Bordeaux, lights and shadows after this year’s En Primeur. En Primeur is the method invented by the French centuries ago to sell and, above all, set preview prices for the top labels of the Bordeaux, around 250. Well, the latest vintages on the market, especially the 2021, have left a bad taste in collectors’ mouths. Traders and buyers, the soul of this system, are already disappointed by high prices compared to the sometimes disappointing quality, they were greeted with downward prices for the 2023 vintage presented this year at En Primeur with a significantly reduced average priceon average 21.5% according to Liv-ex.
DROP IN CONSUMPTION, PLANTING OF VINEYARDS
Wine production in Bordeaux, one of the most prestigious areas in the world, but also among the largest, is in great crisis. It is above all small producers who suffer, forced to “sell off” their wine following a crisis decisive increase in costs and the decline in consumption. The big brands make history in their own right, but even this supremacy is shaking in light of new trends and among the grand crus there is no shortage of even more pronounced reductions, as much as 30%. The French government was forced to intervene by focusing on the distillation and massive explantation of vineyards. But it’s not enough. We need a more decisive marketing and sales strategy.
A CRISIS OR AN OPPORTUNITY
Decanter experts, among the guides who influence the ups and downs of the world market, believe that the crisis situation could prove to be aopportunities to invest, to buy at more affordable prices, both on the primary market and on the secondary market, which is also losing share, aiming for a future rise. The indication also from analysts of the Lv-ex it is to scour the region better, look for opportunities beyond the 4 or 5 brands that have continued to make money and are unobtainable.
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EYE FOCUSED ON PURCHASE REACTIONS
All eyes are on the purchase reactions relating to 2023. “We wait with bated breath”, write the analysts of Liv-ex, an acronym which stands for London International Vintners Exchange, the World Fine Wine Stock Exchange. The question is: will the cut be enough to reignite the market? At first glance it seems not.
THE PRICE FORMATION MECHANISM
The courtiers, the mediators, know the quality of the châteaux, the performance of the vintage, but also the requests for quantities from the négociants, i.e. the traders who buy, and therefore help the châteaux to set a selling price of their wines. Once fixed, these labels are sold almost exclusively to shop owners, at the same price for everyone and at the same time. More recently, for 40 years now, the price has also been influenced by the scores that the most influential critics assign to wines sold en primeur.
THE BET ON THE FUTURE
Buy fine wines when they are still maturing it is one bet on the future, because the tastings are done on barrel tests of the last harvest, which will be available on the market, in bottles, only after 18-24 months. Of course, the purchase price is decidedly lower than that at the time of actual marketing, which is why the En Primeur is so long awaited. But we need to get the future trend right. When the wind is favorable, it’s fine. It is in the most difficult moments that decisions become more careful. Let’s take the 2022 vintage, considered excellent and highly appreciated by critics. The shopkeepers bought, but complained about the prices too high. A year later, many find their supplies almost full. The key point is whether the release price will be accepted by the secondary market and, above all, to an extent that guarantees a positive trend. Gains or losses? This is the dilemma.
ALL INDEXES FALL, TRADING SLOWS DOWN
Currently on secondary market the situation, say Liv-ex analysts, is contrasting. After a whirlwind of an En Primeur campaign, the picture for Bordeaux is mixed. The Bordeaux 500, the benchmark that indicates the health of this region, recorded a decline of 0.7% month on month, total in the last 12 months 10.3%. The Right Bank 100, the right bank just north of the Dordogne, fared better, with a decline of 0.4%, while the Left Bank 200, the left bank of the Garonne, fell by 0.6% month after month. On the Right Bank we find appellations such as St-Emilion and Pomerol. On the Left Bank, St-Estèphe, Pauillac, St-Julien and Margaux.
WEAK TRADING VOLUME
Liv-ex analysts highlight the worst performer, Bordeaux Legends 40, the index which has as its basket a selection of 40 Bordeaux wines from exceptional older vintages (since 1989): had a decline of 1.4% month on month. Prices drop, activity slows down. Secondary trading value and volume were weak in May, decreasing month over month. The labels handled and the individual wines exchanged also decreased.
DOWNWARD DOUBLE-DIGIT OUTPUTS ANALYZED BY WINELISTER
Château Batailley, the first estate out of the gate for the 2023 en primeur, released the 2023 vintage at 11.9% lower than the 2022 sales price. But then it got worse and worse. Château Margauxwhich was judged the best Bordeaux for the 2023 vintage according to a survey by Liv-Ex), has decreased by 30%, setting the price per bottle ex négiociants at 360 pounds against a £516 release price for the 2022 vintage; Mouton Rothschild 339 against 518, Lafite-Rothschild 410 against 595. The list is long. Yet, comments the research and analysis portal WineLister – an offshoot of the French newspaper Le Figaro – the declines were not enough to restart the market.
SUPER ENELOGIST MICHEL ROLLAND ATTACKS THE PRODUCERS
After the unsold and downy mildew, there is also the wind blown against us by the experts. Michel Rolland, renowned and influential global winemaker, grew up in Château Le Bon Pasteur, the family estate in Pomerol. he said in an interview with The Times, that the historical crisis that the region is going through depends a lot on the superior attitude of producers and on the wrong strategies. He blasted the trend of indulging the “misconception that consumers no longer wanted the classic full-bodied claret” and began producing lighter wines that Rolland believes are “almost indecent in Bordeaux”.
THE MARKETING MISTAKE
Another big mistake, again according to Rolland, is the marketing and the determination of the price which, he claims, is done with a certain condescension. In his eyes, the price of Bordeaux is akin to proclaiming “We are the most beautiful. We are the best,” regardless of the quality of the wines, the state of the fine wine market, and the wines produced anywhere else in the world. Is the price the definitive sign of Bordeaux’s “arrogance”? If so, releasing 2023, a good but certainly not exceptional year, at an average price 21.5% lower than the previous one seems too modest, say Liv-ex analysts, compared to the exaggerated increases of past years.
