After weeks of hints and whispers, Bordeaux's futures campaign for its 2014 vintage got its unofficial start Tuesday morning when first-growth Château Mouton-Rothschild released its initial allotment of futures at a price of €240 ex-négociant, or $263. While a few properties had released in the past two weeks, the first-growths often set the tone for the campaign.
The Mouton price is an 11 percent increase on its 2013 futures. After markups by importers and the U.S. distribution system, 2014 Mouton futures will likely retail for approximately $325 per bottle, or $3900 per case. Wine Spectator rated the 2014 Bordeaux vintage at 91 to 94 points for the Left Bank, compared to 83 to 86 points for the 2013, and rated 2014 Mouton in barrel 95 to 98 points versus 91 to 94 for its 2013.
The other first growths and other prominent châteaus will likely release their prices in the next few weeks as the campaign heats up. Château Angélus ($233 retail), Palmer ($206 retail) and Lynch-Bages ($79) released 24 hours after Mouton. (For a full analysis of their prices and other top estates, please see our Futures Pricing Chart.)
The question remains, however, will consumers buy in significant amounts?
"The appetite for young Bordeaux en primeur has diminished amongst our clientele and in the U.S. market in general," said Jeremy Noe, CEO of New York's Morrell & Company Wine. "With too many wines in recent years, the en primeur price and the delivery price are nearly the same."
Classified-growth Bordeaux faces a challenging landscape. The past four sales campaigns were weak, and négociants have large stocks of unsold wines in their cellars. Many longtime customers in America and Europe have turned to improving lesser-known Bordeauxs and other wine regions, and wealthy Chinese buyers who eagerly purchased expensive 2009 futures have slowed spending.
As in recent years, everything will depend on the prices.
We need to find a new normal
Merchants in America and the U.K., as well as négociants and courtiers in Bordeaux, have been lobbying château owners to keep prices at the same level as the poor-selling 2013s. Lower prices would be even better. “They need to hold to 2013 prices," Giles Cooper at London merchant Bordeaux Index told Wine Spectator. "We need to find a new normal.”
The primary purpose of the futures campaign is to allow consumers to secure the wine before its release and, ideally, get the wine at a better price than they would two years later. Château owners are able to make money while the wine is still aging. But prices for most of the leading wines from the past five vintages have not increased in value since their futures were sold, not even the classic-quality 2009s and 2010s.
“The primeurs are a speculative purchase by definition, with the hope of gaining value by the time the wines are delivered two to three years later,” said courtier François Lévêque. "Since 2010, in most cases Bordeaux has not given prices that serve this speculation. We need reasonable, coherent prices.”
While American consumers may benefit from a stronger dollar this campaign, U.S. retailers say that's not an excuse to raise prices. “Simply put, if the châteaus determine the appropriate price for the euro zone, then Europe will be happy and Sherry-Lehmann will smile,” said Chris Adams, CEO of New York retailer Sherry-Lehmann, while visiting wineries in Bordeaux during barrel tastings.
2013 was a catastrophe
The 2014 vintage produced Bordeaux's strongest wines since the classic 2009 and 2010 vintages, according to Wine Spectator senior editor James Molesworth, who visited the region in March and conducted extensive barrel tastings. But while 2014 should prove better than the previous three vintages, it does not rise to the same quality as 2009 and 2010.
Château owners don’t like to be reminded of the 2013 vintage. There has been grumbling that the 2014 vintage is a better wine and should therefore cost more. They also argue that if they charge the same price for their 2014s, no one will ever buy the previous vintage.
Merchants say that argument ignores the consensus that the 2013 campaign was a disaster. One London merchant said that pricing 2014s higher to protect 2013 sales was akin to killing a healthy young man in an attempt to rescue a dog that is already dead.
One of France’s most influential Bordeaux buyers, Didier Coustou from the 550-store Leclerc supermarket chain, agreed. “The 2013 is a catastrophe," he said. "It’s dead. Unfortunately, we bought some.” Leclerc typically spends between 20 to 35 million euros annually on futures, but Coustou doubted he would spend anything close to that this year. “I’m skeptical. If they exaggerate [prices], we won’t follow.”
