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Bordeaux Futures Are Here. Is Anyone Buying?

Merchants, retailers and consumers all want lower prices; Lafite and Mouton are helping set the pace

Suzanne Mustacich, Ben O'Donnell
Posted: April 16, 2013

Updated April 25, 2013

Bordeaux's futures campaign is underway, and the wine world is looking to the region this week as châteaus are making their moves. After last year's disorganized, slow campaign, consumers, négociants and retailers in key markets around the world are calling for the top classified properties to release futures quickly and drop prices significantly. Some have answered.

Sales of futures for the 2012 vintage began April 15, when Pomerol's Château Gazin announced it would release its wines at $43 per bottle ex-château (that price does not include négociants', importers' and retailers' markups). On April 18, with the release of first-growth Mouton-Rothschild and super second Lynch Bages, as well as Rauzan-Ségla in Margaux and Petit Mouton (Mouton's second wine), the markets got their first major indicators of how this campaign will take shape.

On April 22, Lafite Rothschild joined them, at $365, a significant reduction from last year's initial release of $495. Today, four more noteworthy properties released: first-growth Margaux, super second Palmer and the Right Bank's Pavie and Angélus, which were elevated to the top echelon of the 2012 classification of St.-Emilion properties, joining Ausone and Cheval-Blanc. (Check our chart to see the latest prices as they are released.)

Mouton was priced from the négociant at $314. After the usual markups, Clyde Beffa, owner of K&L Wine Merchants in California, is selling it at $379 to his customers, a 30 percent reduction from 2011's $541 average retailer release price. Margaux has followed suit at $314. (It should be noted that, from the négociant, the Lafite price ratcheted up to $434.) With the new recognition, Pavie and Angélus bucked the trend of reducing prices from 2011 levels, with both shooting for $235. It's a 30 percent increase on Angélus and 58 percent for Pavie, bold moves when many merchants and négociants are still having trouble selling 2011s at their high prices. Lynch Bages came out at $78 ex-négociant, Palmer at $209, Petit Mouton at $86 and Rauzan-Ségla at $48.

"I want to congratulate Mouton for their wise move," said Jean-Pierre Rousseau, managing director of Diva Bordeaux, a négociant house. "It is the highest decent price possible, and since it is going to index the market of the first-growths, [they will] avoid unbearable prices, hopefully." The Left Bank first-growths set the tone for the campaign and send a signal to lower-ranked properties.

"I know that Mouton released 90 percent of their crop on first tranche, and no more second tranche," said Beffa. "And I think the people who want to buy first-growths year after year will buy them." He was a little more ambivalent about Lynch Bages. "I was hoping to be able to sell Lynch Bages for $79 or $89. That would've really sparked the market." Still, he said, "Lynch Bages will come out at a price under $100. It's not a big margin for us, but it'll be the only [vintage of] Lynch Bages out there for under $100."

So far, American retailers are looking toward this campaign with attitudes ranging from cautious optimism to outright pessimism, but all share one sentiment: Prices must drop significantly for this campaign to be successful in the United States.

"Château representatives and owners have told me directly that they're ready to focus again on the American market," said Chris Adams, CEO of New York's Sherry-Lehmann, who headed to Bordeaux last week to taste. At the time, he said, "I'm going to go there and I'll be optimistic. I'll say, 'Look guys, you have a huge opportunity here. Drop your pricing. Send a message. Get people thinking about this again, because 2009 and 2010 were outside the realm of what was purchasable for a lot of consumers.'"

"The '11s didn't sell that well and if the '12s don't, there will be a back up on the Place de Bordeaux,” said one major négociant. "A sensible campaign is needed. But, with little stock in America, if the châteaus see any sort of demand, some might gamble and price high. I think that would be a mistake. This is not a vintage where the quality merits that kind of thinking."

While most top properties lowered prices for their 2011s, prices had risen so steeply for the 2009 and 2010 vintages that the 2011s still weren't attractive. Few consumers were interested. Château owners are walking a tightrope, trying to entice buyers, but not give up too much profit.

Quality is not the overriding issue. Senior editor James Molesworth visited the region in recent weeks for lengthy blind tastings. Overall, he reports that the wines do not compare to 2009 or 2010. They are similar in quality to 2011, but more structured and less easy drinking.

In the past decade, more and more of Bordeaux's best producers have learned to deliver good wine even in challenging conditions. But can Bordeaux deliver value?

Too much wine, too few buyers

Why buy futures? For consumers, the initial price offered by the château (plus subsequent markups) will likely represent the best price they'll see if the vintage proves to be good. Additional releases, or tranches, of wine typically grow more expensive. But not all vintages go up in price.

