La nouvelle place de Bordeaux: the new place to be?

A small revolution has been quietly taking place in Bordeaux – but not this time in the vineyards.  La place de Bordeaux, it seems, is becoming ‘the place to be’, not just for the grands crus of the Médoc, St Emilion, the Graves and Pomerol, but also and increasingly for the leading fine wine regions of the world hors Bordeaux. 

In what follows I consider how la place (as it is more or less affectionately known) works, why and for whom that might work particularly well today, and what the wider consequences might be for Bordeaux and the world of fine wine more generally.

But it is difficult to begin without first noting a strange kind of irony here.  For the anglophone fine wine press has always been a little suspicious of la place.  It has typically regarded it (alongside the en primeur system) as something of an outdated and historical anachronism – an institution that is, variously, opaque and impenetrable, crusty and ossified, well past its sell-by-date, not fit for purpose and, more fundamentally still, an unnecessary impediment to the efficient operation of more conventional market mechanisms.

But, strangely perhaps, it seems to be working – apparently rather well.  More importantly still, it is most definitely seen to work by those now beating a path in increasing numbers and from some unlikely places to Bordeaux in the hope of releasing their wines on la place.

How has this happened?

To begin to answer that question it is important first to remind ourselves of what la place does, how it is structured and, indeed, how that structure arose in the first place.

The system itself is tripartite, with a clear division of labour and responsibilities between three types of actor: the property (typically and historically, the château), the courtier and the négociant.  It dates in something resembling its current form from the 17^th century at a time when the châteaux didn’t want, in effect, to soil their hands by having to deal directly with the merchant class nor, indeed, to have to take responsibility for the distribution of their wines themselves.  They required the services of an intermediary.

That intermediary was the courtier, whose task it was to act on behalf of the property in assigning a proportion of the release of the new vintage to those négociants on la place lucky enough to secure an allocation and to draw up the contract between the château and each selected négociant.

The négociant’s task, in turn, was to pay for their allocation up front, to take the wine thus paid for into their own storage and to start to sell it in fulfilment of (and under the terms defined by) the contract.

In so doing they took – as they continue to take – most of the risk.  If demand for the wine was good, they might sell all of their allocation quite quickly, but without the wine having appreciated in price since it was purchased.  In such situations, they’d take only their commission.  But if the wine sold poorly, they’d be obliged to hold the stock and, quite conceivably, to cut into their margin by selling it on at a lower price later (though this has typically been rare).

As a system, la place seems very much to have reflected the power structure of the time in which it was conceived.  It was, in other words, somewhat skewed in favour of the châteaux and their aristocratic proprietors (if, somewhat ironically, a little less so then than now).  The courtiers took (as they continue to take) a meagre commission (their courtage) of just 2 per cent of the value of the contracts they were responsible for drawing up.  And this, in turn, was (as it remains) paid for by the négociants and not by the châteaux.  And the négociants stood (as they still stand) to gain (at best) their margin, in reselling the wine to brokers and merchants in Bordeaux and beyond.  These days that margin is typically around 20 per cent (and it includes, of course, the courtier’s fee).

One can perhaps begin to see already how this might be enticing to producers beyond Bordeaux.

Beyond Bordeaux?

Yet the expansion of la place ‘hors Bordeaux’ was at least initially driven from Bordeaux – and by the châteaux themselves.  For it was through shared ownership that wines like Almaviva (from 1996) and Opus One (from 2004) came to be the first outsiders to be offered on la place.  It took quite a while for them to succeed.  But when they did, they were relatively rapidly joined by a number of investment-grade wines from Italy (the ‘super-Tuscans’ above all), the US (especially the Napa Valley), Chile and Argentina.  Many of these were comparatively large volume wines that it was relatively easy to sell alongside, particularly, the Médoc classed growths.  A key turning point in this second wave was the arrival on la place, and at its behest, of Masseto in 2009.

But it is the subsequent and more recent expansion of la place hors Bordeaux that most interests me.  So great has been this quiet revolution that the global fine wine calendar has now been restructured to include and incorporate two periods in which wines from beyond Bordeaux are released onto the global market through la place de Bordeaux (even if, in certain cases, the négociants of la place do not have the right to distribute these wines globally for reasons we will come to presently).

The first of these is in September; the second is in March, immediately prior to the annual en primeur campaign for which la place is still perhaps better known.  And to give you an idea of the significance of these now annual events, in September 2021 on my best estimates, 75 separate wines were released on la place from 8 different countries.  35% of those were from Italy, 28% from the US, with a further 12% coming from French regions other than Bordeaux itself (including, for the very first time, Champagne).  Perhaps more impressively still, well over 20% of these wines are new to la place in the last five years – including, of course, this year Champagne Philipponnat’s Clos des Goisses

So, quite simply, what is in it for those newly able to release their wines onto la place?

