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Vinexpo 2007: Prices and New Markets Are Key Concerns

With 50,000 visitors present, 2006 Bordeaux futures and Asian buyers were on many people's minds

Eric Arnold, Tim Fish
Posted: June 21, 2007

Vinexpo, the international wine-trade show held every two years in Bordeaux, came to a close tonight in grand style with the Fête de la Fleur party at Smith-Haut-Lafitte in Pessac-Léognan. The celebration was a chance to relax after producers, merchants, importers and media had spent four long, busy days holding one meeting, deal and interview after another. Though some attendees expressed frustration with wine prices or their regions' lack of presence (and even wines) at the show, the general sentiment seemed to be that Vinexpo 2007 was a success, considering the turnout from buyers in traditional and new markets alike.

An estimated 50,000 people from 140 countries crowded the aisles of Vinexpo's massive exhibition halls this week. On hand were 2,400 exhibitors from 45 countries, including delegations from Croatia and Barbados. France had the largest contingency by far, commanding 61 percent of the exhibit space. Spain, for the first time, surpassed Italy this year as the No. 2 country at Vinexpo.

Producers from Australia and New Zealand were virtually absent from the floor. E. & J. Gallo was a key player with a large lakeside pavilion, but the United States overall ranked as only the sixth largest contingency. California wineries such as Trinchero Family, Kenwood and Joseph Phelps shared a cooperative space in the heart of the main hall, and Napa Valley cult wine producers Bill Harlan of Harlan Estate and Charles Banks of Screaming Eagle were seen wandering the halls. Otherwise U.S. producers were few and far between.

Some U.S. producers shared booth space with distributors and importers, such as Bruce Cakebread, winemaker for his family's Cakebread Cellars in Napa Valley, who poured wine at the Kobrand pavilion. Cakebread lamented that more of his California colleagues weren't on hand. "But I guess when the market is so good in the U.S.," he said, "many of them think 'Why travel?'"

While sales are good, Cakebread said U.S. producers need to look to the future and emerging markets in Asia. That's why he came to Bordeaux. "You think you're the Big Kahuna in your own market, but you come here and it's 'Who are you?''' Cakebread said. He added, "It's easy to be a national brand, but it's tough to go international."

Few wines are more internationally recognized than Bordeaux's classified growths and, as always, the talk of Vinexpo was the potential prices for the region's latest vintage. Due to the stratospheric wine prices set by the châteaus in the 2005 en primeur campaign, there has been much nervous anticipation surrounding the prices of the 2006 Bordeaux wines, considered at this point by many to be very good, but not at the quality level of those from the 2005 vintage.

While some négociants and media were calling for a return to 2004 prices, the first châteaus to release their futures prices have indeed dropped them, but not necessarily as low as some would hope. Jean-Guillaume Prats of sescond-growth Château Cos-d'Estournel dropped his price to 80 euros from négociants to their clients, while Bernard Magrez of Château Pape-Clement told Wine Spectator that his release price will be 69 euros, about a 15 percent drop from the 2005 price. Pontet-Canet dropped its price from 39 euros to 36 euros, while Château d'Issan's Emmanuel Cruse said he dropped the price of his wine by 18 percent. Of course, concern still looms over what the prestigious first-growths will do when they announce their prices in the days after Vinexpo.

Baroness Philippine de Rothschild, for one, carefully danced around the issue in a speech she delivered to other vintners and media at the Conseil des Grand Crus Classés en 1855 international press dinner, which she hosted this year at Château Mouton-Rothschild. On one hand she hinted that prices for first-growths could drop, suggesting that the world's elite could whimsically choose to show off their wealth by buying luxury products other than collectible wine. But earlier in her speech she defended the high 2005 price: "Let us not forget that all of us here make a rare, if not to say unique product, with our three trump cards that I believe will long remain so: terroir, know-how and prestige."

Leading up to the dinner, Frédéric Engerer, president of Château Latour, expressed concern over simply setting the right price, not a higher or lower one. "It's like real estate," he said. "How do you tell a collector that the same money they spent last year will get them less, or something of lower quality? It is very difficult."

At the same time, some producers and their négociants expressed happiness and relief at how the 2006 en primeur campaign has gone for them. While wine merchants and château owners did not agree about prices, Château d'Issan's Cruse said, "I'm very happy with the '06 campaign because we've sold all our production, 7,800 cases, in less than a day. It's not as good as in '05, which was only three hours, but it's a good result. You need to know your market and your price range."

Négociant Frédéric de Luze of L.D. Vins--which sells to distributors in Europe, North America and Asia--noted that they sold all of their allocation of d'Issan (which in recent vintages has retailed for about $30 to $35) in 24 hours. "We have been able to sell this kind of château very easily, and the customers are very happy," said de Luze.

Sellers are getting a boost from relatively new markets such as India, China and Russia. While some have lamented that the margins in China are too low, De Luze has a representative there who notes that there is already enough demand there to squeeze supply on traditional markets such as the United States.

Vinexpo got off to a rocky start for some producers on June 15 when hundreds of cases of wine were held for nearly six days by French custom officials at the Belgium border. E. & J. Gallo and Foster's Wine Estates were among the companies affected by the delay, but the industry association Wines of South Africa (WOSA) was hardest hit.

"Fifty percent of our producers had no wine," Dalene Steyn, WOSA's marketing manager for Europe, said of the first few days of Vinexpo. "When they heard, some producers managed to bring a few bottles directly with them from South Africa." Steyn explained that a pool of producers had hired a truck to ship the wine from Antwerp to Bordeaux and custom officials at the border questioned the validity of the paperwork.

"It was a case of getting caught in petty bureaucracy," said James Gabbani, one of the Vinexpo organizers for Gallo. "We were lucky because we were able just to access new stock from the U.K., and we had wine when Vinexpo opened."

Many South African producers, however, were without wine until Wednesday. "I must say, the producers had surprisingly good spirits about it," Steyn said.

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