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The Origins of En Primeur


Posted: Mar 19, 2007 2:19pm ET

What is the en primeur system and what is its purpose? Many of you might find it hard to understand this 50-year-old system of selling wines in Bordeaux.

After the second World War, most of the châteaus were very poorly run and very much underfinanced, and they struggled to pay their bills. Moreover, their markets were basically limited to the U.K., Benelux, France and Scandinavia. The base of consumers was much smaller than it is today, and the wine media was nonexistent.

The en primeur trade was initiated by the dominant Bordeaux wine merchants of the day, including Ginestet, Calvet, Cruse and Cordier, among others. They agreed to buy wines from top châteaus prior to bottling and pay in advance for them. It was not unusual to even buy wines before the harvest with anticipation of the quality and, above all, quantity. A real poker game!!!

In those years, apart from the first-growths, the châteaus were far less powerful, rich and dynamic than the Bordeaux wine merchants. This system allowed the wine merchants to set their own price, and the châteaus were also very happy to have some cash in advance. I have to confess that in those years wine quality was not so much of an issue in the discussion. Quantity and up-front cash were the main issues.

In the 1970s, both the world market for Bordeaux wines and the fine-wine press were beginning to expand. By the end of the decade, the en primeur system had changed: What had been primarily a source of financing for the châteaus became an efficient way for the wine merchants to secure large stocks of wines from the best estates. For the first time since 1850, the châteaus started to be profitable and were able to invest in new winemaking facilities and improve their vineyards’ management.

1982 was a key vintage for the en primeur system as it was the first great Bordeaux vintage since 1961, and one that offered quantity as well as quality. It was also the year when the U.S.A. really started to buy Bordeaux wines en primeur. As it turned out, Americans who bought their 1982s as futures made very good investments.

From 1982 to 2000, the en primeur system was the best way for the consumers to buy Bordeaux wines at very affordable prices and secure in advance the numbers of bottles that they wanted in their cellars. These 17 years of prosperity also helped the châteaus to invest in quality and equipment as well as in replanting vineyards. Thanks to this unique system, more progress in quality was made in Bordeaux in this period than in the previous 100 years.

This year, the vintage 2006 will be offered by the châteaus to the Bordeaux wine merchants beginning in late April, who will sell the futures contracts to other merchants—importers, distributors and retailers—who will offer them to consumers. The wine will be bottled in June or July 2008, then delivered to the en primeur buyers.

With this unique system, the trade and consumers have the possibility to purchase great wines before they are sold out, at prices (even though still high) that are likely to be substantially cheaper than the current market price at final release. It seems that with the short supply of great wines from around the world (including California) and the rise of new wine aficionados, Bordeaux’s en primeur system will continue to flourish.