Reputation through association

First, and perhaps most obviously, la place offers reputation through association.  To be offered on la place is to have been selected by la place.  And that, in turn, is to be seen in effect as deserving a place alongside the classed growths of the left and right-banks – and, increasingly, the other leading fine wines of the world now present on la place.  It is also, no less significantly, to have been selected as amongst the very leading wines of one’s region.  It is a signal of prestige, reputation and quality in a market that places great significance and value on each.

But it is far more than that too.  It is an opportunity to have an en primeur-like moment under the spotlight, in which the fine wine world’s attention is focussed on the release of your wine – typically, also, with it having been tasted and evaluated by the world’s most influential wine critics.  To be released on la place is to have a release date; and to have a release date is to be the centre of attention, at least momentarily.

More significantly still, to be offered on la place is to have access to the market knowledge of one’s courtier and to the resources of the négociants – above all their organisational, distributional and logistical power.  Most of the non-Bordeaux wines newly released to la place in the last five years were distributed before directly from the property itself and, invariably, to no more than 45 countries.  La place doubles that immediately, bringing with it additional demand.  But the négociants also create new themselves through the extensive promotional activities they engage in in practically all the markets they supply.  And, crucially, all of this happens without the property having to manage any of the distribution itself.  In short, the négociant system, with all its fine-grained knowledge of the interstices and dynamics of the market in practically each wine-buying country on earth, resolves at a stroke one of the most difficult, risky, costly and time-consuming parts of the bringing of a wine to market.

And for small production wines, like many of the most recent releases to la place, it also offers what the négociants like to call capilarité – the capacity to take a given allocation and to partition it in such a way as to place smaller quantities of the wine in the hands of a larger number of clients (as well as giving transparency to the property – through the courtier – about the details of that fine-grained distribution).  This contributes to building demand whilst also ensuring that these precious and rare wines are more likely to be drunk and appreciated.  It is practically impossible to achieve this without the massive logistical capacity that, collectively, the négociants of la place can muster.  Crucially, no property has the capacity to achieve that on its own – either in Bordeaux or beyond.

Stability

Finally, in the more volatile and chaotic international market of recent years, la place offers stability through flexibility.  Covid provides a good example.  Small producers of premium wines with long-standing dedicated distributors in individual countries that have been particularly hit by Covid have often suffered greatly as a consequence.  This is especially so where their exclusive distributor is, for instance, a specialist in the hotel or restaurant sectors – sectors of course massively hit by Covid.  Here, again, la place offers considerable advantages as the négociants practically never work with single distributors concentrating on single sectors of the market in economies of any significance.  They have, and have always had, the flexibility to reassign and reallocate wines between distributors and merchants to respond rapidly to the changing conditions of the market.  That has arguably never been more important than it is today.

These are just some of the factors that help explain both the growing interest in la place from the leading wine-producing regions of the world today and the ongoing expansion of la place hors Bordeaux to which it has given rise.

But it would be wrong to conclude without noting at least a couple of the impediments to the further expansion of la nouvelle place de Bordeaux hors Bordeaux.

The first is that those small producers who have arguably most to gain from la place – in the sense that at present they have the smallest capacity to manage a global distribution themselves – may also have the most to lose too.  For them to abandon long-standing, often inter-generational, exclusive distributional contracts in the few countries that they do export to is both costly personally and potentially quite risky.  Abandoning what they have always done for la place comes at a potentially quite significant personal cost (in that it requires breaking long-standing relationships with dedicated distributors).  And it is difficult to guarantee in advance that it will work immediately – though, in fact, the greater the proportion of the wine allocated to la place the more likely it is to interest the leading négociants.

But therein lies the second problem.  Small producers previously reliant on a series of exclusive contracts for specific markets with long-standing dedicated distributors are often tempted not to risk too much when first releasing on la place.  They typically wish to retain much of their existing distribution; offering to la place only small volumes of wine that can only be sold in what, to them, represent entirely new markets.  That may well be insufficient to tempt la place.

As this suggests, la place de Bordeaux is evolving quite quickly and in a way that has already significantly broadened the range and diversity of the wines it offers globally.  There are considerable opportunities for those prepared to take the risk of being amongst the early movers – as the largely successful September release campaign that is coming to an end would seem to demonstrate rather well.  La nouvelle place, it seems, might just be the place to be after all.

 

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