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Bordeaux Looks for Lessons in 2009 Futures Sales

Wines sold well overseas, while American retailers exceeded low expectations

Ben O'Donnell
Posted: September 8, 2010

The circus has left town. The dust has settled after one of the most discussed, most fretted over and certainly the priciest Bordeaux futures campaign ever. There were many question marks when the campaign kicked off in late June, but one loomed largest: Would anyone buy the wines at these prices? Three months later, the answer is yes—but the picture is complicated.

“I was very skeptical,” said Nikos Antonakeas, managing director of Morrell & Co. in New York. “I bought accordingly, which was about 50 percent of what I bought in ’05, and was selling right at those levels.” But, he added, “[My customers] all mumbled, ‘You’d better not call another year like this one for awhile.’”

Among a sampling of 23 top wines representative of the vintage, prices at major U.S. retail outlets exceeded those of the 2005 vintage by 86 percent. (See chart of retail prices for leading properties below.) Some stateside sellers worried that with a twitchy economy and Asian markets potentially poised to pick up American slack, the campaign would scuttle itself on U.S. shores. But Jeff Zacharia, president of Zachys in Scarsdale, N.Y., sees the same old story in these concerns. “For the past 30 years we have had customers unhappy with the new prices," he said. "But most continue to buy, and for those who do not, there always seems to be someone to take their place.”

Leading Bordeaux négociants tell Wine Spectator that sales to the U.S. were down compared to past big vintages like 2005. Sales to European markets, especially London, and Asian markets, such as Singapore, Tokyo, Seoul and Hong Kong, easily made up for the difference. Mainland China, a young market for futures, also showed growth. “2008 was the first year we experienced any real interest amongst the mainland Chinese consumers for en primeur,” said Don St. Pierre, Jr., CEO of the distributor ASC Greater China. “2009 marked a significant increase in that level of interest among wealthy Chinese clients. This was the year when we saw people really try to understand what this whole futures thing is about.”

Because many top U.S. retailers expected a diminished campaign, they ordered cautiously and expressed pleasant surprise when the wines sold, if at a slower pace and more modest levels than in the 2005 campaign. “The U.S. market was much stronger than I expected,” said Zacharia. Certain wines—top scorers who kept their release prices close to $100—sold through much more aggressively than others. Retailers cite Léoville-Barton, Lynch-Bages, Léoville Poyferré and Pontet-Canet, among others.

Pontet-Canet’s owner, Alfred Tesseron, priced his wines with an eye toward the long term. “[Pontet-Canet] was sold at roughly one-tenth of a first-growth price, giving the consumer quality recognized on a similar level or even considered better than certain first-growths," he said. "Our price was fair and it reinforced Pontet-Canet's friendships throughout the world, which gives us confidence for the future.”

Despite overall success, some U.S. retailers saw longtime supporters of Bordeaux forced to the sidelines. “Everybody’s interested in them when they hear about what a great vintage it is,” said Mark Wessels, managing director of Macarthur Beverages in Washington, D.C., “[But] they say, ‘Geez Mark, I really wanted to buy a case of Cos-d’Estournel, but now I’m either not going to buy any, or I’m only going to buy three, four, five bottles instead.’ The traditional fan base, even if they can afford the wine, remember when it was a $40 or $50 bottle of wine and have a moral problem with paying $300 for a bottle of it.”

Plenty of other customers didn't, however. And Antonakeas believes that some exorbitant prices ironically muscled out those who might have bought the wines to resell them. “At $300 for Ducru-Beaucaillou, what am I going to do with it? I’m going to drink it,” he said.

“If you bought them to try to make money on them, I think you made an unwise investment,” said Wessels. The retailer consensus is that while top wines should hold their prices, few, if any, will appreciate in the near future.

