif]

So Eric is also right…

As to the correct answer to the title of this thread : my answer is it is false. [stirthepothal.gif]

9

Is this a usage question or a legal question? If it’s a usage question, common usage in the U.S.A. favors the term “futures” with respect to Bordeaux and “pre-arrival” with respect to Burgundy. If it’s a legal question (insert standard disclaimers here) then “futures” is no more accurate in regards to Bordeaux than it is in regards to Burgundy. Presumably it caught on because it brings to mind investment-grade commodity futures, but one important difference between a real futures contract and what you get when you “buy” a Bordeaux “future” is that the date of delivery is not specified. It’s just a vague commitment and it’s the same vague commitment you get when you buy Burgundies before the bottles are in the store. Certainly, nobody should assume that their “right” to the wine when they buy Bordeaux en primeur is any more concrete than their right to any other wine purchased on pre-arrival.

10

No, this isn’t the definition of a future in any legal/investment context I’m familiar with. You do not own any wine, or even any fractional interest in wine, that’s sitting in a barrel. You just have a contractual agreement that you will receive the wine at some unspecified date after it is shipped.

Likewise, I don’t believe that’s an accurate description of a pre-arrival purchase. You have an agreement with your retailer. It’s not just a hopeful promise, it’s a contract. If the merchant fails to deliver, you have whatever remedies are at your disposal with respect to any other kind of contract.

11

It was both a usage and a technical question. Sounds like it’s pretty clear from a usage standpoint that most people refer to Bordeaux as “futures” and Burgundy as “pre-arrival”.

From the technical standpoint, it sounds like the difference is determined by whether or not the wine is in the bottle when it is offered. Futures not in bottle, pre-arrival already in bottle.

From the practical/legal standpoint, sounds like they are about the same?

12

Perhaps that’s the rationale for the difference in usage, though I don’t know why that should be a material distinction from the consumer’s point of view. For what it’s worth, some retailers do offer Burgundies on a pre-arrival basis before they’re bottled, though we can only speculate what deals they have made that make them confident they can deliver.

13

K&L uses both terms for Bdx, with the distinction you note. Perhaps a better way to think of the distinction would be that pre-arrival wines are finished wines.

A former stock broker, Martin Ray, was the first person to sell futures.

Maisan Ilan sells futures, so the expert is incorrect.

14

I’m nto sure it’s a material difference, but to me the difference is that in Bordeaux-style futures the buyer is asked to front money a significant time before release whereas in most pre-arrival situations that’s not the case. Fronting money 2 years ahead of release means that 1) I need to get a price break that at least makes up for the time value of that money and ideally more because 2) I’m taking a small but not zero risk that the business I’ve given money to will go out of business in the interim. Admittedly this is rare but it’s a risk in a way that pre-arrival purchases usually are not. I’m using the idea of prearrival to mean an under 6 month delivery time - for example, buying a wine now that’s in Europe but will be shipped in the fall and delivered in the late fall, early winter timeframe.

15

Someone’s clearly not a Premier Cru shopper.

16

AHAHAHA!!! I almost put in a caveat for PC… :slight_smile:

17

The “pre-arrival” term for Burgundy is simply this: The wine, either as contracted for or in the distribution channels of intermediaries, is offered to retail customers ahead of delivery. With small quantities available, avid customers were eager to secure allocations, and retailers and importers were eager to get pricey wines sold and cash flowing. In the US, once an importer had secured an allocation and with it, the certainty of wine available to sell, retailers were allocated and they in turn offered the wine to customers. For the official channel, this was a routine procedure and the wine was 2 to 6 months from final delivery. Short of the ship sinking or a customs house fire, it’s guaranteed wine. Things are little different for retailers offering “grey” sourced wine. It’s still usually bottled wine (but not always), ex-cellar, but it’s been contracted or purchased through brokers or agents in Europe who are trading in wine that is being diverted from it’s original destination. This is the “market” perfecting itself. It is excess unsold wine, or low cost wine finding a higher paying buyer etc. Problems arise with the fact the wine doesn’t physically move or change hands as fast or as easily as the deal making does. So while in reality they qualify as “prearrival” offerings-the wine literally hasn’t arrived-it is distinctly different from what began as a specific trade practice done by official importers and their retailers.

18

Keith…nice joke and I love it. [highfive.gif]

Rick…sorry [cheers.gif]