Reg’s Wine Blog – Post # 60, Bordeaux 2017 Vintage, Are Bordeaux Futures Still Relevant? August 8, 2018.

Every year in April the world’s leading wine critics, tasters and buyers gather in Bordeaux and taste barrel samples of the previous year’s harvest, now safely at rest in barrels for the next 18 – 24 months. The wine world waits with baited breath for critics to release their preliminary ratings, and those tasting scores set the stage for opening prices to be established for the upcoming “En Primeur” or “Futures” offerings by the leading Négotiants or wine distributors, once the Chateaux have set their prices and allotments to their various distributors have been made.

Readers of my previous blogs will recall that I wrote all about the 2015 vintage in post # 22 June 14th, 2016, and again in post # 23 June 29th, 2016. I wrote about the 2016 vintage in post # 44 April 17th, 2017, again in post # 46 May 13th, 2017, and once more in post # 47 June 19th, 2017. The central themes throughout those five posts was great vintages, huge harvests, and crazy out of control price increases. And now for something completely different, here comes 2017, not the same at all.

The year started with a killer frost in the last week of April 2017, when for 3 straight days temperatures were below freezing, effectively killing budding grape vines on the right bank of the Gironde River. Most, in fact almost all of the famous Bordeaux chateaux escaped any damage at all. The worst affected properties were those producing table wines and situated on low lying ground, but the net effect was to reduce the overall size of the harvest by roughly 40%, a huge sudden decrease at the lower and middle quality levels of the Bordeaux wine market. Some producers lost just their 2017 harvest, some lost several hectares of vines and need to replant.

Many critics will be rating 2017 as a great year for Cabernet Sauvignon grapes and not so great for Merlot. The Merlot grapes were ready for harvest in September, when there was plenty of rain, so the Merlot grapes may be a little watery and flavors not as robust as they should be. The Cabernet Sauvignon was harvested in October under perfect weather conditions, so this again tends to favor left bank producers rather than right bank producers.

The Bordeaux wine pipeline also happens to be full, with two great and large vintages in 2015 and 2016 yet to be released. Let us not forget that prices also maxed out over those two years by a total increase of about 50% for the best wines over that 2 year period, and those prices will only start to register with the retail wine purchaser later this year when the 2015’s start hitting retail shelves. So we can expect many wine consumers will be looking elsewhere to California, Australia, Italy, Spain, Chile and Argentina for cheaper alternatives, and they will most certainly find plenty of those cheaper alternatives. Logically that means that Bordeaux prices should be coming down, and in particular the 2017 vintage should be priced cheaper than 2016. So let`s take a look at what is really happening in the world of Bordeaux 2017 “En Primeur” or “Futures” offerings.

Sales of 2017 Bordeaux Futures are down 60% from last year’s sales of the 2016 vintage. Why so much you might ask, was 2017 such a bad year? Well 2017 was not as good a year as 2015 and 2016, and many critics describe the 2017 vintage as being on par with 2014 and 2012, both respectable years but not great years. However there is also a broader trend at play in the market, away from Bordeaux, and both Burgundy and Champagne have gained some of that market share from Bordeaux.

Price has a lot to do with the consumer’s decision to buy Bordeaux Futures. On average, 2017 Futures are being offered at prices about 12% less than 2016. Now while that may sound attractive, you need to remember that the 2015 vintage was priced 30% higher than the 2014 vintage, and the 2016 vintage was priced another 20% higher than the 2015 vintage. So many consumers looking at buying 2017 Futures are looking at a wine quality on par with the 2014 vintage, but priced over 35% higher than the 2014. So it should come as no surprise that 6 out of 10 are passing on 2017 Futures.

However, there is much more to the story than just the price/quality disconnect. The story of 2017 to the average consumer is one of confusion. The weather was sketchy, and between the killer frost in April, and the September rains that may have diluted the Merlot grapes, the consumer knows there were at least two weather events that could seriously impact wine quality. Most people do not pay attention to detail, they just think that the vintage may be inferior.

There is also confusion within the ranks of the wine critics themselves. There is no more Robert Parker to lead the buyer’s market. In his place the heir apparent was Neal Martin, but half way through the 2017 Bordeaux campaign, Neal jumped ship from The Wine Advocate and joined Antonio Galloni at Vinous. So Neal’s initial barrel sample notes were published by The Wine Advocate, and his final barrel  tasting notes were published by Vinous. Lisa Perotti-Brown took over at The Wine Advocate and she published her own 2017 Bordeaux report. In the meantime, Antonio Galloni at Vinous published his own 2017 Bordeaux report, which did not agree in content with Neal Martin’s report as to the top wines. When you also throw in James Suckling and James Molesworth (from the Wine Spectator) you now have 5 major wine critics all over the map as to which are the top wines. The end result? What else, the consumer is confused!

