Pape Clément hails success of its EP strategy

Château Pape Clément, the historic Bordeaux estate in Graves, has declared its 2016 en primeur campaign a success with its wines selling out within half a day, an achievement it puts down to its consistent pricing its development director told dbHK.

“Pape Clément 2016 as well as our other grand cru classé have been sold out in less than half a day. All world regions have bought our wines: the US, UK, Switzerland, France, Germany, Japan, Singapore, Hong Kong, and China did more than last year,” said Augustin Deschamps, director of development of Grands Crus Classé Bernard Magrez, who was in Hong Kong recently to promote the group’s new lifestyle brand Bleu de Mer.

The key to their success, according to the Bordelais is that the wine has been released at roughly €60 since 2011 despite vintage variations, a move aimed to ensure a 50% profit margin for its clients even when the average price increase for this year’s en primeur campaign was around 16%.

“We maintained our release EP price since 2011 around the same price point, whatever the quality of the vintage. That’s what the market is waiting for. Bordeaux grands crus are open-market wines, so if we want Bordeaux wines to be still in the merchants’ (and négociants’) portfolios tomorrow we have to give them fresh air and margins!” explained Deschamps.

“By promoting our wines with nearly 10 people worldwide and maintaining low en primeur prices, we’re creating this high demand, and now our wines, selling for around €60 [a bottle] en primeur, are traded around €90 on the market one year afterwards. We think that doing our best to ensure around 50% margin for the trade is a great way to maintain attractivity [sic] for great Bordeaux wines.”

The same strategy is applied to the Bernard Magrez group’s other châteaux including; La Tour Carnet, Fombrauge, Clos Haut Peyraguey and for its cru bougeois Les Grands Chênes, according to Deschamps.

Asked how much of Pape Clément wines are sold to China and Hong Kong, Deschamps admitted “a big part” of its wines ended up in the two markets through its négociants without revealing a specific number.

However, he noted that in the past three years, the winery has diversified its markets and distributions. “Our team is important in Asia, but we have three people for the US, and five of us are also active on the main European markets (the UK, Belgium, Switzerland and Germany). France as well remains an historic and key market for us,” he explained.

Referring to 2017 as a “tough year” for China, as figures for the value of the country’s wine imports continue to slide in the first few months of the year. “It’s going to be tough since the market is going to be more and more transparent, and margins are going to be squeezed more and more for the classical names and products,” said the Deschamps, adding that a few leading importers’ moves to cut back on stocks is a good sign showing that they are “becoming aware of the risks, and [that] they remain cautious”.

In the first five months of the year, the country’s bottled wine imports, which took up 91.8% of the country’s total import value, dropped by 3.47% from January to May to US$912.5 million, according to figures released by China Association for Imports and Exports of Wine & Spirits. Its import volume, however, was up by 8.13% over the same period last year to 196.4 million litres.

“You can see that the value of the wines imported to China is increasing less fast than the volumes, that is a good sign in my point of view. There is less speculation. Merchants are targeting the real heart of the market. I’m confident for the future,” he stated.