The négociants, the merchants who buy Bordeaux from châteaus and sell to the world, are still furious about last year's campaign. Château owners don't see a problem—the top producers sold almost all their wines. But the négociants bought the wine largely because they wanted to maintain their allocations. Multiple sources report that the négociants are still sitting on large stocks of unsold 2011 futures, hoping they can move the finished wines once the global economy picks up steam.

Some négociants opted to discount the 2011s to clean out inventory. "Last year many négociants were offering the wines at cost right off the bat," said one leading British merchant. "I can see why you need to do it, but this gives the châteaus the impression they have sold the wine to the end consumer when it hasn’t even made it to us."

So the négociants' main desire is that the 2012 vintage is priced to sell quickly. "The vintage needs to be liquid. No one can afford to stock it," said Yann Schyler, CEO of négociant Schroder Schyler. "It needs to be a cash machine—not in terms of profit, but selling straight through to consumers."

In a move widely applauded by négociants, the new president of the Union des Grand Crus, Olivier Bernard, who is also owner of Domaine de Chevalier, recently held a meeting with château owners, négociants and brokers and told them all that the goal of this year's campaign should be to sell the vintage in 40 days. "The négociants can't hold the 2012," said Patrick Bernard, CEO of leading négoce firm Millesima (and Olivier's cousin).

A major concern is where to sell the wines. Bordeaux focused on Asia for the 2010 and 2011 futures campaigns. But Chinese consumers have grown skittish over any bottle over $50 ex-cellar. Not only are the Chinese angry over losing money on the overheated 2010 vintage—they bought futures and then watched the wine prices decline—but flashy Bordeaux has become a political no-no. President Xi Jinping has told government officials and state-owned industry executives to stop overspending on wine and entertainment.

"My Chinese clients said they are interested in the $6 to $20 range, no higher, and they'll buy a big quantity. Over that, it'll be a small quantity," said Bernard.

In America, retailers report that customers are showing a renewed interest in Bordeaux, particularly in well-priced wines. But they worry that the 2012 prices will not be low enough to sustain such curiosity.

Jean Reilly, director of wine buying for online retailer J.J. Buckley Fine Wines, is optimistic. "The situation in Bordeaux is very different to last year. There is much more flexibility on prices," she said. Buckley had 12 staffers in the region, a sign they are looking seriously at this year's campaign.

But other merchants are doubtful that the price cuts will be enough. "In a vintage like 2012, you've got to look at drastic cuts—that just won't be made," said Daniel Posner, owner of Grapes the Wine Co. in White Plains, N.Y. "You've got to be talking 75 percent and above [off 2011] to make it somewhat interesting. And these places will probably cut 25 percent. Whatever we did buy of 2011, I regret. And 2012, I think it'll be lesser still."

Wine investment funds in the United Kingdom are not expected to buy, either. This could leave Bordeaux pitching to the French, Germans, Swiss and Belgians, none of whom will bite if the prices aren't right.

Photograph by Deepix Studio

Jean-Luc Thunevin and his wife Murielle are dropping prices for Château Valandraud.

So how low will they go?

"This year will be a buyer's vintage," said Christian Moueix. "Returning to the 2008 [price] levels would be a dream, but if we cannot dream, we should fall between the 2008 and 2009 prices."

Moueix tested demand with the early release of more than 20 châteaus in Belgium, a leading market for him, dropping prices 5 percent to 10 percent compared to 2011. His top wines were priced between their 2008 and 2009 prices. "Thus far we have only offered the wines in Belgium but the response has been good," he said.

But how far prices go down may depend on how much the individual châteaus raised their prices in 2009 and 2010, and then decreased in 2011. "I dropped my prices by 40 percent in 2011," said Olivier Bernard. "I won't do that again in 2012."

"On pricing you can't say there is a percentage that châteaus need to drop by, as many dropped a lot last year," said Simon Staples, sales director for Berry, Bros. & Rudd in Asia. "The biggest issues will be the super second-growths who didn't reduce much last year and overconfident Right Bank property owners who believe their own hype."

And certain producers may decide they can stand pat. On the Left Bank, stellar brands like Château Pontet-Canet, owned by Alfred Tesseron, won't feel pressure to reduce prices. Nor did Palmer, which only took its price down 1 percent. On the Right Bank, Stéphanie de Boüard-Rivoal justified the increase in price at Angélus. "One cannot ignore this promotion [to Premier Grand Cru Classé A]—Angélus officially belongs to the Bordeaux first-growths."

