Latour Releases Older Wines—Is Anyone Buying?
No one said reinventing the way Bordeaux does business would be easy. On March 19, first-growth Château Latour announced the release of three wines from past vintages, including Latour 1995, from the winery's cellars. The sale is a model for how the estate will do business now that it is no longer participating in Bordeaux's annual futures campaign.
So far the response has ranged from measured enthusiasm to cold rejection. At least three major négociants—Duclot, Diva and Millesima—have refused their allocations.
The Médoc first-growth, owned by French businessman François Pinault, announced last April that it was abandoning the en primeur system starting with the 2012 vintage, and would only sell its wine once managers felt it was ready to drink. This week's release included approximately 1,000 cases of 1995 Château Latour at about $487 per bottle ex-château; it's retailing for about $622. Latour also released allotments of second wine Les Forts de Latour 2005 and third wine Pauillac de Latour 2009.
The 1995 Latour received 94 points when it was first released in 1998 and was priced at $120 a bottle. In the past three months, it sold for an average price of $475 at auction, according to the Wine Spectator Auction Index, and can be found for about $550 at retail—meaning that Latour's new release comes with a 13 percent premium.
"This isn't a boycott."
Executives at Millesima, Duclot and Diva told Wine Spectator their refusal to buy the wines was not a reflection on the quality, but an objection to Latour's decision to not participate in the futures, or en primeur, campaign next month.
“This isn’t a boycott,” said Fabrice Bernard of négociant-retailer Millesima. “The objective is not to attack Latour as a group. If tomorrow Latour sells en primeur, we will sell Latour again. But they are destroying the entire distribution system. This is Latour’s choice, not ours."
“There is too much profit on the side of the château,” said Jean-Pierre Rousseau, general manager of Diva. Rousseau said that he had spoken with clients in Europe, America and Asia, and heard neither enthusiasm for the wines nor for the new sales system.
Latour declined to comment. “It’s a bit early for us to communicate on this,” said Jean Garandeau, sales and marketing director. "Our priority is to work on the distribution of these wines."
The strategy of holding back stock to sell later is nothing new. Latour has previously released older, bottled vintages a couple times a year. Négociants either took the allocations or saw their en primeur allocations reduced.
But négociants believe Latour's departure from the en primeur system hurts everyone—from négociants to retailers to consumers—to the benefit of the château. The futures system pays producers up front for wines that must still age. People buy futures because, most of the time, prices will rise as the wine matures. Latour is taking that opportunity away, the négociants complain, selling later and pocketing the gain in value. “The aim is to eventually sell the wines much higher than the en primeur price,” said Rousseau.
The château's executives argue that they are releasing the wines when they are ready to drink. They also say provenance is a factor—the wine will arrive with a Prooftag seal and a back label stating the date of shipment from the château.
But is it worth the extra money? Justin Gibbs, director of London-based wine exchange Liv-ex, feels only new collectors will be attracted to this wine being sold at a premium. Experienced buyers will simply ask a trusted merchant if their wine has been stored well. "There's this suggestion that only the château knows how to store wine, which is odd," said Gibbs.
“It wasn’t a blockbuster, but there was clearly a demand.”
The long-term challenge for Latour will be to sell their stock of older vintages, knowing their cellar will refill each year with 240 acres worth of wine. Nevertheless, Bordeaux is a $5.6 billion business, and if there is demand, there are négociants and retailers willing to sell.
So far, initial demand for the ex-château Latour is cautious, reflecting a number of factors, including a sluggish desire for first-growths. “Latour has a following. It is one of the finest wines in the world,” said Joss Fowler, head of fine wines for broker Fine & Rare Wines. “We sold 20 cases. It wasn’t a blockbuster, but there was clearly a demand.” Fowler's team sold the wines to private collectors spread evenly between the United Kingdom and Asia.
American response has been mixed. In New York, Chris Adams, CEO of Sherry-Lehmann, said he’d be offering the wines. “When the opportunity comes along to purchase wines direct from the château, I do expect that we will have interest," he said. "And I'm happy to secure some of the wines for the future, too.”
But Barbara Hermann from Binny’s Beverage Depot in Illinois said she passed. “We have plenty of $600-and-up bottles of first-growths in our stores and don't need more," said Hermann. "That's not to say I won't be interested in the future.”
In China, Don St. Pierre, Jr., chairman of ASC Fine Wines, said he would take the wines. “The key issue for us will be the price the négociant offers. If our price is at or below current market price for the same vintage, we will buy more.”
Hong Kong retailer Jay Ginsberg of Ginsberg+Chan said he had turned down offers, however. “I already have stock on hand at lower prices than was being offered to me. There is always demand for Latour from my clients but not at these prices—they don't appeal to my clients.”
Only time will tell if Latour's new approach will work, especially as these releases become négociants' only chance to get their hands on the wines. “If the first-growth model of positioning their wines like pieces of art works, then so be it,” said Hermann. "There are a lot of rich people out there."