And the high 2009 prices give some retailers pause about Bordeaux’s prospects in the coming years. “The pricing? OK, they got away with this one,” said Antonakeas. But “an unfortunate image [of Bordeaux] that has now been many years in the making is: ‘my father’s kind of wine.’ Unless they get serious about giving Bordeaux a little bit of a luster of youth, something to put on your table without feeling that everybody had better be older than 65, they’re going to have a problem sooner or later.”

Inaccessible prices could prevent “30-year-olds who are just coming up making their money in the next 10 or 15 years from being excited and feeling positive about Bordeaux,” said Antonakeas.

Château 2005 2009 Change
Ausone $1,375 $1,827 33%
Carruades $57 $279 389%
Cheval-Blanc $737 $1,211 64%
L'Église Clinet $111 $169 52%
Cos-d'Estournel $197 $309 57%
Ducru-Beaucaillou $174 $260 49%
Figeac $112 $243 117%
Haut-Brion $571 $1,007 76%
La Mission-Haut-Brion $325 $853 162%
Lafite Rothschild $622 $1,553 150%
Latour $766 $1,470 92%
Léoville Barton $95 $102 7%
Léoville Poyferré $91 $167 84%
Lynch-Bages $81 $128 58%
Malescot-St.-Exupéry $73 $94 29%
Margaux $728 $1,053 45%
Montrose $106 $208 96%
Mouton-Rothschild $573 $940 64%
Palmer $246 $316 28%
Pétrus $2,563 $2,544 -1%
Pontet-Canet $82 $136 66%
Smith-Haut-Lafitte $66 $96 45%
Trotanoy $146 $449 208%

Note: Prices are average retail futures prices from leading U.S. retailers.

William L Duty
York, PA, USA —  September 9, 2010 6:23am ET
At what point will consumers world-wide who pay these prices finally realize that after they peel away all of the hype, all of the mystique, and all of the marketing that they just paid an obscene amount of money for what is quite simply a bottle of grape juice? P. T. Barnum was right.
Michael B Ray
nj —  September 9, 2010 10:42am ET
There were actually some good buys early on in the 2009 campaign and the message may well be to avoid the prestige brands in the great years as has been the case for many years. If 2010 turns out to be another vintage of the century, it will really be an interesting campaign. Looks like the Napa Cabs for 2007 are taking French lessons ...

I have friends who "re-discovered" Bordeaux in the form of the inexpensive 2005's that were in the market over the last few years. If the 30 somethings drink those wines, then it could build a fan base for Bordeaux in the future. 2008s, 9's and possibly 10's could help the trend.

For first growths, there could be real softness in the 2007's next year about this time with the 2008's hitting the shelves. I can't figure out their market today. If they stay high in price, then we have a lot of folks buying labels which is fine if that's how you want to spend your money.

In the end, Spain: Rioja, Priorat; Italy - Brunello and Super Tuscan's in general and France's Rhone ( especially CDP!) and Bandol offer compelling great wines at a great prices. Others would add their own favorites and if I left yours off, it wasn't meant as a slight. The point I am trying to make is that you could never drink another high dollar Bordeaux and have a jolly great time with a bunch of fabulous wines.
James B Seder
newton, ma —  September 9, 2010 1:48pm ET
On a long term basis for Americans and Europeans alike, it would be instructive to examine the potential income growth of the over 30 age group. While only fools and liars believe that they have the key to the future, I prefer to use some logic.

The US owns a monsterous budget deficit which has be either repaid, restructured or forgiven. The result has been an economy which is still fragile at best, sporting negligent full time job growth and a housing market still bouncing off the bottom. Without job growth, there's minimal income growth. And without income growth, the housing market recovery will be periless. This doesn't much sound like a formula for indifferent discretionary spending.

With this as the basis, I would argue that the very high end wine market in the US has seen its better days, at least for the next couple of decades. While those with a secure financial foundation will still dabble, I suspect that the next couple of generations will find it challenging to invest heavily.

By the same token, with so many wine regions now competing for consumer interest and dollars, this couldn't be a better time to expand your tasting universe and at affordable prices.