"If the big names don't drop prices, the market is finished," said Bernard before the campaign. Most have, but it remains to be seen whether the cuts hit a low enough mark to stimulate interest.

Among the château owners who agree with Bernard is Jean-Luc Thunevin, whose Château Valandraud was recently promoted in St.-Emilion's classification to Premier Grand Cru Classé B and earned 93 to 96 points in a preliminary tasting by Molesworth. He told Wine Spectator he would drop his ex-négociant price by 40 percent from last year to $105. "It's not about the vintage," said Thunevin. "I think the vintage is very good, sexy, charming. It's the economy."

"If we get the bargain everyone is hoping for, we will all fall back in love with my lovely old pal Bordeaux," said Staples. "Come on amigos—do what needs to be done. We know it. You know it. The châteaus know it and, above all, the forgotten consumer knows it all too well."

With additional reporting by James Molesworth.

Josh Moser
Sunnyvale, CA —  April 17, 2013 3:25pm ET
I buy Cantemerle each year, and will continue to do so, but I won’t buy 2012 Futures unless the price is under $24. Doesn’t make sense. Below is a snapshot of current prices for Cantemerle, and what I paid. At some point, the folks in Bordeaux will understand that they might be better off if they cut off their noses to save their faces. Also, go look at all the great Spanish Riojas from the ’01 and ’05 vintages on the market that sell for less than $30.

In 2006 you could have purchased 2003 Cantemerle for $24 a bottle. 




’11 Cantemerle - $33 --- Futures -- now $32 to $33

’10 Cantemerle - $38 --- Futures -- now $40 to $43

’09 Cantemerle - $33 --- purchased December 2010 --- now $40

’08 Cantemerle - $28 --- purchased November 2011

’07 Cantemerle - $27 --- purchased January 2011

’06 Cantemerle - $30 --- purchased July 2009 --- now $40

’05 Cantemerle - $40 --- purchased July 2008

’04 Cantemerle - $27 --- purchased July 2008

’03 Cantemerle - $24 --- purchased July 2006

Josh Moser
Founder of VinoServant
Thunevin
Saint Emilion, France —  April 18, 2013 4:31am ET
Just a little clarification regarding Valandraud's en primeur pricing : $ 105.00 would be the price offered by the Bordeaux wine merchants to importers. Retail price would naturally be somewhat higher.

Cheers !
JLT
Stephen Freedman
Amherst, MA, USA —  April 19, 2013 1:55pm ET
It's hard to believe that it cost the cru classe chateaux significantly more to bottle a case of wine in 2009/10 than it did in 2000. The profits made in recent years are borderline obscene and it's hard to take seriously the moaning of some of these folks about having to reduce prices for a vintage (2012) that is apparently mediocre at best.

I last sold futures in 2009. Can't imagine when the next time will be.
Steve Freedman, Amherst Wines & Spirits
Jon Burdick
US —  April 19, 2013 7:22pm ET
It's hard to show interest in these wines if you look at what's in the bottle. There are just a lot of places in the world where you can purchase quality wines in the 90+/- range for significantly less, including Bordeaux blends. If you are label chasing, then perhaps there is more value but the economy is not flush with cash and chasing after consumer goods, so I don't think there will be strong en primeur sales (and certainly no reason to purchase futures).
Matthew Hayes
France —  April 22, 2013 9:04am ET
The devil is in the detail: technically speaking Lynch Bages is not a Super Seond, but an historically overperforming Fifth growth. The same is true of Pontet Canet which now commands equally high "second growth" prices.
Jan Fridrichsen
Birmingham, AL-USA —  April 22, 2013 11:20am ET
Jean-Luc, I was in your store in St. Emilion last week. Would have liked to meet you but your salesperson said you were in the Medoc that day. We bought several bottles of Bad Boy 2009. What a delicious wine.

Continued good luck and best wishes.
Thunevin
Saint Emilion, France —  April 23, 2013 10:00am ET
Jan : thanks for visiting us ! Let me know beforehand next time you visit Saint Emilion, and I hope we will be able to meet. In the meantime, enjoy your bottles ;)
Allan J Sagot
USA —  April 28, 2013 7:40am ET
Greed over logic seems to be the theme in Bordeaux. Last evening had a 2006 bottle of Alter Ego (second label of Chateau Palmer) with dinner...Brilliant!!! $48.00 Retail!!! The shame is that my children who are now learning wine may never experience first growths because of the insane pricing. They are the true futures not 2012. Greed over logic.
John Furia Md
Lewisburg, PA, USA —  May 17, 2013 7:10am ET
Great comments by all.
So, the "thousand dollar" question, if you had 10K to spend on the 2012s...what would you buy?

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