Bordeaux 2011 Futures Fizzle

"The campaign that didn't happen" ended with a shrug as customers balked at prices
Jul 10, 2012

The 2011 vintage may be remembered as a missed opportunity for Bordeaux. The wines were good, but not as outstanding as in 2010 and 2009, which meant Bordeaux had the chance to win back traditional markets like the United States during its annual springtime futures campaign … if the wines were priced right. But while most châteaus reduced prices by 20 to 50 percent compared to their 2010 wines, many 2011s were still costlier than older vintages currently on retail shelves. With the global economy still uncertain, particularly in the eurozone, buyers saw little incentive to participate in the en primeur campaign this spring.

"I was surprised at the pricing," said Chris Adams, CEO of New York's Sherry Lehmann. "There were a handful of wines that I thought were priced properly, but the vast majority of what I saw, the prices were too high. I didn't expect to have any consumer interest in this, so I couldn't finance their overpricing." He took only 15 percent of the allocations he had snapped up in 2010.

Not all retailers were surprised. "It was not even too little, too late—it was just too late, too late," said Nikos Antonakeas, managing director of the Morrell Wine Group in New York. "I can understand the proprietor who can't all of the sudden reduce their price 80 percent. But at the same time, we have gone up 300 percent over the last decade, so what gives?"

Antonakeas only took 5 percent of the allocations he bought last year. "[Négociants] were trying to sell me offers three times for the same wine in the same day. I was offered bigger allocations, unique allocations, wines that I usually have only five cases, 'Oh we'll give you 10 this year.' Yeah, never mind, I'm not buying even the five," he said.

If conducted wisely, futures can benefit producers and consumers alike: Châteaus can sell off much of their wine quickly, while consumers often get access to lower prices and higher quantities than they would when the wines are released. But overpricing, especially in an uninspiring vintage, can ruin the investment. Those who bought the 1997 vintage en primeur saw the same wines appear on retail shelves for cheaper the next year. Most premium labels from the 2007 vintage can be had for the same price or less today than they sold at as futures.

Many merchants, not to mention négociants and châteaus, still have unsold stock from the historically expensive 2010 vintage, and buyer excitement now centers on the phenomenal 2009s, which will be released in bottle later this year. "You can't force a horse to drink when he's not thirsty," said négociant Francois Thienpont, founder of Wings Wine. "I can buy '01 or '04 or '08 cheaper than I can buy '11," vintages of similar quality that are near or ready to drink. Thienpont called the campaign, "dead—a missed opportunity, absolutely. Even the first-growths were difficult, for the first time. It's a shame, but, you know, c'est Bordeaux."

The instability of the euro is a complicating factor. "If the Euro is at parity with the dollar a year or two years from now because of what's happening, then whoever bought now looks like an idiot," said Antonakeas.

Of course, a gamble on the euro could pay out instead. "Should the euro get stronger, the 2011s will be more expensive when they come to market as finished wines," said Shaun Bishop, co-founder of J.J. Buckley's, a large online retailer.

Indeed, not all sellers saw only doom and gloom out of Bordeaux. "Bordeaux has definitely not lost its mojo," said Bishop. "The best buys came from Pomerol, where quality was outstanding and the prices were appropriate, or even cheap, relative to previous vintages in the marketplace." Retailers cited multiple wines priced well for their quality or buyers' demand—Pontet-Canet ($106), Vieux Château Certan ($147), Clinet ($82), La Fleur-Pétrus ($149), Carruades de Lafite ($183), La Mission Haut-Brion ($336), Beychevelle ($75), and, in a lower price category, Cantemerle, La Lagune, Poujeaux, La Vieille Cure, Monbousquet and Montlandrie.

Sauternes, which had a superior vintage in 2011, has been another bright spot. "The last two vintages for the reds were so hyped up that people kind of forgot about the Sauternes," said Trey Beffa, wine buyer at K&L Wines in Los Angeles. For him, "the Sauternes are [selling] stronger than last year." Adams and Bishop are also seeing better returns on Sauternes than they expected.

Unlike in 2009 and 2010, when many Americans were priced out of Bordeaux but other economies picked up the slack, distributors report the American disinterest in 2011 is par for the course, globally. "In China, given that the 2009 and 2010 vintages were the first that most mainland Chinese invested in, there was some justifiable skepticism regarding the potential upside to investing in 2011, when 2009 and 2010 have performed so poorly relative to these new Chinese buyers' expectations," said Don St. Pierre, Jr., CEO of ASC Fine Wines, a premier Chinese importer, who also cited political instability there as a factor. Hong Kong and London, reliable hubs of the fine Bordeaux trade, sat this one out too.

Only the French themselves, at the supermarket end of the price spectrum, and the Japanese, both of whom were turned off by 2010 prices, had any enthusiasm this year, according to Thienpont.

Some retailers predict that interest in 2011 will eventually pick up, from the typical collector, but there is no urgency to buy now at current prices. "They're kind of sitting back and watching," said Beffa. No one expects the vintage will bring new customers to Bordeaux, at a time when the region is hurting for them.

Paradoxically, a less-than-stellar 2012 may be exactly what Bordeaux needs to get back on its feet. "Except the big châteaus with plenty of money, some [lesser estates] have a lot of stock at the château. They will have a problem because those in this category didn't sell well last year either for the price," Thienpont said. "If next year is an average vintage, you'll be sure to have the right price. Because they cannot play this game twice."

Pricing data compiled by Morgan Taylor.

Wine 2008 current retail 2010 initial futures offering 2011 initial futures offering 2011 futures change from 2008 retail
Ausone $1,119 $1,913 $745 -33%
Carruades de Lafite $454 NA $183 -60%
Cheval-Blanc $646 $1,424 $649 1%
Clinet $119 $150 $82 -31%
Cos-d'Estournel $150 $326 $162 8%
Forts de Latour $251 $285 $181 -28%
La Mission Haut-Brion $307 $1,030 $336 10%
Lafite Rothschild $1,523 $1,524 $715 -53%
Latour $1,101 $1,340 $672 -39%
Lynch Bages $136 $179 $108 -21%
Margaux $729 $1,199 $557 -24%
Montrose $130 $236 $112 -14%
Mouton-Rothschild $1,223 $1,189 $541 -56%
Palmer $223 $357 $256 15%
Pétrus $2,793 $3,200 $1,690 -39%
Pichon-Longueville Baron $130 $228 $111 -15%
Pontet-Canet $122 $179 $106 -13%
Vieux Château Certan $147 $307 $147 unch
France Bordeaux 2011 Bordeaux Barrel Tastings 2011 News

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