So what you might think, no big deal, just pick your favorite wine critic (who’s tastes most closely reflect your own) and just buy what he or she rates as their top wines. Not so fast, if you are buying your Futures as an investment, your resale value might be seriously hurt if you buy based on the wrong critic’s recommendations. More confusion. Furthermore, if you buy at the wrong price, it could take up to 10 years or longer for resale value to catch up to the inflated price you paid for your Futures, so forget about Bordeaux Futures as a good investment this year. Does this sound like the right time to be shelling out $1,000.00 per bottle for 750 ml of a wine you will not get delivery of for the next 2 years?

And there is yet another obstacle for you, the 2017 Bordeaux Futures consumer, to overcome, and that is a choked off limited supply of the top wines. How can that be you might ask, with demand down 60% there must be plenty of the top wines available, right? Nope, sorry, the top chateaux have all been cutting back on what quantity of wine they allocate to the Futures market. For decades the standard procedure was for the chateau to allocate 90% of their production to the Futures market. This meant that the first Futures offering was always the best time to buy, when the best selection was available. Not so any more!

Latour does not offer Futures at all since 2012.

Mouton Rothschild, Lafite Rothschild, and Margaux have all been cutting back.

In 2016 Haut Brion released 20% less.

Palmer has reduced their Futures offering by 50% since 2010.

Pavie and Pontet Canet have both cut back by 40%.

In addition to the cutbacks by those seven properties, let us not forget how small the production is to begin with by chateaux such as Le Pin (500 cases),

Lafleur (1,000),

Eglise Clinet (2,000),

Ausone (2,000),

Belaire Monage (2,000),

Beausejour Duffau (2,000),

 Petrus (2,500),

and several others. Your chances of getting any of the two or three case allotments of these wines made to the SAQ in Quebec, the LCBO in Ontario, or your local wine retailer in New York, Washington or Los Angeles are just about nil, unless you have great connections. So many of the best names and the best wines are already nearly impossible to get either because there is inadequate supply, prices that are ridiculously high, or the chateau is cutting back on distribution, in effect hoarding their wine to release later at higher prices.

Chateau Pontet-Canet is one of the largest properties in Bordeaux owning about 300 acres of land in Pauillac, with 200 acres planted, and produces about 40,000 cases of wine annually. 20,000 cases of the Grand Vin are made, and another 20,000 cases of their second wine, Les Hauts de Pontet are made.

So if 40% of the Grand Vin is now being held back for later release (8,000 cases), then only 12,000 cases will be offered as “Futures”, and you can be sure that this will drive prices higher. It will not be long before Chateau Pontet-Canet will end up priced as a “Super Second” in the $300 – $500 per bottle range, so buy it now. You can buy the 2017 Chateau Pontet-Canet “Future” in the US at about $110.00 US, or in Canada at about $197.00 CDN, per bottle. The Wine Advocate rates the wine at 96-98 points, and James Suckling rates it at 96-97 points. It seems not so long ago in 1985 that I was buying the 1982 Chateau Pontet-Canet at $9.00 US per bottle retail in New York State.

Bordeaux producers need to remember that, from the consumer’s point of view, the whole point to buying Bordeaux “Futures” was to lock up your purchase early to secure a 30% discount to what the wine would retail at once it hit store shelves two years later. This was not without risk, because you had to commit to buying the wine and pay for it before it was even bottled. The “Futures” program also worked well for the producer, since he had 90% of his production pre sold and in the bank two years before releasing it. So both the producer and the distributor had your money long before you got your wine. Now today if less and less of that production is pre sold, we will end up paying more and more for the same wine, which is contrary to the original intent of the whole “Futures” program.

So if you look objectively at what is actually going on, the small estates do not generate enough production to supply demand, and anything they commit to the “Futures” market is gone instantly. This includes most of Pomerol, the St. Emilion “garage wines” and all other small producers. First growths and Super Seconds are all cutting back by up to 50% the amount of production of their “Grand Vin” that they commit to the “Futures” program. Top producers as well as all other classified growth producers in Pauillac, St. Julien, Margaux, St. Estephe, and Pessac-Leognan all have their own second wines like Les Carruades de Lafite or Pavillon Rouge de Margaux, reducing further what is bottled as the “Grand Vin”.