Cheer, Jim
Randy Hodge
CT —  September 9, 2010 2:27pm ET
There are plenty of '09 Bordeauxs out there or coming that are extremely affordable and just as solid with the same ability to mature effectively. If the vintage is strong, then it doesnt matter who the maker is nowadays, it'll still be very well represnted on a wine list. Smart wine drinkers and smar wine buyers pay more attention to the year rather than the price or producer.
WS should spend more time promoting the underdog rather than hyping up pretentious prices from overrated producers anyway, but that'll be saved for an entirely different post.
Its all about who advertises here....sad, especially with how bad the economy is, currently. Its a great parallel with the same slogan...the rich just keep getting richer.
Alex Andrawes
USA —  September 9, 2010 2:53pm ET
Prices like this require thought and careful evaluation. The guys who loved Bordeaux in the 80's when you could buy first growths for $30 are not buying them today at $800+. I always tell my clients and friends, if you are buying wine as an investment, you are playing an awful risky game. If you are buying it to drink it, then you must really love it. Wine is no doubt the most special beverage on the planet.
Ben Odonnell
New York, NY —  September 9, 2010 2:57pm ET
Michael and Randy, you are both correct that there were many strong values early in the campaign. Any coverage of Bordeaux futures will necessarily focus on the higher-priced labels, not only because people are interested in them but also for the simple fact that value Bordeauxs are less likely to release their wines as futures.

But please do see our earlier coverage of the campaign if you haven't yet: http://www.winespectator.com/webfeature/show/id/42871. The corresponding chart includes many high-scoring, retailer-recommended wines at very affordable price points, some as low as $20. The story with those, needless to say, is they've sold very well.
Merlin Guggenheim
Zurich, Switzerland —  September 10, 2010 2:12am ET
there were bargains in this campaign. I stay away from the overpriced big names and will reevaluate the auction market in a few years. These days, the chateaux squeeze every penny out of the market and the wines are sold way above anything that resembles fair market value. So the prices drop over the next few years. Not necessarily true for the premiers (btw. their 2nd bottlings are simply indecently priced with an eye on the asian label buyers, see Carruades at 280$), but everything from the deuxiemes will depreciate. Example: The hyped Rauzan Segla 2005, 97 WS pts, ex chateau at around 100$, at auction now at 70-90$). I buy the bargains during the campaign and the rest at auction. Works well for me
Gerald Ansel
Fullerton, Calif —  September 11, 2010 6:02am ET
The 2009 buying picture is not all that complicated, from my point of view. Top-name Bordeaux has simply become too expensive. Producers and distributors are leveraging what they learned about marketing from the 2000 and 2005 campaigns to drive up prices. They are targeting Asia, which is ripe (no pun intended) for the taking, and moneyed enough to pay the high prices. Collectors in the U.S. and Europe are already stocked up with 2000s that are just entering their drinking windows, and with 2005s they won't be able to drink for a while. Now it's Asia's turn to buy.
Gisle Sarheim
London, UK —  September 13, 2010 12:34pm ET
From this side of the pond it's pretty clear that wine has moved from a delectable beverage, you may say a luxury perhaps, to an investment asset class. We blame the Asian market, but reality is that more of the damage is being caused here at home. You wonder why the UK market picked up the slack from the US market - it's purely because wine is being bought for investment purposes. Would anyone buy first growths at such rediculous prices if it wasn't for the inherent belief that another s***** would pay more for it in the future? ...and who do we want this potential buyer to be - the Chinese of course. We have ourselves to thank for having created the illusion of the Chinese dragon that one day will sweep all our dusty bottles away at imaginary prices.

I bought Pontet Canet 2008 and 2009, with only a Parker point or two as difference - yet the case price nearly doubled. I still believe there is more value to Pontet Canet then there will ever be to any of the first growths...let's not forget that scarcity is not an issue given how many throusands of cases are made every year...

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