How are 2009 Bordeaux futures selling? "You get a lot of, 'That's a crazy price. I'll take six bottles,'" says Trey Beffa, wine buyer at K&L Wine Merchants in Los Angeles. "That goes all the way down the line. The négociants say, 'Wow, that's crazy. I'll take my allocation.' And then [the retailers] are saying, 'Wow, that's nuts. I'll take it.'"
Despite the highest prices on record, the world is clamoring for 2009 futures. In the past week, all five first-growths have released their first tranche or allotment, at prices that floored even some trade veterans. Château Haut-Brion released its first tranche Wednesday morning at $612 (500 euro) per bottle from the cellar, before négociants and retailers add their markup. That matched the price of Latour's first tranche Tuesday, while Margaux, Mouton-Rothschild and Lafite Rothschild all released at $550 (450 euro). In Sauternes, Château d'Yquem came out Thursday at $540 (440 euro).
Despite the sticker shock, négociants report global sales are brisk for the highest rated vintage since 2005. "I don't know if we'll wake up with a headache, but for now sales look good," says François Thienpont, head of the négociant firm Wings. U.S. retailers report that customers are buying, if ruefully. But several négociants say sales to the U.S. are more restrained than in 2005. Customers in the U.K., central Europe and Asia—particularly Hong Kong—are showing more interest. But with futures for most wines just arriving on the market, it is still too early to tell.
Prices of the Century
Top retailers in the U.S. report that even though many prices, from the first-growths all the way down, exceed those of in-stock 2000s and 2005s, customers have been eager. "Where there is lamentation about price it's more, 'Well, we knew this was going to happen, but I want the wine,'" says Chris Adams, CEO of Sherry-Lehmann in New York. In blockbuster vintages, "there has been an accommodation made in the customer's mind."
Prices are up across the board from 2008 and, in most cases, from the classic 2005 vintage (see chart). And there's still uncertainty—the top producers released very small first tranches. "Lafite released half of what we got last year, Mouton about 30 percent less," says Thienpont. Small first tranches will likely stoke demand and allow the château to raise the prices with each subsequent allocation. Some négociants are waiting until the second tranche is available before selling the wine to retailers.
"The first tranche prices are unrealistic because nobody's going to see the wine at those prices," says Steve Wallace of Wally's Wine and Spirits in Los Angeles. "I wouldn't be surprised if when Lafite comes out [with more tranches], you'll see it at over $1,200 [at retail]."
"[Prices are] well above what I anticipated in my worst nightmares," says Michael Glasby, sales director of Premier Cru in Emeryville, Calif. "The first-growth market is increasingly isolated from the rest of the Bordeaux market. It's speculation allied to the luxury brand market." Lafite, which is especially popular in Asia, could rapidly grow very pricey. "I don't know how the Bordelais are going to handle the fact that Lafite can justify twice the price of the other first-growths. It could cause a lot of unpleasantness."
"First-growths appear to be in a league of their own at this point," says Jeff Zacharia of Zachys in Scarsdale, N.Y. He was not surprised by the prices, however. "And the demand, even at those prices—I could have sold ten times as much as I got in my opening offers."
Separating Smart Buys From Less Smart
Below the first-growths, the wines are expensive but several are triggering enthusiasm. Across the board, retailers and négociants are calling Château Pontet-Canet a good buy even though the $132 retail price is 61 percent higher than the 2005 futures price. Alfred Tesseron's estate has made big improvements in recent years and the wine scored a potential 95-98 points from Wine Spectator. "It's the best buy of the vintage," says Wallace.
Other smart buys, according to retailers, include Lynch-Bages (96-99 points), Malescot-St.-Exupéry (97-100), Léoville Poyferré (93-96), Domaine de Chevalier (93-96), Smith-Haut-Lafitte (95-98), Montrose (97-100) and Pavie-Macquin (96-99). "Good, strong super-seconds with a good name and good scores are selling through at either side of a hundred bucks a bottle," says Glasby.