I think that a very clear trend is emerging that consumers need to voice their objection to, and that is the danger that all classified growth chateaux will eventually have no more than a token amount, say 5,000 cases each, committed to the “En Primeur” or “Futures” program. I also think they will eventually put in place a tied selling program, where in order to get a case of the “Grand Vin” you must also buy a case of the chateau’s second and third wines. The Grand Vin will continue to escalate in price, beyond the reach of most consumers, to the point of becoming a luxury affordable only by the elite 1%, and this will be a pity.

This leads me to my last thought, which occurred to me when I read an article published May 14, 2018 and written by Devon Pendleton about how Chateau Margaux is now worth over $1 billion US:

https://www.bloomberg.com/news/articles/2018-05-14/a-wine-billionaire-emerges-in-bordeaux-at-chateau-margaux

Bought in 1977 for approx. $16 million, and today worth over $1 billion, phenomenal growth.

We are making vineyard owners and winemakers wealthy beyond their wildest dreams, because we the consumer continue to accept ridiculous price increases. In 1985 you could buy the famed 1982 vintage of Chateau Margaux for $40.00 US per bottle in New York City wine shops, and cheaper at under $30.00 US if you had bought it as a “Future”. Today I can buy the 2017 Chateau Margaux as a “Future” from the SAQ in Quebec at $945.00 CDN per bottle, or $500.00 US ($655.00 CDN) at Zachys in Scarsdale NY.

So looking at the question behind this blog in the first place, “Are Bordeaux Futures Still Relevant?”, in my opinion the answer is “Yes, but only if properly priced and available in sufficient quantity”. Producers are cutting back the quantity to get a higher price on later releases, and consumers are balking with 60% saying no to the 2017 “Futures” because the prices are still too high. So there is an interesting “tug of war” battle going on right now between producers and consumers. What ever happened to that old truism “the customer is always right”? Let’s hope the consumer wins this battle before too many more Bordeaux chateau owners become billionaires.

It is a strange feeling that you get when luxury items escalate in price so much and so fast that you can no longer afford to buy them. It is also depressing to see so many wine producers becoming so wealthy in the process. I should have been a grape farmer!

Cheers,

Reg.

 

 

Reg’s Wine Blog – Post # 46, May 13, 2017 Bordeaux 2016 – Reg’s Top 30

In my previous Post # 44 about the 2016 Bordeaux vintage I suggested that collectors should take a good look at buying 2016 Bordeaux futures, and focusing on the cheaper 2nd, 3rd, 4th, and 5th growth properties because the quality of those wines was looking very good. At that time only some of the best known wine critics had reported on the 2016 vintage so some critical information was still missing.

Over the last 4 weeks three very important developments have taken place: 1) the rest of the wine critics have reported, 2) the first few Bordeaux Chateau announced their 2016 prices, and 3) there was a major killer frost April 27, 28, and 29 that did serious damage in Bordeaux, Burgundy, and Champagne.

In Post # 44 I discussed in detail the high scores issued by James Molesworth and James Suckling, and since then Antonio Galloni and Neal Martin have released their own reports and scores, and they too are just as high. So all the critic scores are now released, and those scores are all high, higher than 2015. Early pricing by the first few Chateau to release prices was as expected, prices were the same for 2016 as 2015, which you will recall I had expected because the 2015 increases were much higher than expected at 30% or more.

Then a killer frost struck and did serious damage to several properties in late April while the vines were full of buds. Damage was extensive in St. Emilion and Pomerol, but Pessac, Graves, and the western edge of the Medoc escaped. Some properties report up to 90% of vines have been wiped out, particularly if they were in lower lying vineyards. Early reports have Ducru Beaucaillou losing 40% of their vines, La Conseillante losing 25-30% of their vines, Haut Bailly losing 33% of their vines.

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The immediate effect of that event was to halt any further announcements about 2016 release prices while owners assess the damage and decide whether or not to raise prices immediately to finance replanting. So if you are the owner of Chateau Ducru Beaucaillou where 40% of your vines may have been wiped out, you are now rethinking your pricing strategy for your wonderful 2016 vintage, and instead of pricing 2016 the same as 2015, you are probably now thinking of raising the price by as much as you dare.

