I am on an Air France flight from Basel to Lyon and then from Lyon to Bordeaux as I write this blog. I need to be in Bordeaux tonight for a dinner with wine merchant Pierre Lawton and a couple dozen of France’s premier wine region's elite producers. I have been in Basel for four days visiting the world’s biggest watch fair. I cover watches for Wine Spectator’s sister publication, Cigar Aficionado.
It’s sort of ironic that I would have been to a fair for expensive timepieces, and now I am going to a wine region known for making expensive wines. Is there any interest in these so-called luxury products with the global recession in full swing?
The fine watch business is down anywhere from 30 percent to 40 percent. Not many consumers are interested in spending thousands of dollars for a new watch at the moment. It’s seemed strange, almost obscene, to be shown fabulous one-of-a-kind watches worth hundreds of thousands of dollars when the recession has badly affected so many people.
But watch producers said that there was a market for these unique timepieces. They say watch collectors still have lots of money, despite losing a good percentage of their net worth. It’s sort of like what I hear about big-time wine collectors.
However, these unique watches only represent a tiny percentage of well-known watch producers’ annual production, whether it’s Rolex, Breguet, Zenith or Brietling. The core of their business is in the $5,000 to $20,000 range, and that business is taking a beating everywhere.
Very few watch producers spoke about reducing their prices, despite the downturns in their businesses. They still thought that they would not lose too much in the next year. Besides, they have made so much money over the past five or six years that apparently they don’t have to worry. “We made more than $40 million in profits last year and that was also a difficult year in the fourth quarter, so if we lose money this year, it’s not a problem for us,” one watch producer said.
I wonder if Bordeaux’s top wine producers have similar thoughts about their new vintage in barrel, 2008. I have heard that the top names produced some very good to excellent quality wines, despite the less-than-ideal grapegrowing conditions during the summer. And I have heard the wines are tasting well this week, as the wine world descends on Bordeaux to taste the new vintage from barrel.
I start tasting tomorrow, and I will also be visiting châteaus. I will be in Bordeaux for a week getting an understanding of the vintage and tasting wines. My thoughts will be blogged daily here, so stay tuned.
But I have no idea how the top names in Bordeaux are going to sell their 2008s, unless prices go back to levels that make people want to buy. Just off the top of my head: How about first-growths, such as Latour or Margaux, selling their 2008 futures to the consumer for less than $200 a bottle? Or second-growths around $50 a bottle? Would that get you excited enough to part with some of your precious money at the moment for a fledgling vintage still aging in barrel in cellars? Maybe you don’t want to buy Bordeaux futures at any price?
My office in Europe did some research on retail prices for currently available vintages of Bordeaux in the United States. And we couldn’t find one vintage of first-growths that sold for close to $200 a bottle. Even such good but nothing special vintages as 1997, 1999 and 2002 were $300 or more. Second-growths were in the $60 or $70 a bottle range. So I am not sure the top names in Bordeaux can price their wines low enough to generate any interest in the market.
Another issue is that if they drop their prices too low, they will devalue earlier vintages, making many of their customers extremely unhappy. Just think if the 2008 futures prices—a vintage I hear is better than 2007—come out at a much lower price than last year’s vintage. Anyone who has money tied up in 2007 is going to lose.
But that’s not my problem. I am in Bordeaux this week to taste and critique the quality of the 2008 wines, regardless of the price. It's sort of like being in Basel last week to review the new watch collections.
Read my complete 2008 Bordeaux barrel tasting package for all my scores and full tasting notes.
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