30.4.09

2008 Bordeaux

As the last shipments of the epic 2005 vintage reach American shores, the wine industry collectively turns their gaze towards the 2008 Bordeaux futures market. In terms of futures sales, Bordeaux is unrivaled in their preselling power. I received an email today from my local wine merchant discussing the 2008 Bordeaux market, and it raised a couple questions. For those who are unfamiliar with the unique way in which Bordeaux sells their wine, here is a quick summary (thanks to the folks at Calvert Woodley for this great explanation):

1. Chateaux "release" their prices and assign the rights, or allocation, to their wine to a group of brokers in Bordeaux known as courtiers, who in turn sell to negociants in Bordeaux.
2. Negociants sell these allocations to the importers around the world who in turn sell to the retailers. In rare instances, retailers are direct importers as well and buy directly from negociants.
3. Retailers sell the rights to these wines to the consumer, who pay in advance for the rights to the wines that will be exported around the world 18-24 months later.

So basically, it's an elaborate process of ordering these wines. Add to that the fact that if a bottle/case is ordered today, it won't be received for 1.5-2years. Due to the global recession, interest in this 2008 vintage is understandably muted. The big players that dropped hundreds of thousands of dollars on the historic 2005 vintage aren't investing and global prices for Bordeaux are plateauing.

What I wonder is this; what will the current economic downturn have on wine prices? It's no secret that the 2005 Bordeaux market basically redefined the entire wine market - prices shot through the roof, demand skyrocketed, and huge profits were achieved. You have to assume that as the economy softens people will avoid buying "nice-to-have" items far more often than before...and with less demand prices will naturally correct themselves.

So what does all this mean to you? Avoid the Bordeaux futures market. Prices are still high due to the impact of the 2005 vintage and we will see prices come down from the pre-sale price (which is typically the lowest). If you are in a position to buy wine, a lot of shops and wineries are offering huge discounts to make up for the softening of demand. Seek out the values and stock up!

No comments: