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Calls for Bordeaux en primeur price restraint is not ‘crying wolf’

16 April 2024 By Arabella Mileham

A new report from Liv-ex has said that the warnings around this year’s en primeur pricing are not “crying wolf”, noting that producers who don’t listen to the market risk losing collectors’ goodwill.

Another day brings yet another report warning about the pricing of the upcoming en primeur campaign – this time, from Liv-ex, whose in-depth look at the market for Bordeaux sets the scene for the campaign. As it freely acknowledges there have been “decades of upset over pricing” while “thirst for top Bordeaux has continued” – and warns that “producers might…. be forgiven for believing that their supply chain partners are crying wolf when warning against further price rises this year”.

However, the Bordeaux 2023– In the Balance report warns that this is not the case – and that the good will the supply chain has traditionally had for en primeur “has been eroded” in recent years.

It pointed to the picture of Bordeaux in the broader market as the main indicator to consider. For example, since February 2022, the Bordeaux 500 Index – the broadest measure of the Bordeaux fine wine market – has dropped 10.3%, with the most collectible wines falling hardest. For example, the Fine Wine 50 Index, which tracks prices of the five First Growths, has fallen 15.3% over the same time, while Bordeaux’ share of the market has fallen to make way for diversification from Burgundy, Italy, Champagne and the US. This has seen it fall from a 60% of trade by value in 2018 to 40% in 2023. While it may remain “the single most important region for the fine wine market”, it is increasingly sharing the stage with more and more regions – and one that is in a particularly slow market, Liv-ex noted.

The report also pointed out that compared to a year ago, there is more than three times as much Bordeaux for sale today than the fine wine market is looking to absorb – a year ago, the value of bids (indicating a commitment to buy) was roughly the same as the value of offers (indicating a commitment to sell) showing that the value of Bordeaux sought by buyers was roughly equal to the value of Bordeaux looking for a home. This is no longer the case – and increasingly buyers are “spoiled for choice” when it comes to buying back vintages.

There’s also the small point of return on investment. As Liv-ex points out, “buyers who purchase En Primeur are, too often, seeing the same wines enter the physical market at the same or lower prices further down the line” – and four of the past five campaigns have wines whose current market prices are lower than their release price.

Furthermore, the data suggests that only “a handful of properties are propping up the overall market” – with only four of the 45 labels represented by the Bordeaux 500 Index – which are available on the open market – giving average positive returns since their release. (A further five chateaux, Le Pin, Lafleur, Petrus, Latour and Forts de Latour were not included in this list as they are subject to tight allocations on release).

“Investing in En Primeur more broadly, however, has been loss making”, the report stated.

It also highlighted the issue that many estates had been gradually reducing the amount of wine offered En Primeur in favour of “drip-feeding the market with more mature vintages”.

While this is “good news for those looking to acquire ready-to-drink wine with perfect provenance,” it is less so for those who want to buy early “to secure the best price. It risks undermining confidence in this segment of buyers,” the report warned.

It also opined on whether some of better-funded estates remained as committed to selling wines En Primeur as they had traditionally been, or whether this was “waning”, with “many hav[ing] one foot outside of the system”.

Glimmers of Hope

There were some positives however – the highly rated 2019 vintage has seen returns of 13% since it was released – “Not a stellar return given today’s interest rates, but a positive number all the same,” it said – showing it is possible. while the expected high turnout at next week’s UGC En Primeur tasting week indicated “continued interest in Bordeaux from around the world”. There had also been “talk of price reductions”, while the greater availability of price data (not least from Liv-ex itself) was a tremendous boon, giving chateaux the opportunity to “price their wines attractively and accurately”.

Further price increases this year are “off the table” for the well-documented reasons of a weak market, stretched budgets and the “era of easy money” being , meaning chateaux “who still believe in the power of en Primeur should think carefully”.

“Unless the prices make sense at the end of the supply chain (add 30%), stock will remain unsold,” it warned.

Justin Gibbs, Liv-ex co-founder and exchange director commented that Bordeaux prices are 14% down from the peak while the cost of money is at a 15-year high.

“Cellars are full and merchants are nervous. Recent En Primeur releases have been overpriced and collectors’ goodwill is in short supply. It is important for growers to keep this in mind.”

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