There is something eating away at Bordeaux’s vines. It is not just the mildew from this spring’s unseasonably wet, cool weather, which means the 2024 harvest should produce the latest in a series of disappointing vintages. In fact, estates can apply for up to €280,000 per producer from the EU to grub up their vines, rather than harvest them.
An equally unsettling problem has taken root, relating to how the world’s best wine producers sell their product to collectors. Designed originally to provide a means of attracting working capital for winemakers, the en primeur campaign in recent decades has morphed into a festival for oenophiles, merchants and critics to taste the wines early and gossip about the trade. In one spring week this year, 5,000 people came to Bordeaux and critics scored the top tier of wines, which can make a big difference to demand from merchants and clients. The top châteaux then release prices from early May into early June, sometimes multiple producers on the same day, and orders are placed.
Wines are actually delivered about two years later, making this a futures market with sometimes limited supply. An antiquated — some would say opaque — sale process known as La Place moves the wine from châteaux through middlemen (courtiers and négociants) to the final buyers. Collectors can benefit from buying these wines during en primeur, before their bottling and full marketing. When prices for these bottles were on the rise that made some sense; indeed, investors might buy extra cases to sell on later.
But as much as people enjoy coming to Bordeaux, they are not as willing to pay the high prices the châteaux have come to expect. Liv-ex, a wine marketplace, tracks the daily price movements of the Bordeaux First Growths in its Fine Wine 50 index. (The First Growths, classified in 1855 as notable for their quality and longevity, are Lafite Rothschild, Margaux, Mouton Rothschild, Haut-Brion and Latour.) This benchmark has declined 24 per cent in two years after a post-Covid boom and is 9.2 per cent lower than five years ago. Over five years prices of Bordeaux’s finest wines have trailed other regions, in particular Burgundy and even Champagne. The latter two regional indices are up, while the Fine Wine 50 has declined.
Fiona Morrison, who owns Thienpont Wines, a network of Bordeaux estates which includes top Pomerol makers Le Pin and Vieux Château Certan, with her husband Jacques, concedes en primeur is faltering. Thanks to a combination of mildew and cool growing conditions this year, she has cut output for 2024 by at least a fifth. “I toyed with the idea of not offering a vintage,” says Morrison, a Master of Wine.
A surfeit of wine often gets the blame for Bordeaux’s ills. Yet its output has steadily fallen over the past two decades: the 2021-23 average output was 390mn litres, compared with an average 604mn litres in 2000-05.
Partly the problem has to do with less demand for red wine — 88 per cent of the wine Bordeaux produces. Worldwide consumption of red wines in 2021 had slipped to 112mn hectolitres, down 15 per cent from the 2007 peak, according to the International Organisation of Vine and Wine. White, on the other hand, has grown in that time from about 95mn hectolitres to 100mn hectolitres.
But the global trends which drove a boom market in the 1990s and 2000s have also faded. The period of energetic buying from US and then Chinese collectors, both initially seen as arrivistes by the French and some European collectors, has passed. Back then, steady price rises by the châteaux were acceptable because existing collectors could buy stock in the knowledge that the new buyers would pay even more for them later on.
Much of Bordeaux cut prices for the mixed-quality 2023 vintage. En primeur prices fell by an average of 22 per cent compared with the better received 2022, and some châteaux reduced theirs by much more. Château Figeac slashed its price by 41 per cent.
Even the top producers have felt the pricing pressure. Domaines Barons de Rothschild, owner of Château Lafite, not only reduced prices for 2023 from the previous year, but also when compared with the decade average. Lafite’s release was about a 10th lower than an average of its last 10 en primeur releases. “More than ever we need to know our final customer . . . [we need] to talk about the story of these wines,” says Saskia de Rothschild, who became the group’s chair in 2018 and chief executive three years ago.
A true test will come next spring for the 2024 vintage. This year’s wet and relatively cool weather has curtailed the quality and quantity of the grape harvest. “This is the third of four years where the pressure of mildew — 2021, 2023, 2024 — has been really strong,” says the British expatriate Bordeaux winemaker Gavin Quinney. “It’s been a real fight. In the fourth of those years, 2022, the [grape] yields were low anyway due to a boiling hot year.”
“[Winemakers] haven’t got a cure for rain at the moment, though we do have cures for hail and frost,” laments Morrison. Le Pin released its 2023 wine at €2,000 per bottle, the same as the previous year. It seems unlikely to go up for 2024.
Ella Lister at Wine Lister, which advises some of the top châteaux on market trends, does not believe that price cuts will solve Bordeaux’s problems. “People are fixated on châteaux needing to bring down prices, but that’s a red herring. It’s about reinventing the image of the region, losing the fusty, corporate image and making Bordeaux cool again.”
Some collectors and the specialist merchants that serve them want Bordeaux’s en primeur to offer significant discounts to reward collectors for taking some risk. After all, they must wait more than two years for delivery. “Prices have been too high for too long,” says Justin Gibbs, co-founder of Liv-ex. He feels falling prices reflect “the disconnect between the collector and the châteaux”. “How many people go home and open a £200 bottle of wine in any given evening? People will hold these wines for a special occasion or for investment purposes.”
Chloe Ashton at 1275, a Geneva-based specialist fine wine dealer, says that price is not the only issue. She emphasises that “Bordeaux looks relatively cheap compared to Burgundy’s top wines. Price is not the villain — timing is. Every year there is another campaign.” Her team has avoided recommending en primeur wines for some time.
Some feel that the structure of the en primeur process involves too many channels. “We have too many merchants and middlemen between the châteaux and the final customers,” says Emmanuel Cruse, co-owner and managing director at Château d’Issan in Margaux. “We need to work more closely with the final consumer, more sensitive to their needs.” He wonders whether the whole process needs to start earlier and not bunch up so many price releases. “The merchants in the UK can’t deal with 10 brands, say, all released in one day.”
Négociants have traditionally done their best to support the top châteaux, amassing inventory even in poor years. They may experience more pressure to do so than ever this coming year. Mathieu Chadronnier of négociants CVBG, which represents a number of the top châteaux, including Cheval Blanc, Haut Brion and Palmer, is not worried: “The négociant business is very cash-intensive, always has been. But overall it is well financed. Yes, [market conditions are] more difficult, but I don’t have any existential concerns going forward.”
Yet higher inventory levels over the past decade suggests financial pressures are building for these négociants. Collectors already have a lot of wine, but the négociants have too much inventory, which costs the equivalent of 4 to 5 per cent annually. Data between 2012 and 2022 from Liv-ex shows that French négociant inventories have climbed and thus put pressure on their cash flows.
For all the criticism, not many expect to see the end of en primeur. “I don’t see them changing the system for en primeur,” says Quinney. “It’s in the DNA of the top châteaux.” And wily buyers can find long-term gains: for example, the 2012 release price of Château Margaux was £2,800 for a 12-bottle case; by 2021 that had climbed to £5,100, according to Liv-ex.
But there is concern in Bordeaux that the top châteaux will choose to sell directly to their top customers, perhaps using a subscription method. Some wealthy collectors already buy their favourite wines this way, such as from Petrus in Pomerol, partly due to its small output. Château Latour, backed by French billionaire Francois Pinault, left the futures system behind more than a decade ago. Other top estates are contemplating this option, says one wealthy Swiss collector.
The en primeur system works well as a marketing campaign, the top producers still say, but while the top estates worry about pricing, lesser producers are struggling to make any money. That explains the need to pull up their vines — about a 10th of Bordeaux’s 103,000ha — in exchange for cash handouts from the EU.
Morrison at Thienpont Wines does not wish to give up: “En primeur week is the only time of the year when the wine industry can meet the owners and growers. It’s become an event,” she says. “There’s a club of buyers who like to be part of the en primeur. A clubby feeling which defies economics.”
