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More Rumors on 2006 Bordeaux

Posted: Jul 10, 2007 11:03am ET

In between tasting hundreds of Tuscan wines for the magazine over the last couple of weeks, I have been hearing some interesting things about 2006 Bordeaux futures. The US distributors I have spoken to say that they haven't sold a thing, and that consumers are totally uninterested.

One told me that the US market is going to lose its allocations for the best Bordeaux after not buying the 2006s. Maybe you already know that, but each year, distributors are allotted a set number of cases of Bordeaux futures from négociants, who act as agents for the various top name châteaus. They have to buy the same amount, or less, each vintage, regardless of what I write or others or what the market wants. But they have a set amount of wines guaranteed each year, whether it's five cases or 500 cases. So, in effect, they make lots of money with a sought-after vintage like 2005, and much less like 2006 or 2004.

I had lunch today with a mammoth US wine distributor at the restaurant below my house, and I asked him if he bought any 2006 futures from Bordeaux. “No,” he said, looking rather pissed off.

“But, brother, you are going to lose your allocations of Bordeaux,” I said in a rather provocative way.

“Who cares?” he asked, looking at me straight in the eye.

I hear that Russia and the Far East are taking up the slack from the US market, but I have my doubts. Only time will tell. I can see 2006 being another 1997, when the top names sold for too high a price at the beginning, and then sold for less than cost a few years later. At least the quality of 2006 is much better than 1997!

Anacleto Ludovic
paris france  —  July 10, 2007 12:17pm ET
james, i have just read a article about the price release of petrus and le pin. I have an heart attack!!!Le pin, 2.2 hectare, 18 barrels produced so 5400 bottles. Estimated price, 700 to 1000 euros. Petrus, 11.3 hectare, 30 000 bottles. Estimated price 1500 euros at release!!!!As a sommelier i have had the oportunity to try them both in several vintages and in my humble opinion le pin and lafleur are a bit on an higher level than petrus. Anyway, how can someone justify such a diference in production and price. Brand recognition? trend? quality?can you help me on that because i feel a bit lost on that. Did Petrus at such a production level justify such a price..........regards Ludovic
Gary M Lewis
Beverly Hills Ca —  July 10, 2007 1:11pm ET

I can't see America losing a percentage of it's Bordeaux allocations as being a bad thing. I'd argue we have more choices and opportunities for high quality wines than say Russia, with the West Coast producing some outstanding hooch.

I'm not one of those who is royally miffed over the prices of Bordeaux. I'm a "whatever the market will bear" kind of guy. I dont have to buy it if the price to quality ratio is unfavorable in my opinion.

All that being said, some of our large producing Bordeaux-like wineries here in the states (high-production and high-quality; I'm thinking say Silver Oak) will probably increase in price. Demand for the higher-end stuff (or the appearance of higher end) is proceeding unabated. I can see Austrailia and South America becoming a real battleground for wine also.

I visited a few friends in the business in the Santa Barbara County this weekend. One of them is kicking himself for yanking out a 30 year old Merlot and Cab Franc vineyard and replanting with Pinot clones. His baby St-Emilion's were fantastic; his Pinot's are average at best.

I cant believe I'm saying this, but, with all the focus on Pinot in the US right now, and the world-wide demand for high quality Cab-based wines, planting ANOTHER Cabernet Sauvignon vineyard in Sonoma or Napa or maybe WA state might not be a bad idea.

