En primeur 2018 verdict: A sense of detachment

The scores declared some wines the ‘best ever’, the prices were ambitious, audacious even but at the end of the latest en primeur campaign why did it all feel so…flat?

After two months and one day from the release of Angelus in April to Vieux Château Certan in June, the campaign for the 2018 vintage has ended (Le Pin and Petrus have now been released but they are very tightly allocated so don’t really count as being part of the ‘main’ campaign).

It has been a long campaign and at the very least releases felt fairly even-paced but, as Giles Cooper at fine wine merchant BI said: “The campaign was a bit odd in the sense that it never really felt like it ‘got going’.”

There was certainly no repeat of the 2011 campaign’s ‘Black Tuesday’ or the splurges during the 2015 campaign nor the somewhat unrelenting pace of daily releases for the 2017s.

Yet, messy and eye-roll inducing as those moments were, at least they offered something to talk about. With releases coming at you thick and fast there was a sense that something was happening.

This time around it felt rather bloodless.

Releases plodded along and while there was no pricing crescendo as in past campaigns, prices were pretty solidly stacked at the ‘upper end of hoped for’ when all was said and done.

Which was a shame because, as Georgina Crawley, business development director at Goedhuis, said, there was “excitement from customers” for this vintage which was lacking last year.

Goedhuis, she went on, has put a lot of effort into its social media and creating profiles on each châteaux for its website, “trying to excite a consumer market that’s a bit bored” and it has worked.

“People were sending in wish lists for the first time in ages,” she said but, unfortunately, this was short-lived. As she went on: “So there was interest but as soon as first prices came out that rather went away.”

Liv-ex looked back at the shopping basket of wines it asked its 400 global members to price back in April and found that, overall, the basket was 0.99% more expensive than the members were expecting.

Some wines were worse offenders than others. Montrose for example ended up being 22.9% more expensive than predicted, Cos d’Estournel 19% and Pichon Lalande 16.8%.

Others were less expensive than expected. La Mission Haut-Brion was 16% cheaper per bottle and Pontet Canet 13% less than forecast.

St Emilion labels Cheval Blanc and Pavie were also a little cheaper than expected – not that it helped their cause much as they were still horribly expensive.

As Liv-ex has laid out in its post-campaign report, it was expected that prices would be higher than the 2017s as 2018 was broadly considered a ‘better’ vintage but as it is not as great as 2016 it was thought prices would be comfortably below the prices that vintage had commanded.

Instead: “Ex-négociant (release) prices commanded a 0.03% premium to 2016 and 13% to 2017. This did not correspond with the anticipated 4.85% discount on 2016, according to the Liv-ex survey.”

Liv-ex co-director, Justin Gibbs, said: “Unless you were a wine where the 2016 had moved dramatically since release, you were going to be expensive, because overall the percentage change is basically zero from 2016 to now. Most clients know their 2016s (a great vintage) have not moved and now they’re being offered wines at pretty much the same price.”

Although most of the wines that sold well, such as Carmes de Haut-Brion, Canon, Calon Ségur, Lafleur and Beychevelle, conformed to the ‘proper’ model of en primeur (offering the latest vintage at a lower price than other available wines), there were a number of surprises where demand for wines that, in most other circumstances wouldn’t work, was very high.

Both Palmer and Pontet-Canet, no doubt due to the high quality wines they produced but in such tiny quantities, were highly sought after and others such as Léoville Las Cases, Angelus and Domaine de Chevalier also sold well.

Ella Lister, founder of Wine Lister, said that while prices were often higher than might have been recommended, it showed that [in the case of Chevalier], “people don’t always buy on a purely technical basis. A lot of the trade really loved the wine and believed in the quality and story. That stuck and it worked and helped the wine to sell.”

But many others still just belly-flopped when offered to customers and, Miles Davis at Wine Owners commented: “It was very telling this year that you can still find big names, including first growths. Some things have really not sold very well at all.”

The top 20 UK merchants’ sales – as reported to Liv-ex – hit £80 million this campaign. This is a good chunk more than last year’s campaign (though that wasn’t particularly difficult to achieve) and makes it the third best campaign since 2010 by value. Many merchants made close to what they did in 2015 but very few matched or even got close to what they sold in 2016.

And in terms of volumes sold, the 2018 campaign was not very impressive, selling less than 2014, 2015 or 2016. Its economic successes therefore are largely cosmetic, the result of elevated prices allowing smaller stocks to be sold for more and the number of brands sold continues to shrink as fewer wines offer the all-important, ‘compelling reason to buy’.

The stock question

Bordeaux 2018 release prices versus current market prices. Source: Liv-ex

Once again, this campaign was overshadowed by the manipulation of stock by the châteaux and there is no doubt that, at present, stock retention is throttling the secondary market compounding the problem of en primeur pricing.

Volumes released this campaign were around 20% down on 2017, which saw smaller volumes than the 2016, which was smaller than the 2015 campaign.

It is well known that many estates are holding back increasing amounts of stock and it would be no surprise to learn if some properties were releasing well under half their production en primeur.

For merchants there is an added frustration because even when something sells well, there is then no more stock to offer meaning customers go wanting and opportunities for sales and profit in increasingly margin-unfriendly campaigns are going missing.

And what stock might be available is then being paired with the detritus of other campaigns by the négociants.

Now, holding back a proportion for future tastings, dinners and ex-cellar releases is one thing but the scale on which some châteaux are hoarding back vintages suggests something else is afoot and the lack of transparency is giving the market cause for concern.

