"We are too expensive in Bordeaux," said Thunevin, the owner of the 22-acre estate. He is also a wine merchant in Bordeaux, selling top wines of the region to clients around the world. Current vintages of Valandraud normally sell for about $500 a bottle in U.S. wine shops. "In 1997, everyone exaggerated their prices. It wasn't just the wine producers, but everyone was to blame -- negociants, merchants and consumers. If Bordeaux producers drop their prices in 1998, they will show clients that they appreciated their business in 1997."
In the spring of 1998, Bordeaux chateaus began releasing their futures, or "en primeur," prices for their '97 wines with an average increase of about 20 percent, despite lower quality in comparison to the previous two vintages. Many wine merchants bought the '97s, but they found slack demand in the world market due to the high prices. Some merchants, especially in the United Kingdom, began in the fall to sell their '97s at prices 20 percent to 30 percent less than cost.
Traditionally, Bordeaux wine estates begin to sell their wines as futures in late spring or early summer each year. Selling Bordeaux futures is a process similar to selling and buying commodity futures or options on Wall Street. When customers buy a Bordeaux wine future, they are purchasing wines that are aging in the cellars of the chateaus. Therefore, buyers will not take delivery of the wines until they are bottled and shipped, usually slightly more than two years after the harvest. Release prices are for merchants in Bordeaux, who then sell the futures to merchants in various countries. Depending on the market, the consumer usually pays from one-and-a-half to two-and-a-half times the release price.
"Valandraud's reduction in prices was a great gesture," said Steven Browett, one of the owners of London-based Farr Vintners, one of the biggest traders in blue-chip Bordeaux and a huge buyer of Valandraud. "Thunevin could have sold his wine for 1,000 francs \[about $172\] a bottle with little trouble, but he wanted to give a sign to the market."
Nonetheless, some wine merchants in Bordeaux who had bought the '98 Valandraud at the reduced price were already offering the wine to customers such as U.S. importers at $259 a bottle -- meaning that the wine would be sold to U.S. consumers at $500 or more a bottle. The same merchants in Bordeaux expect Thunevin to release more of the '98 at prices two or three times his opening price.
"This will not change the market in any way," said one major wine merchant in Bordeaux, who also calls such cult wines "garage wines," because they are made in small wineries and have little or no tradition or history behind them. "Wines like Valandraud have nothing to do with the top wines of the region or the market as a whole. Valandraud has been used purely for speculation and is simply a financial tool."
Still, Thunevin believes his price reduction will not go unnoticed. "I wanted to show that 'garage wines' are an important part of Bordeaux. Just like other top chateaus in Bordeaux, we should be capable to understand that we live thanks to our clients. My wine exists because of my customers."
Thunevin believes, like most other wine producers in St.-Emilion and Pomerol, that his '98 is a fabulous wine -- in his case, his best ever. Many wine estates on the Right Bank of Bordeaux harvested the majority of their grapes before rains arrived in late September. The vintage has already been deemed a great Merlot year.
"It is the best wine we have ever made, but we have to be loyal to our clients," said Thunevin, whose first commercial vintage was 1992. "For me, the '98s should be better than the '95s for Pomerol and St.-Emilion."
Bordeaux producers predict high prices and demand for 1997 despite a dip in quality.
The Taste of Money in St.-Emilion