So here is what I have done. I have put together my own shopping list of what I consider to be the Top 30 Bordeaux Chateaux of 2016, representing Best Value for Best Quality. I have taken the wine scores of my 5 top wine critics for the 2016 vintage. My top critics are:

  • Neal Martin (The Wine Advocate)
  • James Suckling (James Suckling and ex Wine Spectator)
  • James Molesworth (Wine Spectator)
  • Antonio Galloni (Vinous and ex The Wine Advocate)
  • Jane Anson (Decanter)

I have taken an average score based on the scores given by all five critics. On my Top 30 list I have not included first growths because they will be overpriced, first growth second wines like Les Forts de Latour because they are all rated below my cutoff point, and clearly overpriced wines like Petrus and Le Pin. I have also eliminated anything scoring an average of 95 points or less, and I have eliminated anything that has too wide a variation in scores between the 5 critics (so if one critic rates the wine at 90 points and another rates it at 99, the wine comes out because we are looking for consistency). The result is 30 properties rated between 98.3 points and 95.3. This by itself is an incredible display of quality rarely seen.

Next, I have also listed the average wine critic score for each of these 30 wines in the 2015 vintage so you can assess consistency and improvement in quality in 2016. In all 30 cases, the wine’s score in 2016 is the same or higher than 2015, another indication of improving production standards by these producers and the high quality of the 2016 vintage. Finally I have listed current international prices for the 2015 vintage of each wine (in Canada add an average 30% to these prices due to foreign exchange rates and provincial liquor board taxes). Keep in mind the 2015 vintage is not yet released, so these prices are up to date futures prices. These prices are what you want to see for the 2016 vintage when they eventually do get announced. This becomes your target price to pay per bottle (in Canadian dollars), which you may not see if the Chateau decides to raise prices to finance replanting of frost damaged vines.

The result is a pretty interesting list that I call Reg’s Top 30. I have listed the wines in order of wine scores, top to bottom. But I have also given the wines a best buy number reflecting the cheapest price, keep in mind all these wines range in quality from 98.3 to 95.3 points, so every one of them is an excellent wine and worthy of purchase as a future.

Quality   Property Name        2016 Avg. Score     2015 Price    2015 Avg. Score    Best Buy Rating

1         Leoville Las Cases                 98.3                  $250.00                 96                             23

2         Palmer                                     97.5                  $380.00                 96                             29

2         Eglise Clinet                           97.5                  $340.00                 95                              28

4         Pichon Lalande                     97.3                  $180.00                  95                              16

5         Pontet Canet                         97.25                 $150.00                  95                              12

6         Angelus                                  97.25                $460.00                  95                             30

7        Ducru Beaucaillou                97.1                   $220.00                  95                              21

7        Figeac                                      97.1                   $215.00                   95                              19

9        Haut Bailly                             97                      $135.00                   96                              10

9        Vieux Chateau Certan          97                     $335.00                   97                               27

11      Cos D’Estournel                    96.75                $215.00                   95                               20

12      La Conseillante                     96.7                  $210.00                   94                               18

12     Pichon Baron                         96.7                  $175.00                    95                               15

12     Trotanoy                                 96.7                 $ 290.00                   95                               26

12     Smith Haut Lafite                 96.7                  $115.00                     95                                 7

16     L’Evangile                               96.5                 $280.00                    95                               25

16     La Fleur Petrus                      96.5                 $250.00                    94                                24

16     Lynch Bages                           96.5                 $155.00                     93                                 13

16     Montrose                                96.5                 $185.00                     94                                 17

20      Canon                                    96.3                 $240.00                    96                                 22

20      Calon Segur                         96.3                  $105.00                     93                                   4

22      Leoville Poyferre                95.9                   $105.00                     94                                  5

22      Pavie Macquin                    95.9                   $100.00                     92                                  3

22     Clos Fourtet                          95.9                  $135.00                      94                                 11

25     Pape Clement                       95.5                  $120.00                      93                                   8

25     Leoville Barton                    95.5                  $105.00                       94                                   6

27     Troplong Mondot                95.4                 $155.00                        94                                  14

28     Domaine de Chevalier       95.3                  $  85.00                       94                                    1

28     Grand Puy Lacoste             95.3                  $  90.00                       93                                    2

28     Rausan Segla                       95.3                  $120.00                       95                                    9

 

This “Top 30” list can be very useful to you when 2016 Bordeaux futures finally do get offered. There are several advantages to you that this list will bring, such as:

  • If you want the best quality and highest rated wine you can get without paying 1st growth prices, then select a wine with as high an average 2016 score as you can get from this list, I suggest the top 10 wines rated 97 points or higher.
  • If you want the cheapest wines then select a wine from the best buy column rated 1 to 10. Keep in mind that even though these wines should get priced between $85 and $135 per bottle, the lowest rating on all of them is still a very respectable 95.3 points. Frankly I like the thought of being able to buy a 2016 future of Domaine de Chevalier or Grand Puy Lacoste, both rated at 95.3, for less than $100.00 per bottle, knowing that I can get between a case and 15 bottles of either one for less than the price of a single bottle of first growth. Now that is good value!
  • When the 2016 futures do get priced, use the current 2015 price column as a guide, and look for a wine where the 2016 price is closest to the same wine’s 2015 price. In Canada, you should expect all wines to be about 30% higher than the numbers quoted above, so if you see the 2016 Chateau Rausan Segla offered at $150 per bottle in Canada, then the pricing is pretty good.
  • Watch out for properties that have not suffered any frost damage last month raising the prices of their 2016 futures. They really have no reason for doing so, and are only trying to capitalize on the misfortunes of those Chateaux that did suffer losses. You should expect properties such as Ducru Beaucaillou, La Conseillante, and Haut Bailly to raise prices by maybe 15% for two years to recoup their losses and replanting costs, but others who have no frost loss have no such excuse for raising prices.
  • Finally, note that the 2016 score, IN EVERY CASE, is equal to or higher than the 2015 score. This is both an indication that the 2016 vintage is at least as good if not better than 2015, and that 2nd, 3rd, 4th, and 5th growth properties are making steadily improving, first growth level quality wines.

When I look at this Top 30 List I am really excited to see some great choices at close to $100.00 per bottle, such as Domaine de Chevalier ($85.00), Grand Puy Lacoste ($90.00), Pavie Macquin ($100.00), Calon Segur ($105.00), Leoville Barton ($105.00), and Leoville Poyferre ($105.00).

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I am also looking very seriously at some very high scoring wines at some very reasonable prices, such as Pontet Canet (97.25 points, $150.00), Haut Bailly (97 points, $135.00), and Smith Haut Lafite (96.7 points, $115.00).

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These would be my top selections for 2016 futures if you can buy them close to these prices quoted above (remember to add 30% in Canada). Do not be surprised if you cannot get Haut Bailly at $135.00 per bottle, they may have no choice but to raise prices as it appears they have lost about 1/3 of their 2017 crop to frost damage.

So which would you rather have, one bottle of 2016 Chateau Lafite, Latour, or Mouton Rothschild at $1,500 per bottle and scoring 98.3, or 10 bottles of Chateau Pontet Canet at $150.00 per bottle and scoring 97.25. I know for me, the decision is obvious, the price for first growth Bordeaux has increased too fast and way out of proportion to the rest of the market, while at the same time, 2nd, 3rd, 4th, and 5th growths have greatly increased quality levels so as to be almost as good as first growths. Plain and simple, this is a crossroads where consumers now have the ability to buy first growth quality in a 3rd, 4th, or 5th growth Chateau at 10% of the cost.

Shop carefully, shop wisely, buy quality in quantity, and follow Reg’s Top 30 list!

Reg.

Reg’s Wine Blog – Post # 44, 2016 Bordeaux – Best Wines and Best Buys

Wine critic reviews of the 2016 Bordeaux wines have started, with James Suckling releasing his thoughts at the end of March, and most recently James Molesworth the first week of April. So far critics are very high on the vintage, especially James Suckling who says this is a strong year for Medoc and Grave wines, especially in Pauillac and St.Estephe. Suckling rates an astonishing 23 wines between 98 and 100 points. Within that group of wines there will be some relative bargains that you should watch closely for.

By contrast James Molesworth is more conservative with his praise and his ratings, rating 15 wines at 95 points or higher. In total, we have seen James Suckling review 92 different Bordeaux wines from the 2016 vintage (both red and white), and he has rated all but one of those wines at 90 points or higher. That is high praise indeed. James Molesworth has released ratings so far on only his top 37 wines which all range from 93 to 100 points. But oddly enough Molesworth has either not included yet or has not sampled yet all the first growth wines and all three of the wines that James Suckling has rated at 100 points.

Missing in action so far are some important wine critics such as Neal Martin, Jancis Robinson, and Antonio Galloni, so it is a little early yet to form any final opinions.

