Bordeaux 2009…. we ain’t seen nothing yet!!!
Author: Simon Staples
It’s been the most hectic, frantic and let’s face facts, bonkers three weeks of my 22 years in the wine business. Seventeen hours-a-day of what seemed like stratospheric prices that we shouldn’t buy at one minute, that then sell out in an hour…….I’ve never seen anything like it.
So is this insanity that’s all going to go belly up or is this a new world order for top wines and are these prices really here to stay?
I have to say, I’m plumping for the second option – we have been here before. The 1996s were double the price of the 1995s and people gasped but bought immediately. The 2000s were double the cost of the 1996s and it seemed at the time that lynch (not Bages) mobs were being formed and we were going to head, en mass, to Bordeaux and raise the place to the ground. But that didn’t happen and the demand was simply enormous. Then the 2005 (a finer all-round vintage than 2009 in my humble opinion) First Growths came in at £4-6000 per case, uh oh, here we go again; WMDs primed and targeted on the Mèdoc, and although in took a few months to sell, we still didn’t push the button. Now those 2005 First Growths are £10,000 a case and heading North.
So I see the prices of the 2009s as very high but sustainable and likely to rise in the short-term, as supply is minuscule and demand at fever pitch. There are several major reasons why I don’t see them subsiding: Firstly, the technology advantages are helping make far better wines than in the past; Secondly, the châteaux are holding far more stock back and dripping cases on the market rather than a deluge and, of course, why would they crash their own wines’ value? But probably the most significant factor is that in 2005 we did not have China as a massive player in the fine wine world, as we do now. What is slightly scary to me, as a wine-lover as well as a merchant, is that we have not even seen the tip of the iceberg of demand from this incredibly exciting market yet. If you think that the top 100 “brands” of Bordeaux only produce a tiddly one million cases and are actually making less year-on-year as they try and improve their already exceptionally high quality……..we ain’t seen nothing yet!!!
Interesting post. And an amazing time to be selling wine.
One thing that remains a mystery to me is how much actually gets put out for sale.
What percentage of, say, 2009 Lafite is now sold and what percentage is held back at the chateau? I appreciate you can’t possibly actually know this, but I’d be interested in what is your best guess.
And, four years on, what about 2005? Are there still vast numbers of cases still sitting in the chateau or are they pretty much all ‘out there’?
Then, a related question. What happens to back vintages in situations like this? After 2000 came out, how long did it take for 1996 to catch up in prices; after 2005 came out, did the 2000s take a leap in value?
In a way, my question is this: is now the time to buy 2005 before that their prices head even further north, or is that just turning 2005 into part of a world wine price bubble, given that a lot of 2009 has been bought by investors rather than drinkers.
Or does it go by region: i.e. a sudden step change in Bordeaux prices then feeds into, say, the Rhone? Or is the Rhone just an independent region?
Anyway, a lot of questions, but then the market’s in a crazy kind of place, it seems to me.
Interesting but slightly worrying post – I have bought on 2009 – but not what I was planning. Either way am glad to see my purchases come out well and endorsed on Livex.
This time round I decided to step back from the ultra mad prices and used my surplus funds to back fill. As Simon Staples says the reality is that the global marketplace has/is changing dramatically, and there are now huge purchasers of fine Bordeaux in Eastern Europe, Central and South America and they’re changing the scenario. Personally, I hope the traditional markets of England and US aren’t in the process of being by-passed in favour of such other buyers and that the Bordelais don’t short-sightedly fail to recognize the importance of their longstanding loyal customers otherwise there will surely be a transfer of power in the markets.
I think it’s important to consider the purchasing power and currencies of emerging economies when considering the price increases of the wine in Euro’s. The Brazilian Real has appreciated by 50% relative to the Euro since 2005 and real wages have far outpaced those in Europe. Although the prices for 2009 are probably on the expensive side, the prices have not increased as dramatically in emerging market currency terms.