Gary Lewis
Lewis Family Vineyards
Peter Czyryca
July 10, 2007 2:54pm ET
James - great blog as usual, thanks for sharing the conversation. It is funny how folks seem to work themselves into a tizzy over the outrageous Bordeaux prices yet are fine with outrageous Cali Cab prices. I'm sure Cali producers are pleased at dropped Bordeaux allocations - leaves more of the Cabernet pie for them.
Jack Bulkin
July 10, 2007 4:06pm ET
James thanks for the note. We already knew that America would pass on this less than stellar and absurdly overpriced vintage. The Bordelais may strip us of our allocations, but at their new pricing model, who cares? I suspect we may still buy some Bordeaux in the future when the dollar improves vs. the Euro and the wines become more realistically priced. If the Russians and Chinese beat us to them, such is life. I have sincere doubts that all allocations will head East although that is the thoughts of many insiders.
Aidan Campbell
Calgary, AB, Canada —  July 10, 2007 4:45pm ET
James, I had a thought on the Russia/China/Far East market talk. Do you think that maybe this hype surrounding the emerging markets for fine wine is generated by the wineries themselves as a way to justify the higher prices being charged (i.e. if you don't buy it someone else will)? Is it perhaps a bit delusional on the part of the wineries to think that these markets can replace the world's largest which I believe is what the USA is? What happens when prices level out and the speculators leave (see the US housing market)? I guess at the end of the day the wineries can charge up to $1 less than the point at which they can't sell the wine, and are obviously testing this limit these days. I agree with Peter, not sure why people seem so insulted by the pricing but things can also change in the consumer's favor if conditions change. Will be interesting to watch over time.Aidan
Jeffrey Alle Cassetta
Ada, MI —  July 10, 2007 5:05pm ET
James, this is great news! The Negociants didn't do they're job this year with letting the Bordelaise (sp?) price the wines like they did. The Negoc's just figured that they'd pass the wine down the line. I personally hope they get stuck and a lot of them fail. That's the only way that this pricing/system is going to get fixed.
Giuseppe Ciardi
July 10, 2007 7:54pm ET
All markets will have corrections and the wine market is no exeption. But when an operator (FG chateau) sees the price of old Bordeaux going up 100% in one year in many outstanding wines, if he thinks he has produced great juice, he will be tempted to increase the price as well by a large amount and test the market. The good news for them is that they seem to have sold to people like me and broadend the market in other directions if the US has not taken up its allocations. I, for one, prefer Bordeax to California Cabs and do not replace with other regions. Many people seem to agree and in addition the status simbol purchasers buy these wines as a luxury good item. They find it exclusive and worth it. The chateux owners are justified for trying to get the best price they can and they are producing very high quality wine in virtually any year at this point. It may not be the best in 2006, but there are some outstanding wines never the less.
David A Zajac
July 10, 2007 9:27pm ET
James, as much as it hurts to say it, the hell with Bordeaux. I love their wines, but at this price point and the utter arrogance they show, the hell with them. It wouldn't hurt my feelings if the first and second growths didn't sell a single bottle to America for the next 10 years. We will adapt and change, lets see what happens when all these other countries ultimately tell them they aren't worth it either. Bitter, a little, pissed off, a lot. The one thing I have learned in business is to NEVER piss off your best customer for some newcomer with no track record. What you may gain today may be completely lost next year.
William Delaney
Arlington VA —  July 11, 2007 11:16am ET
I am not angry at Bordeaux chateaux for getting as much money for their wines as they can, I am angry that they misjudged the market and got greedy in 2006. James this is what many of us have been saying in different ways for weeks now. We dont mind paying a lot of money for great wine; we mind paying a lot of money for average wine. I had the occasion to try some 2004s last weekend and I was not very impressed. If 2006 turns out to be like 2004 in terms of quality, I think you are correct that it may become another 1997 in terms of price. As always, thanks for the Bordeaux gossip, we love it! Cheers, Bill
Peter Chang
Hong Kong —  July 11, 2007 12:12pm ET
It's funny to continue to see the animosity towards the French for raising prices on a less-than-stellar vintage, especially from the Americans. They forget that, as Peter said, there are some really mediocre Cali wines charging $80 and up. They also forget that many top CA wineries also have a mailing list and an allocation system that punishes you if you don't buy your allocation and pass on weak vintages. Harlan's prices go up just about every year regardless of the quality of the vintage, and people don't seem to be up in arms about that. Double standard?
