For the longest time, Bordeaux has been the envy of most vintners everywhere.
Its wines have history, tradition and prestige and are often in great demand. The top classified-growths produce thousands of cases that command top-rung prices. Most of the elite wines are sold before they're even bottled. As a business model, it has few peers.
Yet apparently it's not perfect. Last week, Château Latour announced it would abandon the long-time tradition of selling wine futures, a move that sent shock waves through the Bordelais wine trade, primarily because of Latour's status. The Pauillac first-growth also addressed issues related to how its wines are handled once they leave the château's chai.
Selling wine futures has long been controversial. Paying for a case of wine you've never tasted, even at a discounted price, is a risky practice. Reviewing young wines out of barrel is a challenge, since those wines are still undergoing rapid evolution, and samples may not be representative of the finished wine. On that count, however, the Bordelais do have a strong track record. Most of the barrel review ratings (given in a range at Wine Spectator) more or less line up with final reviews of finished bottles.
It would seem that from a château's perspective, getting customers to pay for a wine in barrel two years before it's released is easy money. But apparently it isn't all that cut and dried. For years château owners have lamented that négociants and middlemen reap a greater profit than the owners themselves pocket.
According to Latour's general director, Frédéric Engerer, Latour wants to exercise greater control over when the wines are released, who sells them and at what price. He also said the château will only make the wine available for sale until after it is bottled and when the estate feels it is ready to drink. Latour is considering holding its grand vin seven years after the vintage. That's a huge turnabout from the attitude that "we'll make the wine, you cellar it."
Engerer also addressed another big issue: how a wine is handled and stored once it leaves the château. Once a wine leaves a winery, it is at the mercy of the distribution system. If it isn't properly handled, especially with regard to temperature, a wine exposed to excessive heat can quickly be ruined. But those risks occur no matter when the bottle leaves the château, just after bottling or years later.
Assuming the wine continues to appreciate in value, Latour stands to make more money by pocketing the profits that are currently split with brokers and négociants, as well as shortcutting the sale of older vintages on the secondary market, analysts say.
For consumers, the whole futures gambit has long been a mixed blessing. On one hand, you lock in an allocation at what you hope will be a discounted price. In many years, the futures discount softens the blow for what often ends up being ultra-expensive wines. The 2009 Latour now sells for $1,600 a bottle, up from an average price of $1,470 when the wine was first offered en primeur in 2010. Occasionally some vintages sell higher as futures than when they are released. For the Bordelais, the media attention to infant vintages alone amounts to a publicity machine.
What seems odd, too, is Latour seems to believe that consumers will prefer its wines with several years of bottle age at a time when most Americans are drinking their wines younger than ever. In countries where producers age their wines for years, they often find the wines are harder to sell. The reason: Aged wines taste older and tired compared to younger ones.
I can't imagine the rest of Bordeaux following Latour's lead. Its owner, François Pinault, is one of the wealthiest men in France. Latour may not need the cash flow, but other châteaus do. They also need the support of the wine trade. The en primeur selling method is deeply rooted within the Bordeaux culture. Only a château with the wherewithal of Latour could afford to challenge the system. This isn't the first time chateaus have dropped out of the futures program, only to return because they need it and it serves them well. It's worth remembering, too, that for all the top growths' affluence, much of Bordeaux is in far worse economic shape. Walking away from up-front money hardly seems like a wise strategy.
Daniel Braun — Princeville, Hawaii, USA — April 18, 2012 9:37pm ET
Josh Moser — Sunnyvale, CA — April 19, 2012 12:32pm ET
Christian Binnig — Naperville, IL — April 19, 2012 5:46pm ET
Staffan Bjorlin — Los Angeles, CA — April 20, 2012 1:40pm ET
James Laube — Napa, CA — April 20, 2012 1:55pm ET
Michael Myette — Sacramento, CA USA — April 20, 2012 6:51pm ET
Vishal Kanji — Portugal — April 23, 2012 6:03pm ET
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