American consumers have largely moved on from futures. Bill Kirchmeyer, director of Wine Operations for Binny's Beverage Depot, said his team buys futures from 40 estates for their 31 Chicago-area locations. But they have little demand from customers. They're chiefly buying the futures so they can offer the wines later, after release. “We buy," he said, "But we don’t sense a big interest. We order to supply our stores.”
Kirchmeyer said that in the case of the 2013 vintage, there was simply no interest from consumers. They didn’t sell a single bottle of one first growth he would not identify.
The American discount?
So far, the winegrowers appear to have listened. The 2014 campaign got a tentative start with Château Prieuré-Lichine at €26 ($28.50) and Château Gazin at €39.60 ($43.40), both small increases on 2013. (Ex-négociant prices are what the wine costs after the négociant has added their markup; the final price will be higher after importers and retailers handle the wine.) And despite a small yield and exceptional quality, Sauternes estates Châteaus Suduiraut and Coutet kept the same prices as their 2013s, at €42 ($46) and €24 ($26), respectively.
But the response has been cautious. “The campaign is very slow at the moment, except for a few [cru bourgeois] wines like Château du Retout, with its 90- to 93-point Wine Spectator rating, which has been a hit,” said Philippe Larché at négociant Vintex. “We need a strong signal from a big brand in order to really launch the campaign.”
Mouton certainly fits the description of big. But will consumers like the price? At €240, the 2014 is the same price the 2012 was released at and is 11 percent higher than the 2013. Mouton's managers may be counting on the fact that the price makes the wine cheaper than current market prices of all recent vintages except for 2013.
They may also be counting on another factor—Americans will get more bang for their buck this campaign. The euro has declined more than 25 percent against the dollar in the past six months, and now trades just under $1.10.
So while Mouton's 2014 is priced 11 percent higher than the 2013 futures in euros, it's nearly 12 percent cheaper in dollars. The 2013s cost $298.75 on release, while today's tranche was at $263.
The strong dollar has already helped négociants sell past vintages. The Place de Bordeaux, where négociants buy and sell the region's top wines, is in better shape than it was last winter, thanks to the weaker euro.
“It’s been very favorable to us, our exports and our buyers around the world. It’s led to transactions across the price range for bottled vintages,” said Lévêque. “There was stock that was stuck here in Bordeaux that has left. The market is relatively healthy.”
American retailers say it's too early to tell if the exchange rate discount will be enough to draw their customers back to en primeurs.
And if the U.S. doesn't buy in large amounts, who will?
Asia remains a valuable market, but not as strong as five years ago. “We were surfing on a Chinese wave that wanted to buy wine en primeur, and we weren’t selling the wine at the right market price,” said Lévêque. Many Chinese buyers balked at 2010 prices when they saw the wine wasn't appreciating in value. The wave broke completely when the Chinese government launched a crackdown on lavish spending by officials and executives at state-owned companies.
“The wealthy mainland Chinese do not want the government to find out that they are spending money on luxury goods—which includes wines,” explained George Tong, a well-known wine collector and vice president of Wong Hau Plastic Works in Hong Kong.
“Hong Kong and China are still flooded with stocks of top grand cru classé bought over the last few years,” said Vincent Yip, manager at Topsy Trading, historically one of the most important buyers of classified growths in greater China.
Tong bought 2010 Lafite at £12,000 a case en primeur. “This wine is currently trading at slightly over £6,000 for 12 bottles," he said. "It is probably one of the very best Lafite ever produced. I believe the price will eventually rise."
In European markets, demand for futures will be affected by clients like Leclerc, which sells diminishing amounts of classified growths and increasing quantities of cru bourgeois wines, which have improved their quality in recent years. “It’s good wine at a reasonable price that can age,” said Coustou. "It’s what consumers want. The grand cru classé estates need to return to prices that are attractive to consumers.”
Now that Mouton has released, those estates are beginning to show if they agree.