Monday, March 30 2009
Bordeaux Futures a Bust
Dude, invest in a decanter or something!
Regular readers of Tim's Blog (is there such a thing?) will recall how I slammed the practice of en primeur (pre-selling Bordeaux wine as futures) as a cheat and a scam. Unimpeachable sources, such as Petrus' winemaker Jean-Claude Berrouet agreed with me (clever fellow), saying the system forced wineries to alter the way they made wine, to cater to the tastes of the nouveau riche and dolts with palates of felt and glue who can only taste sugar and alcohol (I'm looking at you, Bob), because the wines have to be 'as seductive as possible far earlier, to the detriment of the Bordeaux style'. Even the ever demure Jancis Robinson hoped the 2006 en primeurs would fail, leaving merchants holding the bag on unsold stock.
E pluribus unspeakable?
It's just another bubble. Stock bubble, internet bubble, housing bubble: there's a sense of exclusivity and scarcity that makes people frenzied, thinking they must buy now, now, now! And this drives the price up. Waaaaay up. But one day the bill comes due and the bubble goes the way of all soap-film ephemera.
The problem is that bubble value has nothing whatever to do with the inherent value of the wine itself. Case in point: Château-Lafite Rothschild, a super-duper first-growth Bordeaux costs under $20/bottle to make--all in with corks, capsule, bottle, label, winemaker's pay, etc. In 2002 futures sold for $1200 CAD (more or less). I can see that as a reasonable and true sort of product markup for a luxury good. 2002 was an okay year as well--not the best in recent memory, but the Cabs were good even if the Merlot was a little off. Fair enough.
Fast-forward to 2005. Fantastic vintage, if you like drinking a jar of jam with a pint of vodka in it. The Wonder Twins (Robert Parker and James Suckling of the Wine Dictator) pimped this vintage like the fleet was in town. En primeur prices shot up to over $10,000 CAD per
case! The frenzy was like nothing ever seen before, riding on a crest of hype and hyperbole.
So, 2006 comes along, an it turns out to be an extremely average year. Of course, the price immediately dropped back to pre-hype pricing, right? Ha ha ha ha, if you believe that you don't understand the power of hype and Veblen economics! It did drop, but only to $8,000 CAD per case! What on earth does a $3500% mark-up on a mediocre bottle of wine have to do with reality?
Well, nothing, really. But reality will win out, especially with the world financial markets collapsing and easy sleazy money disappearing (unfortunately along with good, decent, hardworking money along for the ride). According to Decanter Magazine, 2008 Bordeaux Futures are being ruled by the market:
With early signs suggesting the vintage could be better than expected – particularly on the Right Bank – producers are desperately trying to focus the minds of visiting press and trade on the quality of the wines.
At last night's opening dinner, Sylvie Cazes-Regimbeau, head of the Union des Grands Crus, pleaded with the assembled press to 'help us make consumers love our wines', in a speech which referenced the financial climate, and hinted at a more co-operative commercial position from chateaux owners.
As ever, commercial rumours and hearsay are running riot, with speculation that the first growths will come out early – as early as the start of May or Easter – at bargain basement prices. Figures as low as €110 (less than half last year's release price), are being suggested.
That's about $250 CAD/bottle, or $3,000/case. While I'm not convinced that there's any point in buying Bordeaux anymore (only rich yoinks seem to drink First Growths, so I'm not worried about Bordeaux as an aspirational goal) I feel 50% better about the whole scene, and the more comeuppance I hear about the better I feel. Dave Jolly in the New York Times quotes:
David Sokolin, a fine wine dealer in Bridgehampton, New York, notes another potential pitfall. "If the producers cut prices sufficiently for the 2008 en primeur to move their product, they could undermine the prices of the 2007 vintage," he said. That would hurt merchants and investors holding the back vintage, because their stocks of those wines would lose value.
Back in the early 90's some friends and I clubbed together to put a few bucks away every week towards buying some top flight Bordeaux to taste. After a few years we pulled the trigger and bought Petrus, Lafite, Latour, Mouton Rothschild, Lynch-Bage and Haut-Brion. They were (especially the 82's) very good, and a wonderful experience. To do the same thing today I'd have to put away two paycheques out of three, live in a cardboard box, and enjoy the wine out of salvaged Starbucks cups retrieved out of trashcans.
And we circle back around to why I love working in this industry. I'm not by nature a seeker of discounts or cut-price goods. But I really want to experience good value for my hard-earned money. And it might just be my upbringing as the child of good socialists (Hi mom and dad!) but when some rich guys show up and spoil the party with sacks of unearned cash, I think I'll fade back to my own cellar full of my own wine and wait until a rising tide lifts all boats, so an ill-wind can blow some good my--and everyone else's--way.
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