Bordeaux: A Reflection on the 2012 En Primeur Campaign and the Current State of the Market

It was, in essence, all over by the end of May; one of the shortest and most underwhelming en primeur campaigns anyone can remember and the second comprehensive failure of its type in consecutive vintages. The key difference between 2011 and 2012 was that the first growth wines sold in the 2012 vintage but the 2011s fell flat; otherwise sales of all other wines were as bad the previous vintage.

The blame for this collapse in the en primeur Bordeaux market can be laid firmly at the door of the Château owners whose detachment from the final consumer has created a disconnect that unless corrected will jeopardise the whole structure of this form of business as it currently exists.

Since as long ago as 1996, the Château owners have gradually taken a larger and larger slice of the cake, leaving the rest of the parties in the supply chain with less and less margin to play with. This chain has also become part of the problem. As it was originally designed, the Château owner employed a courtier to distribute his wines to the negociants who in turn sold the wines to the merchant, who then sold them to their customers. This enabled the Château owner to concentrate on the production of the wine, while at the same time spreading his wines among a number of negociants who maximised their distribution. While the wines remained reasonably priced the system worked well and merchants built up allocations from various negociants, as they in turn did with the individual properties. The system helped maintain a position where demand for the most part was kept high and the merchants were able to persuade their customers to take sought-after wines in less good vintages in order for them to preserve their allocation of those wines in the better years.

Fast forward to today and the system, if not broken, is under severe strain. The main players are still in their respective positions but during the campaigns of 2009 and 2010 the prices of the best classified Bordeaux reached unmatched heights, so much so that the only people who could afford the best wines from 2010 were those with the deepest pockets. This is a very small number of individuals with the consequence that, even in this exceptionally fine vintage, there was enough volume available for these buyers to obtain almost any wine they wished, providing they had the money.

The key effects of this situation have been brought into sharp focus in the last two campaigns. The wines remain too expensive, and whilst in the past some of these wines have sold, as buyers protected their allocations, this is no longer the case. The rich realise that it is no longer necessary to buy wines they “don’t really want” as they have in the past,  because they know that when they want to buy the next top vintage the chances are that there will be enough of these wines to go round without having to worry about preserving allocations. The evidence of the last two campaigns would suggest that the time when only in the best vintages will we see a reasonable volume of sales has already arrived.

Why don’t the prices reflect the prevailing economic climate and the general quality of the vintage? The excessive pricing is directly linked to the fact that the Château regard the wine sold as soon as the wine goes to the negociant – a position at only just half way on in the journey to the end user, i.e the potential drinker. Until now, circumstances have meant that the negociants have continued to buy up their allocations. After the success of 2009/2010 their cellars were empty and they were happy to take the 2011s. These did not sell well and while the largest firms are sufficiently well placed to fund unsold stock and were still buying the 2012s this situation is not viable for the smaller firms. The over pricing of wine from difficult vintages has continued in 2012, despite the fact that negociants are now stocking and funding unsold wine, a fact either not recognised or ignored by the properties. Until the Château are faced with the prospect of funding unsold wines themselves in their own cellars, only then is the situation is likely to change.

The excesses of 2009 and 2010 have finally disenfranchised the traditional buyer who would year after year buy a selection of properties, many of which were the cornerstones of the typical “Englishman’s cellar” – the likes of Talbot, Gruaud Larose, Pontet Canet, whose prices were all under £250.00 per case as recently as 2005. The present reluctance for people to engage in the en primeur market has had a serious effect on the sales of classified quality Bordeaux from older vintages, resulting in a sluggish market that is of no benefit to anyone (except perhaps to put out of business the charlatans that briefly sprung up like weeds to exploit the gullible when there were large headline profits to be made in quick time, before the recent bubble burst).

Bordeaux is in a difficult place at the moment and the responsibility for an upturn in its fortunes is in the hands of the producers. There needs to be a recognition that their wares are overpriced and that despite what they have been lead to believe, there really is no imperative to purchase their Bordeaux wine; the modern fine-wine world is full of fabulous alternatives, both for delicious drinking and profitable investment, and they need to understand that and offer a competitively priced product from which we can all profit, and not just the château.

Patrick Barran – Clarion Wines, July 2013

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