Bordeaux 2014: Prices will Rise
The 2014 Bordeaux primeurs draw near. The almost traditional pre-primeurs back-and-forth is already behind us. The UK wine trade called for sensible pricing in an open letter printed here in The Drinks Business. Bordeaux says no, of course.
Once a seemingly innocent device designed to provide early cash flow for the châteaux, which then mutated into merely the first step in a now well-established investment system, in recent years en primeur prices have risen almost interminably, as the châteaux sought to keep more of these investment profits previously enjoyed by third parties for themselves. In recent years this has resulted in a paradox, in that we now have many wines released at prices that are more expensive than mature vintages of the same wine. Add this to the many other criticisms of en primeur – samples that are tasted too early prior to blending, the exclusion of press wines from the blends, and even the failure to complete the malolactic fermentation before tasting in some cases, and of course the continued unproven suggestions of manipulated and misrepresentative samples – and today the en primeur system provokes more ire than joy. Some call for its abolition. Some pray for its collapse. When I read such criticisms I often think of what we would lose if that were to happen. I often also wonder, it has to be said, in what ways those making the calls might gain.
The tragedy is that en primeur as a system does work. It has worked for decades. All that is required is a drop in prices to regenerate lost good will and renew interest. I think anyone looking for significant price falls in the 2014 vintage will be disappointed though. The Bordelais are adept at matching their pricing to the perceived quality of the wines on an upward trend, as we have seen multiple times since the mid-1990s (and probably back further than that), but they are not so good at matching quality and price on a downward trend, as we have seen in the last three vintages. From 2013 to 2014 we have an upward trend in quality once again (you can’t go down from 2013!), and so to expect a contradictory price fall is rose-tinted wishful thinking. This isn’t another 2008 – there isn’t a global economic meltdown brewing. Prices will rise.
There are some obvious counter-arguments to my belief that prices will rise, and so I thought I might look at one or two of these here. The first and most obvious is Robert Parker. Will his retirement from the reporting of en primeur put a downwards pressure on pricing? After all, without Parker’s scores, how will the châteaux set the prices – won’t they just have to flog the wine off cheap? The answer to this question is no. Anyone who believes that Parker’s absence means cheaper wine has looked to the wrong vintage; that might have been the case in 2002 (although I believe it also reflected the despondency of the Bordelais who thought they had a much worse vintage on their hands than was actually the case, a factor that might have also played a role in 2008) but that’s not the Bordeaux we are dealing with today. I sense a more confident critic-free independence in Bordeaux these days. Parker’s absence does not begin in 2014 – do not overlook the fact that Parker didn’t report on the 2013 primeurs either. Because of recent surgery, he visited Bordeaux long after the 2013 primeurs finished.
The 2013 vintage was one that many in the region openly admitted to be the “worst in thirty years”, or “the worst in my lifetime” according to the younger folk. Not a 2002, or a 2008, but a 1984-style washout. So how did Parker’s absence influence the pricing in such a disastrous year? Many prices saw barely a token reduction – cuts of a few per cent – or none at all. Indeed, annoyed by the press having written off the vintage before even coming to Bordeaux to taste, Alfred Tesseron released his wine before the primeurs week had even got underway, and at a very strident price too. This was not really the action of a man who was lost without Parker. No doubt Tesseron was content (he certainly told me he was) as his wine sold very well (as far as the négociants at least, which isn’t quite the same as selling through to a consumer of course). And so if the Bordelais are content to price so aggressively without Parker’s support, why look for anything other than a price rise in 2014, obviously a better vintage?
The other major factor that might conceivably push prices down is the strain that exists in the system. Every year we hear en primeur is at breaking point. And then what happens? It doesn’t break. Nevertheless, there is a huge volume of wine in the system, and the négociants who have soaked up the recent difficult-to-sell and over-priced vintages must now be under great pressure. All the same, I doubt this will have an impact on pricing by the châteaux. I think it will take a major collapse, such as bankruptcy – the result of the banks who are supporting the négociants through these leaner years simply pulling the plug – to result in that. That’s not impossible, although I cannot imagine a bank doing this during the next few weeks as we head into the primeurs season. And those unloved vintages will eventually sell, discounted, or through the foires aux vins, generating cash flow for the négoce once again. So don’t hold your breath for lower prices based on the perhaps precarious state of some of the négociants.
The third reason we won’t see any drop in price is the current state of the Euro. The pound and dollar are both strong, and the Euro is weakening by the day. I have read that some hope this will produce a fabulous buying opportunity outside France, as whatever decisions are taken in Bordeaux the favourable exchange rates will mean a 15-20% reduction in price, on top of whatever cuts the Bordelais might make. But here’s the reality; the Bordelais are fully aware of the exchange rate, and know that potentially lucrative British and American markets are already getting a good deal based simply on these rates. Prices, despite the world’s obsession with Parker, are not set on his scores alone (and certainly won’t be this year). Everything else matters too, from the global markets (one reason why the 2008 prices were slashed) to the naivety of new markets (hence the dramatic price rises as China suddenly fell in love with Bordeaux), even what your neighbour sells his wine for has an impact. And so, of course, do exchange rates. Why lower prices, when all your prospective customers in the UK and the USA are already getting a super exchange-rate discount? This will certainly be taken into consideration when price setting.