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Bordeaux's 2009 Vintage Looks Outstanding, But Will Anyone Buy?

Retailers fear futures prices will top 2005 prices despite an unsteady economy

Ben O'Donnell
Posted: June 7, 2010

After three days of meeting with excited Asian customers and trade members at Vinexpo in Hong Kong, a growing number of Bordeaux producers are finally testing the waters and releasing prices for their 2009 futures. But while a few classified growths like Château Giscours and Château Haut-Batailley have taken the plunge, retailers and buyers are still holding their breaths for prices from the most anticipated wines. Industry members speculate that the first-growths may not release prices until July.

The delay reflects everyone's uncertainty on how much the 2009s should cost. On one hand, all reports say the vintage is outstanding, on par with classic years like 2005 and 1982. But the global economy is very lopsided. Will Americans buy expensive Bordeaux? And if they don't, will China step in and pick up the slack? Forced to wait, U.S. retailers trumpet the vintage's towering quality-and fear prices will match.

"I'm an old guy, and it's the best vintage, I think, in my lifetime," says Steve Wallace, owner of Wally's Wine Store in Los Angeles. "I don't think there are going to be any bargains at the top."

"[The prices] are going to look ugly. I'll keep it to words that are printable," says Nikos Antonakeas, managing director at Morrell & Co. in New York. "The Bordelais seem pretty convinced that they are going to equal the 2005 pricing or go somewhere between 5 and 25 percent higher, because it is the kind of vintage that in the long run they will have no problem selling."

The Bordeaux futures, or en primeur, campaign begins each spring following reviews and barrel tastings from critics and wine merchants from around the world. Futures buyers are purchasing young wines that are still lying and aging in barrel in châteaus' cellars. The wines are delivered to buyers approximately two years later after bottling. Buying futures guarantees the consumer wines at set prices, quantities and bottle sizes. (For James Suckling's reviews of the young wines, see his 2009 Bordeaux barrel tastings report.)

If conducted wisely, en primeur can benefit producers and consumers alike: Châteaus sell much of their wine before the next harvest, while buyers snap up cases at a cost usually below the final release price. But overpricing, especially in an unprepossessing vintage, can ruin the investment. Those who bought the 1997 vintage en primeur saw their wines released on the shelves for cheaper the next year. The so-so 2007 vintage, sold at high prices right before the financial industry crashed, is rapidly becoming a similar cautionary tale.

The question this year is whether the economy has regained enough strength for American buyers to shell out for a classic vintage. Europeans, meanwhile, have watched their currency flatten this year. And on the other side of the globe, China's new wine lovers are already participating in the futures campaign more aggressively than ever before. "They are really interested," says Jean-Pierre Rousseau, managing director of DIVA Bordeaux, a négociant. "We have already made some sales-they bought high-quality crus bourgeois. First-growths they will certainly buy. For the 2009 primeurs, we expect to do more than 50 percent in Asia."

Though demand in China could threaten to freeze American retailers out of allocations and price American consumers out of blue-chip purchases, Wallace is not concerned. "It gives the Bordelais more leverage, but most of the Bordelais we've talked to are not short-sighted," he says. "They've been through this with Japan, with Russia. They're not going to sell all their wine in the Asian market. But it does make them look like the best-looking girl at the bar."

The need to achieve a delicate equilibrium between markets has top producers, who had been expected to unveil their prices shortly after Vinexpo, still deliberating. "Because the dynamic of this campaign is so different than the others, with the depressed economy on one side and the overheated market on the other side, as well as a great vintage, it is complicated to make a decision," says Jean-Charles Cazes of Château Lynch-Bages in Pauillac, which has not released its price yet. "Each campaign there are some mistakes from some properties. You can't really correct that mistake."

That potential for missteps has American retailers nervous. "I would sound a note of caution," says Chris Adams, CEO at Sherry-Lehmann in New York. "I'm worried that the appropriately great press surrounding the vintage is going to cause people to forget that this is not the economy that it was in 2006."

Trey Beffa, wine buyer at K&L Wines in Los Angeles, echoes that concern. "It's easier for people to spend $40 on a really highly rated wine," he says. "A $200 bottle that's highly rated? We'll see. That's going to be the big question."

"I'm afraid that [the Bordelais] may fall on their face, where people will balk and not buy," says Antonakeas, who is convinced that consumers will ignore overpriced futures. "That's what I hear from my customers, and that's what I hear from some of my colleagues under their breath." Antonakeas only intends to buy half the amount of futures he did in 2005.

Wallace predicts that the first-growths will climb into the $500 to $600 per bottle range for the first tranche, or allotment, and could rise to $1,000 in later tranches, but many believe that the so-called super seconds are the wines to scrutinize. "The first-growths are not going to get hurt [by overpricing]," says Beffa. "But that middle area, the second-growths, the Ducrus, the d'Estournels, those middle wines in a whole new pricing area are the interesting part."

Fifth-growth Lynch-Bages is considered a super second, and Cazes says his peer owners are of two minds. "There will be one school that will chase for the first-growths or to reposition themselves at a very high price, and there will be one school that will price the wines keeping in mind that they need to be drunk at some point," he says. "I can speak for Lynch-Bages: We need people to drink our wine every year, and we have a responsibility to release one price that will fit all markets—the fair price."