Guus Hateboer
Netherlands —  March 19, 2007 4:01pm ET
Indeed: "From 1982 to 2000, the en primeur system was the best way for the consumers to buy Bordeaux wines at very affordable prices...". But not anymore.You forgot to mention how the system dramatically changed into one big hyped circus between 2000 and 2006, where the word 'affordable' has lost its meaning.
Steve Wooden
Montreal, Canada —  March 19, 2007 6:19pm ET
Jean-Guillaume, you forgot to mention the price manipulation by offering the futures in multiple "tranches". Don't you also find it disturbing to have so many levels in the distribution chain, every one of them taking a piece of the pie, and often for doing very little?
Greg Malcolm
St. Louis, Missouri —  March 19, 2007 6:23pm ET
Jean-Guillame,Thank you for taking the time to participate as a guest bloger, during a very hectic time of the year for you. I have enjoyed your initial posts. I would be most interested to hear your comments regarding who you, and the other chateaus, view as your primary customer. I know that you phisically sell to the negociants. However, do you veiw them as your primary customer? Or, do you view your primary customer to be the importers/distributors or the actual wine consumer? Thanks again, and welcome! Greg
Karl Mark
Geneva, IL. —  March 19, 2007 7:33pm ET
Thank you for the explanation, it is a very interesting system. I do not agree that there is a short supply of great wine in the world. With relative ease I can go to a nearby store and purchase great wines from Italy, Pinot from California and Oregon, Syrah from Australia, Sauvignon Blanc from New Zealand and Cabernet from California and Chile. Don't get me wrong, I absolutely love Bordeaux, but perhaps you don't realize how easy it is for the American consumer to find and buy great wines from around the world.
Phillipe Bernard
Montr? —  March 19, 2007 9:01pm ET
M.Prats, the fact that we can buy today some of the best ' cru class¿ from Bordeaux in a stellar year like 1982 (and ready to drink ! )the same price as the '05 en primeur, shows that they're might be a problem with that system.Meilleurs salutations,
Troy Peterson
Burbank, CA —  March 20, 2007 1:17am ET
To reiterate my comments on another blog earlier today, I eschew the en primeur process altogether because (at my price points anyway) it makes no sense to pay $50 for a 92-94 point barrel sample that comes out as an 88-point mediocre wine (something that has happened WAY too many times). I'd rather pay 50% more for a Bordeaux on release that really achieved the 94-96 point realm and just procure a few less bottles. No gambling, no heartache, and more room in my cellar for all the other great buys available from around the world!
Glenn S Lucash
March 20, 2007 4:48pm ET
You are absolutely correct that the en primeur system will florish. But NOT in America. You will find that all the top wine producers will be selling almost all of their production to the nouveau riche in the Far East. That's OK. That's business. The U.S. consumers, by in large, will not tolerate the price abuse and therefore refuse to purchase. The backlash will be felt unfortunately by the seconds and thirds who do make very good wines. As I have said before, I'd rather spend my $ 40 on a fabulous Spanish, Australian, Chilean, Argentinian, Oregonian or California wine than a good French wine. Someday you will NEED the US market. It might never be there again. Au Revoir.
Peter Czyryca
March 20, 2007 6:02pm ET
"It seems that with the short supply of great wines from around the world (including California)Are you kidding me? At no other point in the history of wine have their been more great wines at affordable prices.This arrogance is exactly why people are fed up with the Bordelais such as yourself.I bid you adieu to high-priced bordeaux when bargains ABOUND in the wine world.
James Peterson
San Antonio, Texas —  March 21, 2007 1:35am ET
Now this is the onslaught I was referring to (and expecting) in your first post. It was bound to happen. Thank you for the interesting post. I would be curious to know what you consider to be a ''great wine'' though. Obviously (at least to me), there are more outstanding wines available than ever before. One of my favorite things about wine is that I can always find something new, interesting, and (perhaps) great when either prices or a bored palate get the best of me. Being an avid free-market capitalist, I don't begrudge the rising prices at all. I can simply choose not to pay them without worrying about missing the next great vintage. At some point, though (like with the 2005), it seems you're just paying for the vintage year on the bottle rather than the wine in the bottle. Best Regards. - Jim
Vandendriessche Bernard
BELGIUM —  March 22, 2007 6:03am ET
Jean-Guillaume, it's very good to explain what " en primeur " is and how it was born.Today , many (young) people still don't understand what " en primeur" is and why it still excist. I think there should be only 1 tranche and that's it.Only the second tranche should be released when the wines are physical available on the market.(or the place the Bordeaux)
Robert Kocourek
March 24, 2007 9:34am ET
At the end of the day, it's all about supply and demand. As long as the Chateau's are able to move their inventory at high prices, they will, and so would all of us if we were in their shoes... it's business. With the transformation to a global economy, which has also flourished in the past 10 years, there is more wealth accumulation in Latin America and Asia, and with more wealth comes more investment, including investment in wines. As long as the wealth accumulation, and related need for investment, continues on a macro level, the relative prices (varying by quality) won't come down. However, even if you do believe there may be a shortage of "great" wines please consider that there are many, many wines on a global basis that are outstanding, and their popularity has, and will, continue to increase. While there will probably always be a high demand for the first growths in classic years, don't think for a minute that people, even those with a lot of money, don't also consider the value proposition. Will there one day be a backlash due to these recent very high prices, maybe, who knows.
Domaines Reybier Sa
france —  March 26, 2007 4:36am ET
I fully agree with Robert's comments and yes the consumers and investors are well informed and can easily access information about prices and scores. I see the Bordeaux first growths being even more in demand in the coming yearsJean Guillaume PRATS

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