The disappearance of Diageo Chateau & Estate Wines is a popular subject at the moment in Bordeaux. Late last month, news broke that the British drinks giant is abandoning the sale of Bordeaux wines, saying it was too expensive to continue, among other things. The exit of one of the most important distributors of the wines of Bordeaux could have important ramifications on the prices and sales of those wines in the United States. Prices in the States are dropping, and this latest development seems to be driving them even lower.
During lunches, dinners or meetings in France’s premium wine region at the moment, conversation inevitably turns to Diageo and the distribution of fine Bordeaux in the United States. Bordeaux producers are obviously concerned. Some are paranoid.
It’s easy to understand why. Diageo was the biggest buyer and distributor in the United States of fine Bordeaux for about four decades. In its heyday, it had the world’s biggest allocations of all the best names of Bordeaux every vintage, from Lafite to Pétrus. But those days are over.
Diageo had a reported $100 million in stock, which it sold mostly at huge discount to Joanne, a major Bordeaux négociant, according to press accounts. The French wine merchant is now selling it at a discount in the U.S. market. There’s been a number of press reports already on how the influx of Diageo stock has disrupted the market.
I honestly don’t understand what the worry is. Bordeaux has always boasted about its great distribution system of négociants who can freely sell all over the world. If the U.S. market wants the wine, it will find it.
The problem is that many distributors and retailers in the States became addicted to Diageo’s incredible purchasing terms, whereby it offered buyers what in effect was free financing until the wine was delivered. In other words, a wine merchant in the states could order Bordeaux futures and did not have to pay for it until the wine was delivered. Moreover, they could cancel their order if they wished to before delivery.
“It was too good to be true,” said one first-growth representative this week.
Think about what a money-spinner it was for the wine trade in the United States. It could sell the Bordeaux futures and take payment; yet it didn’t have to pay for two years. I don’t know the legality of all this, or what or how the futures money was used until the wine was delivered in reality. But it sounds like a deal that was “too good to be true.”
Apparently many of the top retailers and wine merchants in the U.S. market already saw the writing on the wall, and they began awhile ago dealing directly with Bordeaux through various négociants and even châteaus. They are willing to finance Bordeaux futures themselves, which they should if they are serious wine merchants.
But some Bordeaux wine producers are now afraid that smaller wine merchants in places other than the major metropolitan areas of America will find it difficult to buy their fine wines. “It’s one thing to be in New York or Los Angeles, but what about Kansas City, or Akron, Ohio, or somewhere else like that?” said a second-growth owner.
I think that if there is a will, there is a way. And if there is a great vintage like 2009 on the way, American wine merchants as well as consumers will get the wines they want. We are resourceful wine lovers, when we need to be, and besides, the world is a smaller place with all the new communication technologies and knowledge out there.
Fred Brown — Maryland — December 4, 2009 7:37pm ET
Matt Scott — Honolulu HI — December 5, 2009 2:26am ET
David Gussmann — Washington, DC — December 5, 2009 6:26am ET
James Suckling — — December 5, 2009 8:20am ET
Kirk R Grant — Bangor, Maine — December 5, 2009 2:02pm ET
Johnny Espinoza Esquivel — Wine World — December 5, 2009 3:17pm ET
Michael Myette — Sacramento, CA USA — December 5, 2009 4:45pm ET
Steve Kirchner — huntington beach, ca — December 5, 2009 5:19pm ET
Rio Hill Wine & Gourmet — Charlottesville VA — December 5, 2009 6:02pm ET
Bert Pinheiro — Baltimore Maryland — December 5, 2009 7:59pm ET
James Suckling — — December 6, 2009 5:42am ET
Douglas Johnson — Appleton, WI — December 6, 2009 10:19am ET
Nick Gangas — Chicago — December 6, 2009 8:11pm ET
Tyler Binney — Georgia — December 6, 2009 11:24pm ET
James Suckling — — December 7, 2009 6:45am ET
Ben Pierce — Warrensburg, MO USA — December 7, 2009 1:08pm ET
Idiart — Bordeaux France — December 8, 2009 3:35am ET
Massimo Marinucci — NY — December 8, 2009 10:52am ET
James Suckling — — December 8, 2009 12:44pm ET
Massimo Marinucci — NY — December 8, 2009 1:15pm ET
Nate Rose — Houston — December 9, 2009 9:29am ET
Heather Boysen — Sioux Falls, SD — December 9, 2009 1:12pm ET
Rio Hill Wine & Gourmet — Charlottesville VA — December 9, 2009 2:21pm ET
Eric P Perramond — Colorado Springs, CO — December 9, 2009 3:43pm ET
Steve — California — December 10, 2009 9:23pm ET
Lee Hammack — Virginia — December 12, 2009 9:48pm ET
James Suckling — — December 13, 2009 3:14am ET
Nancy H Harper — Birmingham, AL — December 13, 2009 6:56pm ET
Lorenzo Erlic — victoria canada — December 13, 2009 8:27pm ET
Jamie Sherman — Sacramento — December 14, 2009 4:34pm ET
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