"I think those were [priced fairly]," says Bill Newton, at Binny's Beverage Depot in Chicago. "They're obviously on the high end—but everyone is on the high end."
"The absolute value of the release price for Lynch-Bages [$115 in the U.S.] is high," says Jean-Charles Cazes of that estate. But when setting the price, "we tried to respect the fundamentals of the market—the quality of the vintage, the supply and demand and the available wines of similar quality that are on the market."
Cazes also point out that with "every vintage of Lynch-Bages since at least 1997, the wines have gone up in value, for recent vintages at least 25 percent, if not double in price" between en primeur and bottle releases. Cazes priced his 2009s to the négociants at 30 percent less than the '05s on the market and 50 percent less than the '00s, choosing to release all his futures in one tranche. "We do not speculate. We sold everything that we had to sell. It has been a family policy for generations now. We are a producer; we produce."
"The disappointment of the campaign has been the U.S. There is enthusiasm, but the response has been nothing close to what we hoped for."—négociant Mathieu Chadronnier
But scores for the 2009s were not as consistently high as in 2005. And some prices, even for highly rated wines, have raised eyebrows. Ducru-Beaucaillou has been offered for $260 a bottle at retail, while l'Evangile is going for $295, Figeac for $243 and La Mission-Haut-Brion is $800. "There are some wines that were priced so far outside the stratosphere that I couldn't see myself taking a significant position," says Adams, especially when plenty of 2000s and 2005s are available for lower prices.
"We've seen prices on Ducru and Palmer, La Mission—Not only are they small tranches, but the prices are, shall we say, robust to the extent that I don't think they're pricing them for the U.S. market," says Glasby.
The Bordelais admit the prices are high, but they also note that the wines are not going unsold. "You have new consumers who are really eager to get their hands on this vintage," says Mathieu Chadronnier, general manager of négociant CVBG. "And some others, who already have cellars full of fine wines, have decided this year is not the year to spend crazy money."
Is Asia a Factor?
Several American retailers suspect that the wines were priced for a Chinese market many expect to be ravenous. Don St. Pierre Jr., CEO of Shanghai-based importer ASC Wines agrees, but warns that people may be overestimating Mainland China's interest. "We do believe there is still very strong demand in China," he says. "But demand for wine futures is centered solely on the very top wines."
Chadronnier agrees. "The interest in China is the top wines and the top wines sell out every year." He also points out that brand name is more important than vintage with Chinese consumers, who are buying top names from good but not classic vintages like 2006 and 2004.
While speculation has focused on Beijing and Shanghai, Hong Kong may prove to be Bordeaux's most-valued customer for 2009s. "In Hong Kong there is a much more diverse and widespread demand for Bordeaux futures, so our Hong Kong offices are having more success," says St. Pierre. Thienpont reports that interest is up across Asia, but especially in Hong Kong. He's also finding a lot of interest in the U.K. English merchants are reportedly buying at levels far above what U.K. distribution would justify. Thienpont is hearing more interest than usual in the rest of Switzerland, Belgium and Germany, but less in America. "It's difficult in the U.S.," he says. "There seems to be fear of the prices."
"From the négociant perspective," says Chadronnier, "the disappointment of the campaign has been the U.S. We were hoping to have a successful campaign in the U.S., especially with the low euro. There is enthusiasm, but the response has been nothing close to what we hoped for."
U.S. retailers, however, say it's too early to tell, but most are optimistic. They are seeing more first-time buyers than ever, who are excited about the quality. "We are getting new participants both in the United States and worldwide," says Zacharia. "We're selling [the wines], and we're going back to buy more."
Additional reporting by Mitch Frank. Pricing data compiled by Nick Suarez.
|Wine||2005 Futures||2009 Futures||Change|
Average retail prices from leading U.S. retailers. Not all wines are available at retail yet.