Bordeaux Futures 2005 2009 Change 2009 score
Lilian Ladouys NA $20 NA 92-95
Charmail $20 $20 unch 91-94
La Vieille Cure $23 $24 4% NR
Godeau NA $29 NA 93-96
Poujeaux $26 $29 12% 93-96
Cantemerle $29 $32 10% 88-91
Les Ormes de Pez $30 $33 10% 92-95
Haut-Batailley $38 $39 3% 90-93
Sociando-Mallet $44 $40 -9% 89-92
Monbousquet $53 $44 -17% 89-92
Giscours $58 $59 2% 92-95
Duhart-Milon Rothschild $45 $60 33% 91-94
Gazin $57 $76 33% 92-95
Certan de May $110 $104 -6% 90-93
La Fleur-Pétrus $103 $136 32% 95-98
Hosanna $130 $250 92% 93-96

Before prices came out, many retailers hoped they would be below the last great vintage, 2005. So far, that hasn't been the case. Château Duhart-Milon-Rothschild is up from $45 to $60, Château Gazin from $57 to $76. Château La Fleur-Pétrus from $103 to $136 and Château Hosanna from $130 to $250. Others held to past prices. Château Haut-Batailley budged from $38 for 2005 to $39, Château Giscours from $58 to $59 and Château Sociando-Mallet readjusted from $44 to $40.

But despite many price hikes, sales have been energetic, with some retailers even selling out their stocks, and most feeling guardedly optimistic. "We've sold through them very quickly," says Adams. "I haven't seen any [red prices] so far that make me think, 'That's impossible.'"

Wallace says his store has seen an influx of new buyers picking up wines that are under $30 or $40. "There is a new market of younger people, people that want to start collecting." Wally's co-owner Christian Navarro advises his customers, "Instead of buying a Napa Cab at $40 or $50 that got a lower score, buy this Château Poujeaux at 27 bucks and you're going to be very happy."

A final wrench in the 2009 futures campaign is the departure of Diageo's Château & Estates Wine division from Bordeaux earlier this year. The importer had been one of the most active players in the futures game and the portal to the campaign for many U.S. retailers. "It's really sad for Bordeaux," says Cazes. "Diageo was providing a great service to Bordeaux which will probably not be matched. I know less and less Bordeaux is on wine lists, and I hope that we can reverse that trend."

Though it is too soon to call this the latest en primeur campaign ever, the consensus is that many classified growths are still weeks away from setting loose their futures. But retailers are poised for whatever comes. As Navarro puts it, "In the next 30 days, it's going to be fast and furious."

With additional reporting by Suzanne Mustacich

Jeffrey Alle Cassetta
Grand Rapids, MI —  June 7, 2010 7:24pm ET
Now figure in that the $ has been 5%+ stronger compared to the Euro during the '09 EP campaign as compared to the '05.
Tan Kok Seng
Thailand —  June 8, 2010 6:58am ET
The Chinese mainly from China had purchased much of the '09 vintage and continue to do so.
Benoit Garneau
Quebec City, Qc —  June 8, 2010 10:08am ET
Giscours' pricing seems fair... But I certainly hope to be able to afford a Latour this year.

I prefer buying better over buying in greater quantity, so we'll see, I guess.
David A Zajac
Akron, OH —  June 8, 2010 1:55pm ET
The second wines of the second growths (particularly the recently release wines from Cos and Palmer) are now selling for as much as the second wines from the first growths were selling for in the 2005 vintage (Forts de Latour excepted, it was higher), between $55 and $60 bottle - expect the second growts to be at $250+ for Cos, Palmer and probably more for Las Cases, maybe a few dollars less from Ducru and the Pichon's...at least that is what I am hearing. First growts at $500 - $600 for first tranche pricing seems too low to me, bet they will be higher - but NOBODY is talking about them right now because I don't think anybody really knows, even the chateau's themselves. Would love to be in the game, but when Duhart Milon is now near or even above $100/bottle, it is pretty scary as to what Lafite is going to do with its top wine.
Athanassiadis Dimitri
Brussels, Belgium —  June 10, 2010 3:42am ET
I think top classified & speculative bottles will be released at sky high prices, since ther still exist high profile buyers. Mid-range like Duhart-Milon prince increase vs 2005 is a decision of the Lafite team to lift-up its product range positioning. It doesn't reflect what we can expect for the rest of similar classified Chateaux. For me, 2nd wines are too expensive and their RQP is not attractive. They are purely speculative, me too products: look at the price increase of Carruades de Lafite since mid '90's and this wine is not a top notch one.
Tone Kelly
Webster NY —  June 10, 2010 8:36pm ET
I am personally expecting the prices to be extremely high, with the follow-on that the wines won't sell through to consumers. In the 1980's prices rose with the economy and this was expected as prices were pretty low. However, since 2000 we have been in a situation where the most recent price rise has pulled older vintages up. But sell through has been less and less each year to the end customer (in volume). We are off the map now and it is certainly possible that wines can get too over-priced and not sell. Expensive Cali Cabs have hit that plateau a year ago and now consumers are looking at lower priced but equal quality wines. If Bordeaux breaks the "too expensive" barrier like Cali Cabs did, the consumer will wake up and say "no thanks". And it will take a major change in the market to bring the consumer back.

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