The 2012 Bordeaux futures campaign defies easy description as it limps toward a lukewarm finish, according to château owners and wine merchants around the globe. Was it a success? A failure? It depends on which wine you're talking about. "The wines that are at the right price have no trouble finding a market," said Mark Walford of U.K. merchant Richards Walford. "Those that are wrongly priced meet complete apathy from buyers everywhere."
A successful en primeur campaign allows châteaus to sell their unfinished wine early and invest in the next vintage, while giving consumers a price that will appreciate by the time the wine comes out in the bottle. But thanks to a slow growing global economy and big price increases for the 2009 and 2010 vintages, the prices of the 2009s have increased little and the prices of the 2010s and 2011s have been flat.
After last year's disorganized, slow campaign, consumers, négociants and retailers called for the top classified properties to release 2012 futures quickly and drop prices significantly. Quality is not the overriding issue. Senior editor James Molesworth visited the region in March for lengthy blind tastings. Overall, he reports that the wines are similar in quality to 2011, but more structured and less easy drinking.
Most château owners listened to buyers when it came to timing, releasing prices in a steady stream of announcements in April and May. But when it came to pricing, they sent a mixed message, which made it hard for retailers to excite consumers and build real sales momentum. (For the latest updates on prices, visit our Bordeaux 2012 Futures Pricing Chart.)
Among first-growths, the campaign went fairly well. Prices were dropped 25 to 35 percent from 2011 releases. "They are a good value. There is an intelligent reason to buy them. They represent the cheapest vintage in the market of comparable vintage," said Gary Boom, managing director of U.K. merchant Bordeaux Index. "About 98 percent of what we sold in terms of value was first-growths."
American retailers believe other well-priced wines include Pontet-Canet, Rauzan-Ségla, Haut-Bailly and Pape Clément on the Left Bank and Troplong Mondot, Fleur Cardinale and Valandraud on the Right.
But others held prices steady—or even raised them. The recent reclassification of St.-Emilion estates prompted the newly promoted Pavie and Angélus to heft prices by 57 and 28 percent at retail, respectively. Retailers balked. "I don't think this was the campaign to make that statement," said Chris Adams, CEO of Sherry-Lehmann in New York.
Of Angélus and Pavie, négociant Patrick Bernard had perhaps the kindest comment. "Everyone has the right to one mistake."
Château Palmer, $243 at retail, aimed for a mark virtually the same as last year's. "The wine is incredible, so dropping the price for the sake of dropping the price doesn't make sense," said Jean-Louis Carbonnier, Palmer's North America manager, who worries the market tends to perceive each vintage as a whole, rather than considering specific estates' wines. "It's a bit unfair, because top properties like Palmer make every effort."
But quality may not be enough right now. "It is up to the estates to decide whether they want to sell or not," said Yann Schyler, CEO of négociant Maison Schröder & Schÿler. "Those not reducing the prices, or doing it symbolically, think that it will just work, regardless of the state of the market. It just does not work. The stocks will just sit in the pipeline. Those willing to sell their wine in a slow market have priced their wine strategically low, near 2008 levels. Things seem to be working better for those estates."
Many merchants hoped this was the year Bordeaux would come back to the United States. "America was an opportunity for the Bordelais to reestablish themselves, because for the moment the economy looks on the up, people are no longer scared that we're going to go into double-dip recession, and wine consumption is increasing where in Europe it's decreasing," said Nikos Antonakeas, managing director of the Morrell Wine Group in New York. "But they missed it."
"Interest from my clients so far: very little," said Mark Wessels, managing director of MacArthur Beverages in Washington, D.C. "This will be a better campaign unquestionably than last year [for MacArthur], but it'll be a small campaign compared to '09 and '10."
Even the disappointment with prices can't completely explain the lackluster campaign. Most estates did drop prices, after all. "We are running at about 30 percent of 2011 sales and 5 percent of 2010 sales," said Jean Reilly, director of wine buying at JJ Buckley Fine Wines, based in Oakland, Calif. "The difference between the two vintages in quality does not warrant the difference in sales volume; there’s obviously more going on here."
Consumers in America and around the globe have apparently decided that the 2012s don't make sense as an investment. "While I don't anticipate the '12s will have too much of a problem selling when they're on the shelf," said Adams, "as an en primeur, it just doesn't look like that big a buy for the consumer two years before the wines are available."
Négociants report that the most demand is coming from the U.K., which is looking for value. "If it was well-priced, like Gazin, we moved a few hundred cases. If it's not so well-priced—like most of the rest of them, we sold maybe a dozen," said Boom. "It's really very polarized."
China appears to have turned its back on futures, at least in terms of classified growths. "Our Chinese customers are not stupid," said Walford. They will buy the wines they like if the prices are right. When I was in China two weeks ago, we met with almost complete indifference to the 2012s, apart from existing customers who follow Vieux Château Certan, Le Pin, etc."
Asian retailers are also being tactical. Négociants report that some clients are, for the first time, holding off on orders until the end of the campaign—looking for deals and wary of making their purchases until the entire portfolio is on the table.
Nor can the French supermarkets—major Bordeaux customers—be counted on to sop up the surplus. "We will definitely buy less this campaign, because the prices, while lower, are not low enough," said Didier Coustou, Bordeaux buyer for Leclerc, who spent 30 million euros on the 2009 and 2010 campaigns. He noted that many businesses were suffering and Bordeaux’s prices were just too high.
On a long-term scale, another lackluster futures campaign could impact Bordeaux down the road. Château owners continue to be pleased, because négociants buy almost all the futures from top growths, so they can maintain their allocations in better vintages. Retailers who specialize in Bordeaux buy futures because it allows them to offer a better selection to their customers. But at some point, it may not be a worthwhile investment for merchants.
Desperate to keep allocations but avoid getting stuck with inventory, many négociants are employing something château owners hate—discounting. It can create ill will among fellow merchants and damage a chateau’s image, but Bordeaux wine is sold like a commodity, and as any Econ 101 student can tell you, a commodity quickly finds its correct price in the market—in this case, a troubled market. "We’re very fast with our offers, but within an hour after the wines are released, our customers are telling us they’ve already received the same wines at lower prices," said one négociant.
"I can't even be indignant or angry about the pricing, because they did moderate it, but they've just got a vintage which ain't that exciting," said Michael Glasby, senior wine buyer for Berkeley, Calif.-based Premier Cru. "There's no money in futures really. It used to be that there was very little in it, but it was safe money, and there was money for the speculators. You didn't make a big margin, but you made quite a lot of it." In the last few campaigns, the châteaus have gobbled up that margin.
"Bordeaux futures are supposed to reward clients, allowing them to make money," said a négociant who has been selling futures for 30 years. "Today, that concept has been forgotten."