If the market senses an overhang in stock – and it appears it does – it will depress prices in the secondary market which has to be fuelled, in part, by a sense of scarcity. What we have now is, as Lister says, “artificial rarity”.

Many buyers know that what recent vintages there are in the secondary market represent the tip of the iceberg.

Cooper explained: “This lack of trading also creates reduced market visibility, which reduces demand, which stifles pricing – leading to the need for accelerated repositioning, which as we have established, is rarely welcomed by the client. It’s all rather short sighted.”

And, more to the point, ex-château releases don’t have that great a record so far either. Miles Davis at Wine Owners commented: Château Latour has struggled since it withdrew from en primeur. It hasn’t done any favours to the back vintages whatsoever.”

One has to wonder even what form en primeur will be in five years from now. At the current rate several château won’t be allocating any wine each summer.

Lack of critical consensus

To what extent the châteaux heed the word of just one or indeed any critic today is unclear but there is no doubt that this campaign suffered from the lack of one guiding voice that has risen above the others – Neal Martin’s.

“Neal’s absence was really noted. His opinion really matters. Not having him was an enormous loss,” said Crawley.

There’s no doubt that the positive scores “gave the campaign legs,” said Liv-ex but despite the loudhailer proclamations that some of the wines in 2018 are the ‘best ever’ produced by certain châteaux, the fact of the matter is this is a vintage that appears far from homogenous – more 2015 than 2016.

Not every merchant nor every critic was convinced by all the wines, Lea & Sandeman had written after the spring tastings: “Quality was far from universal. In 2010 and 2016 you could buy with impunity but in 2018 you must be much more selective.”

High alcohol is very prevalent and it was noticeable that Antonio Galloni, founder of and Martin’s co-critic at Vinous, demurred somewhat on several wines that others awarded rapturous scores.

There is an interesting bit of comparison in the Liv-ex report regarding the scores of three ‘main’ critics this year: Galloni, James Suckling and Lisa Perrotti-Brown MW and the ‘fair value’ of wines released.

Of the 82 major releases, 58 looked ‘fair value’ if you were guided by Suckling’s scores, 45 looked ‘fair’ by Perrotti-Brown’s scores but only 24 looked fair from Galloni’s perspective.

So where does that leave the 2018s? Which view is correct?

Martin is due to taste the 2018 wines later this year. They will of course be more developed and perhaps in a more ‘finished’ state by then. A lot of people are going to be watching or waiting for his point of view and his remarks could make or break certain wines or even the whole vintage.

“God forbid these wines don’t live up to their high scores,” said Gibbs.

Conclusion

The 2018 campaign happened but only because the trade was conditioned to be ready for it to happen, nothing more. It was, in nature, largely perfunctory. Customers, the press, critics, the trade and even the châteaux seem to have become detached from the primeur process.

Customers find little to interest them, merchants find little to offer them and are making less money from the whole system and so making themselves less reliant on Bordeaux; for the press it’s the same old story and through the withholding of stock even the estates seem to be ‘consciously uncoupling’ themselves.

But if the Bordelais want to take their chances in the current marketplace they can go right ahead. Through a situation they have in part created there is plenty of excellent drinking stock currently available in the secondary market – at cheaper prices than their ‘repositioned’ releases – and buyers have a strong taste for Burgundy, Champagne, Super Tuscans, Barolos, Napa Cabs and much in between.

Fewer and fewer châteaux seem to be asking themselves why anyone needs their wines year after year.

The other problem, as Gibbs noted, is that the châteaux have failed to take into account the wider economic environment currently at play either.

‘Brexit’ has made the pound weaker – and the UK is still the principal foreign market for en primeur – the US and China are stuck in a trade spat and there is political unrest in Hong Kong. This is not a global marketplace in dire need of expensive claret but the Bordelais plunged in regardless.

With every passing year the whole system is cast into ever greater uncertainty.

“What’s for sure,” said Farr Vintners’ managing director Stephen Browett, “is that en primeur is in decline and the main reason for this is over-ambitious release prices.”

Reading the drinks business’ after-action report for the 2016 campaign, it is striking how closely this 2018 campaign has gone over the same ground, in much the same way and with many of the same problems still unaddressed, repeated and failure re-enforced.

The pricing and stock strategy of too many châteaux continues to be short-sighted and wrong-headed whatever they may claim. There is just not enough ‘upside’ to many wines offered en primeur anymore. “I don’t think people are going to be making money out of this vintage – for many years,” said Davis.

On the other hand there continues to be a core of estates that make en primeur worthwhile, such as Les Carmes de Haut-Brion, and en primeur continues to be a huge advantage for Bordeaux, focusing attention entirely on the region for several months a year and creating the opportunity for impulse buying. As Lister said: “There is still a market out there for en primeur because it’s exciting and an opportunity for engagement.”

And what’s frustrating, yet again, is that, “if priced right, the whole primeur campaign could have flown,” said Crawley.

But it didn’t and until lessons are learned future campaigns will continue to fail – or at least seriously underperform – in this manner.

The Bordelais attempted to position the 2018 vintage as the successor to the 2016. That campaign wasn’t a stonking success either it should be remembered. “This campaign, with the quality of its wines, should have gone off like the Guns of Navarone or Superfly TNT; the final effect was more like that of a pop gun,” as db wrote afterwards.

But if the 2016 campaign could make allusions to The Guns of Navarone, this campaign offered more of a nod to that film’s sequel, Force 10 from Navarone, which, despite an all-star cast and a few good moments was otherwise far less than the sum of its predecessor’s parts, largely unnecessary and a commercial flop.