Friday, 11 April 2014

Are the 2013 Bordeaux Primeurs worth buying?

Alexandre Thienpoint, the philosophical quiet, owner of Vieux Chateau Certan in Pomerol told me last year that the key decisions for a Chateau owner are:
1. The date of harvest.
2. The precise date and conditions for bottling
3. Setting the correct release price for the wine.

Many chateaux owners are twisted with angst as they are busily working on the third point above. How do you sell the 2013 vintage....and at what price?
When Bordeaux vintages are great ....such as 2005, 2009 and 2010.....the decision(for the chateau owner) might much can I really achieve in this bright new world of incredibly expensive wines?
In 2011,2012 and particularly 2013 when the wines are clearly not as good, the decision can be tricky. However the Bear market financial strategists can still make money, if they are clever.
Lets consider some basic costs:
A new oak barrel costs between 6-800 euros per barrel. A barrel holds 300 bottles. Therefore the ageing cost is 2-3€ per bottle.
Agricultural workers are paid the minimum wage of €9.53 per hour in France.
At each chateau there will also be higher salaries for the technical team, the marketing and administration staff.
New fermentation tanks, new cellars, new bottling lines, new tractors are all major capital costs that have to be considered.
BUT even with variable costs and long term finance considerations the average production costs for a bottle of top quality Bordeaux wine will not exceed 15€ per bottle. And in many cases the cost of production will be between 5 and 10 euros.

So why do First Growth chateaux sell their wine for €600 plus ex negociants in a good year such as 2009 or 2010 and then €200 in a lesser year such as 2011 or 2012?
The First growths are still the most sought after wines in the entire world. The words Latour, Haut Brion, Lafite Rothschild, Margaux and Mouton Rothschild are revered and respected in every country. If you want the best of the best you pay the price.
I recently had some Russian clients in Bordeaux. They exclaimed that if something is great quality you MUST expect to pay far more for that product. That sounds like a simple comment. But it is at odds with much of the bargain hunting mentality or discount culture that pervades UK consumerism at the moment. Wine and various products sell better in the UK if the price is slashed/reduced/butchered. This also confuses the consumer as a previously lauded and respected wine is savaged in price. Therefore at the same time the esteem for the wine is reduced. If you spend 20,30, 50 or 100 years establishing your wine (or brand) and invest in education, marketing, distribution and engendering brand loyalty why on earth would you then slash the price and, by so doing, send out a message to the consumer that there is a fault. Serious long term Bordeaux buyers will look back at the 2009s and 2010s and buy as much as possible. The wines are actually cheaper now than at the Primeur sale.
But this is the rollercoaster of making quality wine in Bordeaux. The climate is such an important factor for dictating the rise and fall of the prices.
BUT nowadays with instantaneous tweets, messages and information the consumer can not be fooled. 2013 is not a great vintage in Bordeaux. There are certainly some good wines. There are some fruity light clean styles of wine. But there are very few wines which can be recommended for long term maturing and investing.
The prices have to be in line. Ie at least 20% less than 2012 in most cases.
I will buy certain wines such as Pontet Canet, Lynch Bages, Grand Puy Lacoste, Domaine de Chevalier, Haut Bailly and Smith Haut Lafitte in order to continue my cellar. But I am aware that these wines will be popped and poured within the next 10 years just as the 2009s and 2010s might be starting to come around  to the start of their drinking window.
One awkward aspect for the chateaux and quite positive aspect for the negociants is that due to the severe selection and weather conditions during 2013 the volume of production is very low. So we will move on quickly.......

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