Hi all – so sorry I haven’t got back to all your comments, it’s been manic here with EP (some big boys have released this week) and I’m off for a (long-awaited) holiday in about 1 hour…I’ll get back to you all when I return!
Simon
Wasn’t really expecting a response but I do hope you have a lovely holiday
Simon I do hope you had a good holiday & enjoyed your well earned break?
Re 2009 En Primeur pricing, sustainability & market analysis, it would be very interesting to hear an update on your post now that the dust has settling on the 09 campaign. Has demand died down?
From what I’m reading elsewhere the UK was the only serious 2009 purchaser, by all account the US was a bystander and early expectation of strong sales in the East proved inaccurate. This latter group purchasing at the highest end of the market only. If these reports are accurate then at a global level the campaign might be considered patchy or fragmented as opposed to strong?
With this in mind is demand by location more like the below?
France – Drinkers market
US – Primarily a price sensitive drinkers market
Asia – Brand concuss market currently interested in the high quality end only. 1st growths & selected others being the Prada & Mercedes Benzes of the wine world
UK – Sophisticated multi dimensional market, split between genuine drinkers & investors. The latter group probably being sourced from the former.
If the above is true then a number of producers just below the top brands might find it difficult to sustain their current pricing policies as the only EP market for these is the UK. For example a 2nd growth like Lascases comes in at a hefty price. The US won’t pay it, the France won’t drink it, it’s currently not mega branded for Asia and in the UK it sits uncomfortably above most of the drinkers but below the investor. If it and others like it don’t achieve the magical 100 Parker points will the secondary market pay? Will prices soften?
You’re probably in a much better position to judge the effects new media, web site advertising, internet payment systems & the blog world have influenced the wine market. From an outsider looking in it would appear that these have captured & educated a large number of new purchases for fine wine and the direct result is a massive increase in the potential pool of EP purchases. Is this combined with the drip feeding of wines to the market causing a supply/ demand imbalance and thus allowing chateaux owners to increase prices exponentially?
EP purchases could easily be considered as the early adopters on a product curve. The early adopters can generally be considered as the least price sensitive product purchases. The real challenge for the chateaux’s & the merchants could prove to be driving the brand through the latter stages of the product curve. The market at the very top end seems to be doing this exceptionally well e.g. Lafite in China. On the other hand America looks impatient with even Parker criticizing pricing. Without a 1st tag or consistent history of producing 95+ scores the non 1st growth/ non high end right bank wines may well find maintaining these prices impossible. It’ll be interesting if the new world order breaks the 1855 and the other classifications into the haves & have nots just as the inception of the classifications represented a barrier of entry for those outside the classification either from Bordeaux, France or elsewhere.
Hi Ray,
Your take on the global distribution of the 2009s is spot on with mine (and also what I have gleaned from other merchants). Approx a third of the value but only 10% of the volume was sold into Asia (with 90% of that into HK and of that, 25% into mainland China).
Bizarrely we had huge demand and sales for the “super seconds ” i.e Palmer, Las Cases, Angelus, Cos, Pichon Lalande which I was amazed by. This also feels like an acceptance by the traditional First Growth drinker, who wants the best but can’t warrant spending today’s 1st Growth prices, as they remember the 2004s for instance. These will have to drop significantly (50%) next year even if 2010 is as good as 2009. Pontet, Lynch, Haut Bailly and Leoville Poyferre will permanently replace the super seconds, as all are repositioning themselves price-wise (and qualitatively) and probably won’t drop much and will take the chance they won’t sell brilliantly next year. Of course this is speculative but how I feel now. I seriously see China being a huge buyer of the top 100 “brands” as I mentioned before and India is becoming increasingly thirsty. I’m sure with mounting pressure from the “drinking class” it’s a matter of months not years before their enormous import tax issue is resolved.
As a wine lover in my early 40s I’m buying up more 2004s, 2005s, 2006s and lesser 2009s for my future drinking pleasure, very conscious that these prices are only going one way.