John Miller
Windsor, CA —  July 11, 2007 12:41pm ET
I understand the frustration of being priced out of your favorite Chateaux, but why is it we always use the word arrogance for the French and never for our own producers? I have had my share of overpriced Napa cabs, but I wouldn't call it arrogance...greed maybe. But give me a break, when did we start to object to a free market economy? You should be angry at the idiots that overpay for status wines, not the wineries (which after all are businesses) that soak them for whatever they can. If I could get $700 a bottle for my wine, you can be damn sure I would charge it, even if I have to go the furthest reaches of the far east. In fact, I just made a deal to export my first shipment to China. Their money is a green as ours (well not literally).
William Delaney
Arlington VA —  July 11, 2007 3:30pm ET
Peter, it is only a double standard if you quietly shell out top dollar for California wines while complaining about the French prices. I prefer Bordeaux and would complain about California Cabernet equally if it appealed to me. Your comment about Americans is blatant stereotyping.
Troy Peterson
Burbank, CA —  July 11, 2007 8:39pm ET
I was thinking exactly what Peter Chang said before I read his post. The mailing list fiasco that we go through domestically seems to be about the same difference as the Bordeaux pricing system. Deal with it folks! If you don't like the price, don't buy the wine! The only arrogance on the part of the Bordelaise is when they say Bordeaux wines cannot be substituted with wines from other regions. Um, they can in my cellar. I don't need to pay twice as much for a wine that will take twice as long to taste 2% better than what I'm getting out of California, Chile and Australia. Word!
Brian Payne
Simi Valley, CA USA —  May 14, 2008 9:55pm ET
Some very insightful comments from knowledgeable readers, including the wonderful folks at Lewis. (Lewis Family - Keep making great Cabernets at reasonable prices! And thanks for making the wines available to all of us. You have earned my support, even in not so good vintages!)Personally, I passed on the '05 Bordeaux vintage; not even a case of Las Cases, my favorite Bordeaux "value" wine. I'm sure the '05 vintage is great wine, but when a case of first growth costs more than a year's out of state tuition, I have to throw in the towel!We enjoy hosting and like to have verticals available for tasting at parties; we'll miss the '05 and possibly the '06 in coming years. It is enjoyable to watch guests contrast wines grown in the exact same soil from different vintages. In my opinion, vertical tastings are a great way to discover wine.Although I love California cabs, I'll miss the Bordeaux if we lose our domestic allocations; but if the prices don't come down, it won't matter anyway, since I won't be buying.Like many of the other commenters, I believe in supply and demand. If the prices are being propped up by anything artificial, they will collapse; and it won't take long. I believe that long term pricing support can only be founded on simple economics. However, if customers become alienated, the demand could be affected. In which case, the economic model may collapse, like it did to some degree after the whole "French thing" following 911. But I continue to be amazed at the pace of wealth growth in our world, which will likely support ever higher prices.Fortunately, for us mere mortals, we have folks right here in California like the Lewis family making terrific Cabernets at reasonable prices which are available to everyone.The guests at our future parties may miss the '05's and likely the '06's Bordeaux; they'll just have to "get over it".
Jr Nunez
alpine,nj —  June 26, 2008 8:56am ET
James,I was wondering when new information/ratings would be coming for the 2006 Bordeaux vintage. As 2007 appears to be a wash, I have been taking a second look at 2006 and would like to make some purchases,en primeur, though some guidance from you with more recent tastings would help.
James Suckling
 —  June 26, 2008 9:18am ET
I won't be tasting the 2006 until December when most have been in bottle for a few months, but it's a very good vintage. I would recommend buying some of the lesser 2005s, if you are not interested in big name labels.
Maxim Kashirin
Moscow —  March 14, 2009 12:29am ET
Given that the crisis in Russia is much deeper than in Europe (since we depend on oil prices and they have been lying on the floor for quite a time), I wouldn't count on Russia for any sales of 2006 Bordeaux. In January Russia nearly stopped importing bulk wine form its main supplier Argentina (-82% compared to Jan 2008). Make your own conclusions.

Bisso Atanassov
Simple Wine News (SWN)
p.p. Maxim Kashirin (SWN owner)

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