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Bordeaux 2009 – All Spin and Hype

The spin machine and the hype continues on for this so called Vintage of the Century – which I wrote about earlier as potentially becoming the Con of the Century – and the longer this campaign goes on the more I am convinced that somebody somewhere is trying to dupe the masses.

It seems to me that some people in the wine industry are starting to believe in their own publicity and are adding fuel to the fire. At the end of this campaign I think there are going to be a lot of people with a lot of wine on their hands and you could see some merchants go out of business. If this should happen there will be a lot of wines on the market at a fraction of their release price, I’ll let you assess the ramifications of that.

The longer this goes on the campaign seems to attract more and more controversy, opposing views and a loss of respect for all those involved. What on earth are Liv-ex doing by selling wines that haven’t been released yet and defending their actions by saying that in any other industry this is the sort of thing that goes on? Well I am afraid that this is not any ordinary industry. I know of no other industry that works on an allocation system whereby producers/manufacturers can budget their exact sales and meet any sales forecast they choose . . . if you know of any that can achieve this then I would like to know!

This year forget the quality of the vintage this now is a price sensitive vintage and I agree with Jean Moueix that the 2009 is the most dangerous En Primeur campaign for years – some of the antics going on are potentially industry damaging and to me it all revolves around naive business practices!

I always thought Liv-ex were set up as an oracle of information for the wine industry whilst offering a platform to traders around the world to trade their wines and would not become market makers. Perhaps they have not thought the thing through? Their Blog states “although this trade happened on the Liv-ex exchange, it was in no way initiated by us” . . . however they still allowed it to happen and provided the vehicle. I can appreciate that these guys started off in the city – so have they now become frustrated ex-city boys? I guess we are all well aware of what the city has recently achieved in its own industry globally? But I think that by trying to operate a system which suits other industries which operates under normal market forces/influences and applying it to the wine industry they are playing with fire and maybe have not been as sensitive as they could have been to what truly influences the fine wine market.

Earlier I mentioned the allocation system whereby if you bought 10 cases last year then you should be offered 10 cases the following year and so on where all things remain equal. This year, where I have been supporting wines over the previous vintages both good and bad, a number of negotiants have cut our allocation. Not just by the percentage of number of cases released by the châteaux but in some instances quite substantially and in a couple of instances we have been offered zero allocation! However we will only sell what we can obtain. Thinking this through what if the initiator of the idea is to offer Lafite on a pre release basis through the Liv-ex platform has his allocation reduced? What will happen should he receive money over and above his so called guaranteed supply thus obtaining monies for goods he hasn’t got? An interesting thought! I can’t remember all of my company law but I am sure that any corporate lawyer will have a field day with that. Also if he has a guaranteed supply of ‘N’ number of cases of certain wines some other poor unsuspecting merchant may be cut on his allocation of wines which he has supported for years. Thus creating animosity and mistrust within the trade.

Knowing the wine trade as I do I think this is a bizarre situation, Furthermore to say that this will not influence the pricing policies of the châteaux is ludicrous. To say that Lafite will not take notice of others making, in some cases, an obscene amount of money from their wines is quite naive. One of the major reasons that wine prices have increased over recent years is the fact that the châteaux owners are getting fed up with people making more money out of their wines than they are. This is why châteaux owners are not only producers of wine but are becoming a merchant/negotiant themselves . . . A person I met recently told me he deals directly with the châteaux at En Primeur whereby he is charged the same price as a Negotiant would charge but they receive allocations direct from the château itself. I don’t think you need to be a genius to see where this could lead and yet again it is going to be the poor wine merchants and negotiants who will end up missing out. Perhaps that’s where some of our allocations have gone?

The wine market still remains very fragile and I can only think that those who are describing the 2009 vintage as “superb, fantastic, great” or whatever other adjective they choose to use are looking at this vintage to screw as much money as they possibly can out of the market. For example take Châteaux Cantermerle (+43% on 2008 and +21% on 2005.) The 2009 Cantemerle is the same release price as Duhart Milon was for 2005!). Or Gazin (+56% on 2008 and +41% on 2005). I agree that Cantermerle was a very nice wine and presented very well indeed but it is not worth this kind of money in my view . . . and the least said about Gazin the better. I didn’t think Gazin showed very well at all at En Primeur – perhaps it is buoyed up by hype as the estate is adjacent to Petrus which happens to be in Pomerol which is an appellation that the Chinese and the Asians are becoming very interested in. You may say I am cynical but I see it as a fact.

Where greed and money are concerned it always seems to bring the worst out in people and I think the worst of the worst is about to happen. Interestingly in a survey taken recently by Decanter where the readers were asked “Bordeaux 2009: do you trust your merchant to cut through the hype?” only 18% said “Yes”. By the end of this campaign if asked the same question again I reckon the result would be much lower.

So what of the future? I have no idea. As for this vintage perhaps people ought to start looking at past vintages and as a guide if 2009 prices come out at any more than 10% – 15% of the release price of the same wines in 2005 then I would suggest that people question their judgement as to whether they buy or not. If I was honest I believe that there are only a dozen wines worth considering from this vintage and that will be very dependent upon their release price!

At Vinexpo in Hong Kong recently I had a very good discussion with a very knowledgeable individual who has many years experience in the trade and he told me about a 2009 wine which had received an excellent rating from Parker (97 – 100). He told me that when he spoke to the château owner they said that they were planning on releasing this wine at 3 times the price of last year (08). The reason being was that the château owner thought he had missed out on his 2008 vintage. Such is the naivety of pricing strategy adopted by chateaux! I can see now after all the hype surrounding this vintage next year châteaux owners, negotiants and some wine merchants could be begging for customers through lack of trust created this year. I also predict that chateaux owners will adopt a less than impressive pricing strategy next year as they did in 2001, 2006 and 2007 should 2010 be a mediocre vintage!

My advice is that you buy 2009 at your peril. There are too many fingers in the pie and there is ultimately a lack of respect for the end user, consumer and customer. To think that China and Asia will mop up the residue is so foolish that it makes a mockery of what potentially could be a wonderful industry!

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2 Responses to Bordeaux 2009 – All Spin and Hype

  1. HamishWM says:

    Enjoy your critical view. I agree this EP 09 campaign is seriously getting out of hand. Some of the pricing is ridiculous. I am not sure about this whole allocation deal. Yes, loyalty is respected. But buying bad vintages in order to buy good vintages seems weird. There are plenty of other wines in the World! The Bordelais could shoot themselves directly in the foot.

  2. Nick says:

    Thanks Hamish, nice to know I am not the only one out there who is questioning where this is all going.