Bordeaux 2015: the new normal?

With the dust settled on this year’s primeurs it is clear that much has changed in the way these campaigns are now approached and that their overall importance, especially to the châteaux, has been greatly diminished.

Opinion is somewhat divided on the overall ‘success’ of the campaign with merchants often saying they have improved on their 2014 vintage results but not always to the hoped for degree. Corney & Barrow’s Will Hargrove told the drinks business that while he and his team had been “pleasantly surprised” with the way the 2014s had sold, the final tally for the 2015s would probably be “a little disappointing”.

It was certainly a campaign that marched to the beat of its own drum and that drumbeat appeared, at times, to be rather haphazard.

If volume and value turnover was satisfactory, some prices were still too high and if there was a high level of consumer engagement, eagerness quickly dropped off in the second half of the campaign as prices climbed and sterling failed to strengthen against the euro in the run-up to the recent referendum.

Berry Bros & Rudd has made an estimated £15 million this campaign, more than the £12m realised last year but the still only the same as it made with the 2011s – the “worst campaign in living memory” as it was declared at the time.

Finally, for all the success of Canon, Rauzan-Ségla, Figeac and Margaux, which all merchants have said sold extremely well; many thousands of bottles of first growths were left unsold.

Turnover

Although it dragged at times with long periods of waiting, the overall run time was just shy of two months which is actually shorter than the 2009 and 2010 campaigns which went on for three and four months respectively.

As in the 2011 campaign there were a couple of days when merchants felt somewhat overwhelmed by the number of releases. On 19 May, the day after Pontet-Canet was released, at least five big names including Climens and Léoville Barton came out but there was an even bigger deluge on 1 June when 20 châteaux including Calon Ségur, Smith Haut-Lafitte, Grand Puy Lacoste and Léoville Poyferré emerged.

The most frustrating aspect of this sort of rush is that merchants are unable to focus on selling all of the wines released which leaves many labels put aside in favour of those they feel are more commercially viable at that moment.

That said, it would appear that some merchants have managed to sell good amounts of stock, particularly from Margaux, Pessac and certain wines on the Right Bank – especially Canon and Figeac.

BI’s marketing director, Giles Cooper, reported that clients were “really engaging” with certain wines and volumes were good even if it, “wasn’t like 2009…there weren’t hundreds and hundreds of cases for £250 being sold.”

BI’s clients apparently “went nuts” for Le Gay – a wine released on the same day as Lynch and largely overlooked at first, while BBR sold 7,000 bottles of Grand-Puy-Lacoste and another 7,000 of Giscours.

FINE+RARE’s co-founder, Bud Cuchet, likewise said that volumes were in fact greater than they were for the 2010 campaign – a vintage whose excellence perhaps blinds us to the fact that its primeurs were not terribly, terribly successful in all areas.

Tom Hudson, director of Farr Vintners was less impressed however, saying that while the 2015 campaign had certainly surpassed the 2011-2014 efforts, “it’s a fraction of what we did in ’05, ’09 and ’10.”

Prices were of course high and merchants that didn’t have huge turnover will still have recorded decent sales figures as a result – although even marginal dips in price would no doubt have boosted sales in all areas.

Hargrove said he was still busy “digesting the numbers” but guessed the merchant would be up in value terms versus the 2014s because of the wines being more expensive yet, on the other hand, in, “bottle for bottle terms there won’t be much difference.”

As mentioned above, BBR’s fine wine director, Max Lalondrelle, thinks the business will have done £15m worth of sales (it has processed around 20,000 orders at an average of £698 apiece) but this is shy of the £20m it was hoping for with the £5m deficit largely attributable to the increasing prices of wines in June and corresponding drop off in consumer interest.

As a case in point he singled out La Mission Haut-Brion, which released at €300 a bottle ex-négociant, a 106% increase on the opening price of its 2014. “Last year we sold 3,000 bottles,” said Lalondrelle. “This year just 1,000 that’s £500,000 we haven’t made and if you multiply across other brands it adds up very quickly.”

Prices

Liv-ex recently reported that just over 98% of its 440 members underestimated price rises this campaign. Merchants had hoped for an 18% rise on average but, in the end, prices shot up over 45% above the 2014s.

