Buying En Primeur – risky gamble or smart investment?

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Bordeaux 2015 en primeur wines waiting to be tasted

Bordeaux 2015 en primeur wines waiting to be tasted

Indian wine collectors are eager to learn about the latest vintage of Bordeaux well before the wines are released on the market. En primeur wines are barrel samples that differ in varying degrees from what gets bottled eventually and released up to two years later.

Coming after four lesser vintages since 2011, the 2015 en primeur wines were received with keen anticipation at the beginning of April. The weather and growing conditions were such that producers’ expectations ran high, both in terms of the quality and quantity of the harvest.

But why taste wine futures? Is there any point to it, considering en primeur samples may come from barrels that are not a true precursor of the final blend, and are unfinished wines that still have several months of development ahead of them?

Wine merchants and journalists taste these wines every year in order to assess their quality, with the intention of booking them at a lower price than what they expect the market price to be when they are launched a few years later. Another consideration is that their preferred lots might be sold out, if a purchase is left too late.

Who buys en primeur?

Traditionally, the most important buyers of Bordeaux en primeur are the French and UK wine trade. Consumers and private collectors account for only a small proportion.  Selling wines en primeur to end-consumers is relatively recent, and started in the mid 1970s just after the oil crisis and wine-market crash. The US, generally speaking, is not actively engaged in en primeur purchasing even though it is a big market for Bordeaux and this year there seemed to be more Americans present at the tastings.

According to Liv-ex (the global B2B for fine wine), buyers of en primeur wines in the last few years, with the exception of the 2012 vintage, have not fared very well, gaining very little advantage over the actual price of the wines when released. Consequently, en primeur sales have seen a downward trend in the recent past. As a percentage of total sales of each vintage, en primeur sales at Liv-ex fell to an abysmal 1% for the 2013 and 2014 vintages compared to 15% and 11%, respectively, for the 2009 and 2010 vintages. The spike in Liv-ex en primeur sales of certain vintages such as 2009 & 2010 was partly due to the booming Chinese market, which has now levelled off.

Is there any point in buying en primeur? Prominent chateaus have dropped out of the system, notably, Latour and Yquem. Asked about the future of the en primeur system, James Molesworth, Wine Spectator magazine’s Bordeaux expert, stated in a Liv-ex interview “little will change. Only a few elite chateaus can afford to hold back greater portions of their inventory, or leave the en primeur market altogether”.

Going on to explain, he said that most chateaus need “the power of the place de Bordeaux”, along with the negociants (merchants) and courtiers (middlemen) to help market the wine, and tide them over financially before the wine is bottled. “It’s still a fairly efficient market, and the negociants that are well capitalised and smartly run are a critical cog in the machine,” he said.

Jean-Michel Cazes, a veteran observer of the Bordeaux scene whose father was mayor of Pauillac and who celebrated his 80th birthday recently, supports the current system of leaving the selling of Bordeaux wines to the négociants – who have always bought en primeur and sometimes even sooner. His argument is that it is difficult for middle-ranking classed growths effectively to market their own wines around the world.

The question then is: will the perceived quality of the current vintage be strong enough to revive the en primeur market?

That depends on how the 2015 wines are priced. “En primeur works when the price is right,” says Neal Martin who was recently named Robert Parker’s successor in the Bordeaux region. He expressed his concern about chateau pricing strategy in an interview to Liv-ex, suggesting that some chateaus are more concerned with pricing vis-à-vis their competitors than pricing at the right level for consumers; he called it “a dangerous game to play”.

Bordeaux has dominated the fine wine trade so far. What is different now, as Jancis Robinson points out, is that competition from other French regions such as Burgundy and Champagne has increased. Burgundy has captured the interest of Asian wine enthusiasts. Sales of Italian wines outstripped those of Burgundy last year and Champagne doubled in volume. There is competition from the new world, too, with growing investment opportunities for wine collectors, particularly in California.

That said, Bordeaux is still considered as royalty among the fine wines of the world and considering both quality and volumes, it is not likely to be eclipsed in the world’s estimate anytime soon. The following list compiled by Robinson demonstrates what a good buy a Bordeaux wine can be.

These wines have, over the last 10 years, averaged under €100 a bottle and, according to Liv-ex calculations, have significantly gained in value. In decreasing order of price the wines are:

 

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Beauséjour Duffau, St-Émilion         Lynch-Bages, Pauillac
Clos Fourtet, St-Émilion
Smith Haut Lafitte, Pessac-Léognan
Beychevelle, St-Julien
Calon-Ségur, St-Estèphe
Duhart-Milon, Pauillac
Clerc Milon, Pauillac
Brane-Cantenac, Margaux
Talbot, St-Julien

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