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2008 En Primeur – will we see a campaign in Summer 2009?
By Amanda Skinner of Private Cellar
In terms of the growing season, nature was kinder to the Bordeaux Châteaux owners in 2008 than in 2007 - less rot and certainly a better end of season, with a long Indian summer and, in the lead up to the Union de Grands Crus tastings of last week, when the wines are first put on general show, there were positive reports coming from Bordeaux... eliciting the response, "twas ever thus" from many merchants!
The trade internationally have become used to this annual bullishness from the big Châteaux and négociants which seems to have become the norm, regardless of the weather conditions during the growing cycle, since the release of the 1997 vintage. For a region with such an global market and populated by individuals who travel the world, it is extraordinary that on so many occasions they don't listen to their customers or read the economic conditions and the release prices are simply too high to stimulate a market.
During the En Primeur process, the Château releases its wine to the market place in Bordeaux, the wine is purchased by the négociants (French merchants) who take their own margin and then offer the wine on to their customers (wine merchants, world wide). We place our orders, take our margin and offer the wine on to our customers. There is no set date when prices have to be fixed and allocations released, although the First Growths (Châteaux Haut Brion, Margaux, Lafite, Latour, Mouton Rothschild and Cheval Blanc) usually come out with their pricing at the same time, but generally we will expect prices to trickle out throughout April, May and June. There is much angst locally over who releases their price first, to set the market, and speculation as to whether their neighbours follow or flout the pricing trend. Meanwhile the merchants, in Bordeaux and across the world wait...
Allocations all along the chain are based on loyalty and if you refuse to buy one year, you probably won't get your allocation the following year. In earlier decades, merchants might hold the wine that they didn't sell En Primeur and increase their margin to cover their "holding" costs, their clientele would tend to be loyal too, having one merchant who they bought from year in, year out and there was much less speculation and use of wine as an investment, so people were buying across the quality spectrum to accommodate different entertaining requirements. With the reduction in availability of the top wines, the narrowing of margins, the transparency of pricing through the advent of the internet, many more players on the market and the growing band of speculators, merchants are now not prepared to buy non "blue chip" stock in a lesser vintage, priced too high at the outset, which they may have to finance for years, with little or no hope of making a margin to cover those costs. Add a recession to the mix, and En Primeur becomes unviable.
Last year, with the release of the 2007 vintage, there was something of a change in stance with many merchants simply saying "no more" and turning their backs on allocations built up over decades. The quality of the vintage, the collapse of Sterling, too many token price reductions year on year and a lack of economic confidence all conspired to make the vintage an unappealing purchase for many merchants outside the Eurozone.
The UK and US have traditionally been very important markets for Bordeaux but the Bordelais are seeing the potential of new markets developing in Russia and the Far East. There is no doubt that there is a buoyant market for mature wines in Hong Kong and Singapore but I believe that a strong En Primeur market will take longer to establish and if the négociants were banking on the Far East buying the stock of 2007 that the Anglo Saxon markets turned their backs on they will, I suspect, have been disappointed leaving many négociants overstocked with huge volumes of over-priced wine.
In the run up to the Union de Grands Crus tastings major UK players, Farr Vintners and Berry Bros & Rudd, stated publicly that En Primeur prices for the 2008 vintage would have to halve to create a market... the question is, for UK customers paying in Sterling, will a 50% reduction in the Euro cost be enough given the weakness of the Pound?
My colleague Nicola Arcedeckne-Butler MW tasted extensively in Bordeaux last week and her initial impressions are that the majority of the wines of 2008 are of higher quality than 2007 but there is a huge variation in quality across the region. It's impossible to say that it's a Cabernet or Merlot year or to point to a specific commune as being an outright success although she found that St Julien produced wines of a more consistent quality than most. Comparisons of style and quality with older vintages are hard to make too but the general view is that the vintage is probably a riper and more concentrated version of 2001, 1988 and 1983. The successes of the vintage will be categorised as "very good" but whether the wines are worthy of an En Primeur purchase will all hinge on release prices.
As this newsletter goes to press, the notable release is Château l'Angélus where the Euro price is down 40%, year on year. This price makes the new vintage less expensive than any previous vintage on the market today which is the whole basis on which an En Primeur purchase is justified - to secure your wine at the lowest possible price.
I will report further as the campaign unfolds.
Private Cellar specialises in the wines of Bordeaux and Burgundy and comprises a group of individuals who have carved their careers in some of the UK's leading wine merchants, over 20+ years. Amanda Skinner started her career, in 1987, with John Armit Wine Investments, managing wine portfolios for private investors and drinkers. This is her 23rd Bordeaux En Primeur campaign.
Private Cellar Limited 51 High Street, Wicken, Cambridgeshire CB7 5XR. www.privatecellar.co.uk.