It’s not that the 2015s didn’t ‘deserve’ to be more expensive than the 2014s as, in many instances, they are clearly superior wines but many more would certainly have found a greater audience if they were “less aggressively priced”. For Goedhuis’ David Roberts MW, “the great losses have been some of the ‘super seconds’ who made outstanding wines, but sadly just pushed prices too far and customers have voted with their pockets and stepped back in this category. This is a great shame as the quality of the vintage was there for this to be a top campaign for châteaux, merchants and clients alike.”

Yet, as Cuchet continued, high prices did not put buyers off as might previously have been the case. He noted there was seemingly, “no rhyme or reason” to this campaign where buyers rushed to scoop up Canon which was 55% more expensive this year than last, or Margaux which was 60% above its 2014 release price – increases that wouldn’t have been tolerated in recent campaigns past but were somewhat justified on the basis of their rapturous reviews and the fact that at €60 a bottle ex-négociant it was vastly cheaper than some of the other later Right Bank releases.

And it was buyers’ willingness to jump in on certain wines that created a positive vibe in some quarters. “I have to say we have not had as much fun in years as we had in this campaign,” said Cooper. “We really enjoyed it. We loved the wines and were able to talk to our customers about them and they were not overly perturbed by the prices because many of the wines are going to be in the canon of the ‘greats’.”

Lalondrelle commented that it was fun to begin with but got considerably tougher later on. He said: “There was definitely hunger from consumers and that was demonstrated at all levels to begin with. It was a hunger we haven’t seen for quite some time but as we approached the referendum, people were put off.”

Even without the referendum of course buyers could simply be turned off by the prices on offer.

“People were enthusiastic about the wine but they were frequently disappointed by the price levels,” said Hudson who continued that caution around buying en primeur still exists in many quarters for the on-going reason that: “They see time and again that there’s no point buying early if it appears later cheaper.”

The only counter to that would be that the recent fall of the pound against the euro means those who did buy en primeur got in at the right moment and those still waiting for the right moment to jump in may be kept waiting for some time.

The new normal

So, despite the occasional hiccup, large price increases were not always enough to put buyers off, especially when they were convinced and enthused by the reports on the quality of certain wines.

This in turn goes to show that en primeur is not ‘dead’ as is occasionally suggested. Buyers are willing to spend money on futures and spend big if necessary. Again, as Cuchet points out, en primeur is the one time of the year when most buyers lay down money on claret.

Yet there is no denying though that the whole system has changed and it’s change has taken place over the last few years. It is now a more limited, more focused exercise; one that only really suits a handful of estates. Châteaux are holding back increasingly large amounts of stock and merchants are being pickier in what they pick up.

En primeur is still a great shop window for Bordeaux and is not going anywhere soon but it seems likely that this year’s campaign, while not a ‘missed opportunity’, is likely the beginning of the ‘new normal’.

And what is this “new normal”? As Hargrove explains it’s a “positioning exercise” for the estates. He said: “I think en primeur for châteaux and négoce is far less important to their business than it used to be. En primeur is still important but it’s become a positioning exercise.”

Continuing in this vein, when writing for the drinks business recently, Hugo Rose MW looked at the changing face of en primeur and asked: “Is it just for show?”

If it is then the châteaux have potentially set off down a very dangerous path. Already many are saying that this new policy of stock retention is simply “market manipulation” designed to justify high release prices.

The idea must be, of course, to release at a later date for profit and, said Cooper, if they released at a “tolerable” price then it’s a system that “could work”.

Judging by the pricing antics of many estates in recent years though it seems doubtful many will be expecting too much, especially as it is almost certainly Asian customers who will be the target of these ‘ready-to-drink’ ex-cellar releases. Asian participation in this year’s campaign was once again pitiful yet still the obsession with their buying power exists, even if European and US buyers have shown they’re willing to play ball with these wines at their new prices (and make no mistake, these are the new prices) en primeur.

It’s risky too because there’s just no knowing what the market may look like in future. As Cuchet points out: “We don’t know what will happen in the future, there are many factors we can’t control regarding what the future price will be or the availability.”

“Is a campaign in the old sense justified?” asked Hudson. “Everyone puts time and expense into going to Bordeaux for the tasting and then three months waiting and selling the wines but if they’re only going to sell a tiny percentage it doesn’t make sense for people to invest in the process.”

The châteaux would appear to have decided how they want en primeur to look in the future it merely remains to be seen now how utopian or dystopian this vision turns out to be.