Bordeaux 2010 Sticker Shock

It may be impossible to crown a “best vintage ever” in Bordeaux, but it is easy to name the priciest Bordeaux futures campaign ever, and we’re in it.

The futures, or en primeur, campaign for the 2010 vintage began weeks later than usual, with few classified growths and top labels releasing their prices until this week. And with their cards showing, it is clear they are playing a high-stakes game: Of 15 leading châteaus who have released their prices that Wine Spectator is tracking (see chart below), all have maintained or raised their prices from their 2009 releases, some as much as 122 percent higher at retail in the United States. Last year’s prices were already unprecedented, and this year, the dollar is weak against the euro.

“I’ve been surprised,” said Chris Adams, CEO of Sherry-Lehmann Wines in New York. “If that’s the way the demand structure for Bordeaux is going internationally, then all the better for them; I’m a capitalist. But I didn’t think the overall global market would support these kinds of increases, and we’ll see if it will.”

Some retailers have been more blunt. “As a whole, the prices are pretty absurd," said Daniel Posner, of Grapes, The Wine Company, in White Plains, N.Y. "There hasn’t been a wine out there where I’m like, ‘Oh, thank goodness someone had their head on straight when they released that price.’”

The annual Bordeaux futures campaign allows buyers to snap up young wines still aging in château cellars. Approximately two years later, the bottled wines are delivered. (For James Molesworth's reviews of the new wines, see his 2010 Bordeaux barrel tasting report.)

If conducted wisely, en primeur can benefit producers and consumers alike: Châteaus can sell off much of their wine quickly, while consumers often get access to lower prices and higher quantities than they would when the wines are released. But overpricing, especially in an uninspiring vintage, can ruin the investment. Those who bought the 1997 vintage en primeur saw the same wines appear on retail shelves for cheaper the next year. Most premium labels from the 2007 vintage can be had for the same price or less today than they sold at as futures.

Pontet-Canet owner Alfred Tesseron hopes he does not price out his loyal buyers. “I am afraid that it could happen, but this is true for all the great wines of the world.”

The 2010 vintage is excellent, but so was 2009, which had been eagerly anticipated after three underwhelming vintages. Christian Seely, managing director of AXA Millésimes, which owns Château Pichon-Longueville-Baron and three other Bordeaux properties, described the challenge in marketing this year. “It’s a different thing when you say, ‘Here’s a great year, well … like last year, really.’”

Some American retailers are feeling vintage hype fatigue. “Sales have been much slower than [those of] the '09s,” said Trey Beffa, of K&L Wine Merchants in Los Angeles. “There seems to be a lot less interest than there was last year.” Consumers have not even received their bottled 2009 wines yet, which Beffa said many of his customers purchased briskly. “They already have a lot of stuff lingering out there, waiting to be shipped.”

At Sherry-Lehmann, Adams only took 70 percent of the allocations he had last year. Some longtime collectors simply do not have the means to follow their favorite brands. “The guy who was buying Smith-Haut-Lafitte at $30 a bottle less than a decade ago is certainly not buying the wine at $150 today,” said Posner. “The person that even last year bought La Fleur-Pétrus at $140 a bottle, I don’t know if they’re spending $300 today. I have a child born in 2010, and I can’t see myself putting any Bordeaux away for him because there’s just nothing I can afford.”

“That’s the problem with dealing with something that’s become a commodity,” Posner said. “You lose a lot of the passion and you gain a lot of the money.”

In Bordeaux, Château Pontet-Canet owner Alfred Tesseron hopes he does not price out his loyal buyers, but concedes the market is moving up. “I am afraid that it could happen, but this is true for all the great wines of the world.”

Global Thirst

If Americans are holding back on Bordeaux, they're the exception. “There seems to be consistent demand across many different markets. It’s not just the U.K. or Asia,” said Mathieu Chadronnier, general manager of CVGB, a leading négociant. "We’re having a pretty strong campaign in more traditional European markets—Switzerland, Germany, Belgium, the Netherlands. The only market where demand is really shy is the U.S.” Only the Japanese market, still recovering from March's devastating earthquake and tsunami, is as flat.

“I think that what you really need to look at in the end is the figures," said Seely, "and the figures show that there’s a lot of wine being sold on a global basis.” Pichon-Baron debuted Wednesday at $226 in U.S. stores, a 70 percent increase over 2009. Château Montrose released its first tranche, its initial limited offering, Wednesday morning in Bordeaux. By afternoon, that tranche was sold out, replaced by a second at a higher price. Pontet-Canet burned through its first tranche in half an hour, according to Tesseron.

“I’m not sure [the Bordelais] are super concerned if the Americans are going to buy this year.”—Trey Beffa, retailer

Analysts have kept a close eye on the impact of new markets, especially mainland China. Chadronnier, who sells to China, confirmed that there was growth in that market, which traditionally passes on en primeur. But “the growth we’re seeing is softer than what we saw in back vintages,” he said. The real growth this year has been in breadth of wine rather than bulk. “The demand in China is still geared toward grands crus classés. But we’re talking about roughly 60 châteaus,” instead of 10. “It’s also expanding on the Right Bank. The range of fine Bordeaux that are consistently distributed in China is really expanding.”

All of which diminishes America's importance to château owners. “I’m not sure [the Bordelais] are super concerned if the Americans are going to buy this year,” said Beffa.

But success is far from guaranteed, and Bordeaux may still regret its pricing. “This year there was a lot of nervousness in the markets,” said Jean-Charles Cazes of Château Lynch-Bages, which was released Wednesday at $175 at retail, over $115 in 2009. That nervousness created a late start. “People didn’t know what to do so they waited and waited and waited for a signal, for a wine to come out. Now Vinexpo [the trade fair] is ahead of us, so lots of producers are now getting worried about releasing after Vinexpo and maybe missing the train, and there’s not as much demand as last year. There will be blood on the wall.”

In the long run, the wines will sell. Chadronnier sees the vintage, on the whole, as immune to depreciation, in part because lower yields in 2010 will keep demand up. “Some vintages go up faster in value than others, so we’ll see how it performs there, but I don’t see it really losing value.”

Pay Less to Play

Though the first-growths are likely to be out of reach for many wine lovers, improved quality means there are options at less stratospheric prices. Shoppers just need to do their homework. The consensus in the industry seems to be that Pontet-Canet, Lynch-Bages and Léoville Poyferré are three producers with high-quality 2010s that, while a splurge, will set buyers back less than $200 a bottle—if they hurry.

Cazes said Lynch Bages sales in the first day were brisk, even though his grand vin is priced 52 percent over its 2009 price at retail. “If you look at the price of the 2009, it’s now trading on the Bordeaux open market at almost twice the price of the release and with significant volume,” he said, explaining that he set his new price 15 percent below the current real 2009 price, 30 percent below 2005 and 50 percent below 2000. Tesseron also said his 2010, at $177 retail, is “substantially cheaper” than 2009 and 2005 today.

Retailers who spoke with Wine Spectator also suggested that Gruaud-Larose, Chasse-Spleen, Poujeaux, Angludet, La Lagune, Branaire Ducru, d’Issan and La Tour Carnet will deliver per dollar. “If you look at the breadth of what Bordeaux has to offer, in spite of the high prices of the small number of headline châteaus, there’s an awful lot of seriously good value out there, especially in 2010,” said Seely, whose lower-priced Château Pibran in Pauillac enjoys the same technical expertise applied at nearby Pichon-Baron.

Other under-the-radar properties appeal at even lower prices. In his coverage of the vintage, James Molesworth has recommended Malartic-Lagravière, Brown, Jean Faux, Dalem and Fleur-Cardinale as values. “Yes, we reduced the price,” said Malartic-Lagravière owner Jean-Jacques Bonnie, and sales have been brisk. “The advice we got was to stop waiting to release the wine and decrease the price, which was what the traditional markets were expecting.”

Even in the American market, there is cautious optimism. “I think that there was value very early in the campaign, which is what I liked so much about the 2010s, that there was depth to the vintage,” said Adams, adding that he expects a younger clientele than usual this year. “It’s been trending that way for the last few years.”

Adams suggested another option for value hunters. “The story for a lot of the bigger names is that their second wines are still accessible,” he said, citing Baron de Brane as one. Echo de Lynch Bages and Les Pagodes des Cos only rose slightly, to $46 and $68, respectively.

Finally, if only by comparison, the 2010 campaign has fired up renewed interest in back vintages. While Bordeaux futures prices could continue to float up and away in the coming years, 2006, 2007 and especially 2008 are all attractively priced and attracting American consumer interest today.

“People say [2008] is the last value vintage,” said Adams. “But there will always be another value vintage down the road.”

Pricing data compiled by Stefanie Schwartz.