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Pragmatic Pricing on 2008 Futures from Latour?

Posted: Apr 14, 2009 11:55am ET

I got Frédéric Engerer on the phone from Taipei this afternoon from my house in Italy. He had more than 50 e-mails to answer regarding the release of his 2008 Latour to the global wine trade. The president of the famous first-growth released his wine at 110 euros to the Bordeaux wine trade, who in turn are selling it to customers around the world for about 126 euros to 132 euros. I figure that American wine consumers will be able to buy a bottle of 2008 Latour futures for about $230 to $250.

Remember that the 2008 Latour is aging in barrel at the château at the moment and will not be bottled and put on the market until 2011. So the wine trade, and perhaps consumers, will be tying up their money on 2008 futures for three years. The hope is that it will be less expensive now than later, but who knows with the global economic crisis as well as the volatile currency exchange? I have heard people say that the euro could go to $1.60 or $1.

Latour was my second-favorite first-growth in my barrel tastings this year in Bordeaux. The 2008 Latour is clearly outstanding, with plenty of currant and blackberry aromas and hints of flowers that follow through to a racy palate that slowly builds with superpolished tannins and pretty fruit. It’s serious stuff.

Engerer released about half the production of the 2008 grand vin as futures.The word from the wine trade in Bordeaux as well as abroad was that the price was reasonable and that plenty of buyers wanted some. “This is a pretty realistic price and a pragmatic price,” said Engerer. “We have made an effort and we have listened to the market. If it doesn’t move at this price, then it is really a frozen market.”

The price seems reasonable to me. I was hoping that first-growths such as Latour would come out even lower so that U.S. consumers could buy them at slightly less than $200 a bottle. I guess it was just a dream? But $230 to $250 isn’t bad.

The fact is, as I've pointed out before, you can’t find a bottle of Latour, or any other first-growth from any good vintage, in the market for $250 a bottle at the moment.

“It is the cheapest Latour available on the market [from the château],” pointed out Engerer on the phone. “Maybe some 1992, 1993 or 1987 is less. But this is the cheapest on the market for a serious vintage. 110 euros for the vintage of this quality, it is very good quality with the cheapest price. End of the story.”

I am not so sure it is the end of the story though. We still have to see what the other first-growths come out at. I assume that it will be the same level. Plus, then all the other top châteaus will follow. The prices are going to have to come down from 2007 levels. That’s for sure.

The prestigious St.-Emilion estate of Angélus came down about 42 percent from its 2007 price about a week ago with its 2008 futures. And Latour is down 45 percent with its 2008 from 2007.

“It is time to have a clear message in terms of price and timing,” added Engerer. “These are not times when wine prices are spiraling high like 2005. We know that there are problems in the market.”

We certainly do know that there are problems in the world. Just read or watch the news. So I am not sure that selling other 2008 futures is going to be easy even to the wine trade. But maybe I have it wrong? As I have written before, the wines will be sold and drunk some day, if not as futures. 2008 is a very good vintage with some outstanding quality wines in Bordeaux.

Peter Wrobel
London, UK —  April 14, 2009 1:12pm ET
I'm interested in the consumer price in the US. The very small allocations on the UK market were priced at just under ¿1600 a case. That's a shade under $200 a bottle at current ¿/$ exchange rates. Are margins a whole lot tighter in the UK?
Andrew J Grotto
Washington, DC —  April 14, 2009 1:47pm ET
Hey James, minutes ago I received an announcement from a local wine shop here in the DC area offering 2008 Latour futures for $3000/case (that's $250/bottle) and Les Forts de Latour for $1000/case.
Gil Lempert-schwarz
Vegas Baby —  April 14, 2009 2:10pm ET
James, I think the two most important points you touched upon in your blog here, is that who in their right mind will want to tie up their money for 24+ months on a Bordeaux Futures vintage, that may be excellent, but will largely not move price-wise in that same period of time? Secondly, is the currency issue; especially if you're buying in US$. If you buy the Latour now at the Euro being 1.32 to the dollar, and the wine itself if 130 Euro ex Negociant, but when finished and released in bottle, the Euro has moved to 1.05; you're really going to be in the hole on this one, because not only have you lost on the exchange rate, but in US$ terms you could probably buy it cheaper upon release than now. There are naturally many factors at play here, but most importantly, I think the market will largely stay out of this, and additionally, Engerer is smart to only have released about half the production, because then there's only half as far to the "finish line"...
R M Kriete
April 14, 2009 2:51pm ET
So will merchants be able to sell ANY 2006's and 2007's, given the overinflated prices they had to pay to acquire these over the last two years?
Matt Scott
Honolulu HI —  April 14, 2009 5:54pm ET
Gil: Great point and it seems like Engerer is very shrude. 2008 might be worth buying, especially something like Latour, however, the quantitative future purchases will not be what the Chateau's are hoping for. Bordeaux needs another 2005 or '00 to be able to get people excited enough to buy futures. As an active wine consumer/collector, I would much rather have cash on hand for the great values that keep popping up, and boy have they, as opposed to tying up money for a wine that I won't get in over two years, and is not of the highest echelon vintage wise for that region. The futures game might be something of the past.....
Peter Chang
Hong Kong —  April 14, 2009 8:58pm ET
When I met Frederic last Monday, Angelus had just announced their price and it was seen as a bold move and the talk of the town. At that time Frederic said that the First Growths should come out quickly and set the tone of the market. I guess he kept to his word.
David A Zajac
April 14, 2009 9:01pm ET
I agree with the general sentiment expressed here, I bot plenty of wine from 1998, 2000, 2003 and 2005, I don't need a good vintage Latour for $250 that I won't see for 2-3 years with prices falling, falling, falling...simply put, not interested.
Tyler Binney
Georgia —  April 14, 2009 10:56pm ET
When it comes to buying, cellaring, collecting, & drinking great bottles of Latour (regardless of the vintage), I take a much less analytical approach. A bottle of Latour is something special and that is why I will continue my Latour vertical for years to come. In 30 years when I retire from the rat race, just think of the endless possibilities and wine tastings that I will have?? I could care less what my vertical will be worth in 30 years... I just care about the experience that I will have drinking it with those that I love. Eat, Drink Latour, & Be Merry! Bravo Mr. Engerer! I look forward to drinking Latour with you again the next time you visit the Breakers in Palm Beach!
William Thomen
San Francisco —  April 14, 2009 11:02pm ET
James - As you were hoping, K&L Wine Merchants in San Francisco just sent me an e-mail for the 2008 Latour at $199.99 a bottle.
Chris A Elerick
Orlando, FL —  April 15, 2009 8:54am ET
my online wine retailer of choice based in san francisco just posted a futures price for '08 latour of $195. and although it's enticing, there's so much excess supply in the pipeline of readily available, high-quality wine with deteriorating prices that i haven't given this opportunity a second thought.
Karl Mark
Geneva, IL. —  April 15, 2009 9:17am ET
Prices on some of the 2nd growths are out today and they are similiar to 2004 pricing as well. If this trend continues I might buy. I think the hard sell for 1st growths will continue because of all the quality older vintages still in the supply chain. Why purchase a 2008 first growth for $225 when you can find 1995 2nd growths for $150? What would you do James?
Scott Morris
Chicago —  April 15, 2009 9:29am ET
K&L Wines is showing 2008 Latour at $199.99/bottle...
James Suckling
 —  April 15, 2009 10:05am ET
Wow. If some retailers are offering 2008 Latour at under $200, then they are working on tiny margins. Moreover, they will not have to pay for the wines until September; so they are also speculating on currencies...etc. Make sure you buy from reputable wine shops!
James Burgunder
Rheinfelden —  April 15, 2009 11:38am ET
221 CHF in Switzerland today. At today's spot rate, this is 193 USD. I just placed my order.
Austrich Wine Club
Singapore —  April 15, 2009 1:11pm ET
The Latour first tranche were all sold out for me at that price .. according to the shop here very small quantity released. It sounds to me like a test market tatic? I did not manage to get any, not sure what price will be after this. I am quite interested but it depends on the price. If it goes up by US$50, I would say "NO THANK YOU"I saw L¿ille Barton for 330pounds on Farr, seems attractive
Jordan Horoschak
Houston, TX —  April 15, 2009 1:40pm ET
Yes, James makes a very important point about "reputable wine shops". In this economy, any business can go bankrupt, especially a luxury wine merchant. If a merchant goes bankrupt, and they already have your futures money, it may be a long and twisted road to get it back (if you get it back at all) - you'll be just another unsecured creditor (this happened in the 1980s, yes James?). Maybe now, more than ever, consumers need to think about getting the best price... but also about getting in bed with a merchant who is financially sound. After all, waiting 2-3 years for the 2008 vintage is longer than many marriages!
Matt Scott
Honolulu HI —  April 15, 2009 5:02pm ET
I just picked up a 1970 Chatueau Palmer for around $200 and a 3 bottle case of "The Noble Man" 2002 by SQN for $170! Again, I'm having a hard time parting with $200 - $250 for a wine that I won't have for 2- 3 years. I bought 3 bottles of '04 Mouton as futures for $205 ea, only to find it at Costco after release for $168 ea. That set a new precedent for myself with the futrue game.
Jeffrey Ghi
New York —  April 15, 2009 10:49pm ET
Hey James,

can you comment on what you think about the ageability of the 08's? is it structured like the 2001s? Approachable like the 1998s? Enough stuffing for 8-10 years but early drinking like the 2002s?
Bordeaux France  —  April 16, 2009 5:34am ET
Bonjour James, I am very supprised to haven't see any comment and scoring on the Chateau d'Angludet Margaux 2008. You well score it many times and it was poured at the UGC tasting. Please let me know if you plan to writte something on this chateau. I am looking forward to hearing from you Best Nicolas Idiart Maison Sichel
James Suckling
 —  April 16, 2009 5:42am ET
Hi Idiart. Sorry but I didn't taste the Angludet. I didn't have the time to taste everything this year. So I had to cut back. I will taste it when it is in bottle. Thanks for the message.
Bordeaux France  —  April 17, 2009 5:17am ET
Bonjour James, MerciAccording from the first press review, Chateau d'Angludet was one the best wine in the entire UGC Margaux room this year.The late Peter A Sichel owner of Chateau d'Angludet was the creator of the UGC primeur tasting when he was the UGC president. I hope next time you will have time to taste it. Thanks again for your quick reply. Nicolas Idiart
Austrich Wine Club
Singapore —  April 19, 2009 2:52am ET
the 2nd tranche of Latour is up by US$30 over here ..about US$225 and sold out. I just wanted to have a few bottles

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