Saturday, 14 April 2012

Chateau Latour 2011 : Change of Strategy

The twittersphere was buzzing yesterday as a result of quite a dramatic decision by Chateau Latour, the First growth wine estate in Pauillac, Bordeaux. The Chateau has decided not to release allocations of the 2011 wine via the negociants and will instead sell the wine at a later date. In effect the Chateau are taking away the opportunity for people to buy at the Primeur/Futures price and then secure stock at the time of bottling. The Chateau will hold on to all of the wine and then release certain quantities in to the market at a later date.
This means a significant investment from the owners of Chateau latour and is contrary to what most chateaux use the Primeur system for.....which is a big contribution to positive cashflow.

The news was announced via letter to the 12 or 13 negociants who had remained to receive allocations. This is not unexpected as Chateau Latour had changed their philosophy over the years.
They had severely cut the amount of negociants with whom they dealt. They had savagely cut people who had loyally bought and promoted their wines. Unfortunately the negociant with whom I work in Bordeaux was one of the victims.....despite Bill Blatch having previously worked for Harveys (who owned Chateau Latour back in the 1970s) and having a very good relationship with the personnel at the Chateau.

Chateau Latour released their 2009 and 2010 wines via their tight distribution network at high prices and with very small quantities. This obviously raised the price and investor/collector desire for this wine within their portfolio.
It is an interesting strategy to try and control the price of your wine in the market. But there is so much money involved in the First Growth wines of Bordeaux nowadays, that they probably feel that they don't need other people to distribute their wines. They want to control the price, control the destiny and control the margin.
I am not sure whether other First Growths will follow suit and I am very sure that many other Chateaux will definitely NOT follow suit, as Primeur sales are contribute to a very positive cashflow.
The Bordeaux system of trade between the Chateaux, the courtiers and the negociants has its critics, but it is a system that seems to function very well to sell and distribute a large amount of wine to all corners of the globe.

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