In my earlier blog # 41 on February 28th I noted that Gavin Quinny, Bordeaux grower/winemaker and frequent writer for Liv-ex, has described the 2016 Bordeaux vintage as an especially good year for Merlot, therefore favoring Pomerol and St. Emilion. Now we have James Suckling describing 2016 as a Left Bank Year, meaning the best wines are from the Medoc and Graves regions, particularly in Pauillac and St. Estephe, where Merlot is not as prevalent. So we clearly have differing opinions, and therein lies opportunity for consumers and investors.

I have also been talking in Blog # 41 and earlier blogs about how Bordeaux first growths have been pricing themselves right out of the market for the average Bordeaux collector, and therefore the need to migrate to other less expensive alternatives where the quality is almost as good as first growth at 10% to 20% of the cost. First growth Bordeaux from 2015 and 2016 is going to hit retail shelves at an estimated $1,000 to $1,200 CDN per bottle. So with Bordeaux 2016 futures soon to be offered, where will the smart money get the best quality for the lowest price?

I looked at the ratings from both James Suckling and James Molesworth for the 2016 Bordeaux vintage, specifically looking for the cheapest wines with the highest ratings by comparing the 2016 ratings against today’s prices for the not yet released 2015 vintage on www.winesearcher.com. I think this is a fair comparison because I expect the 2015 and 2016 vintages to be similarly priced. I came up with my top ten suggestions for 2016 Bordeaux futures, check out my list below:

  • Chateau Leoville Barton – rated 95-96 by Suckling and 96-99 by Molesworth at $100 per bottle. The 2015 is rated at 94 points. This price is only 10% of the price of first growths at similar scores.
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  • Chateau Calon Segur – rated 98-99 by Suckling and 94-97 by Molesworth at $100 per bottle. The 2015 is rated at 93 points. This price is only 10% of the price of first growths at similar scores.
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  • Clos Fourtet – rated 95-96 by Suckling and 96-99 by Molesworth at $130 per bottle. The 2015 is rated at 94 points. This price is only 13% of the price of first growths at similar scores.
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  • Chateau Haut Bailly – rated 98-99 by Suckling and not yet rated by Molesworth at $130 per bottle. The 2015 is rated at 96 points. This price is only 13% of the price of first growths at similar scores.
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  • Chateau Pontet Canet – rated 98-99 by Suckling and not yet rated by Molesworth at $145 per bottle. The 2015 is rated at 95 points. This price is only 14.5% of the price of first growths at similar scores.
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  • Chateau Lynch Bages – rated 98-99 by Suckling and 96-99 by Molesworth at $150 per bottle. The 2015 is rated at 93 points. This price is only 15% of the price of first growths at similar scores.
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  • Chateau Pichon Baron – rated 98-99 by Suckling and 96-99 by Molesworth at $170 per bottle. The 2015 is rated at 95 points. This price is only 17% of the price of first growths at similar scores.
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  • Chateau La Conseillante – rated 99-100 by Suckling and 93-96 by Molesworth at $205 per bottle. The 2015 is rated at 94 points. This price is only 20.5% of the price of first growths at similar scores.
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  • Chateau Figeac – rated 96-97 by Suckling and 95-98 by Molesworth at $210 per bottle. The 2015 is rated at 95 points. This price is only 21% of the price of first growths at similar scores.
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  • Chateau Ducru Beaucaillou – rated 97-98 points by Suckling and 97-100 points by Molesworth at $215 per bottle. The 2015 is rated at 95 points. This price is only 21.5% of the price of first growths at similar scores.
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Well I don’t know which you prefer, snob appeal or value for your money, but I would much prefer getting 10 bottles of Chateau Leoville Barton or Chateau Calon Segur for the price of one bottle of Lafite or Latour, especially if the critics view them to be of similar quality. So while first growth estates have raised their prices relentlessly, lesser chateaux have been busy focusing on raising the quality of their wines to the point where today they are very similar in quality to the big names. We as consumers therefore have a tremendous opportunity here to send a clear message by switching to much cheaper 2nd, 3rd, 4th, and 5th growth wines without sacrificing much in quality. Hopefully, if enough people switch to better value the first growth producers will stop raising prices as much as they have been doing over the last 5 years.

30 years ago the 1982 vintage was on store shelves, Chateau Lafite, along with Latour, Margaux, Mouton Rothschild, and Haut Brion were all selling retail for $40 US per bottle, and all rated 95 points plus by Parker. At $25 you could get all the super 2nd growths like Leoville Las Cases, Pichon Lalande, and Palmer. At $15 to $20 you could get everything else like Ducru Beaucaillou, Cos D’Estournel, Figeac, L’Evangile, etc. Super seconds were rated at 92-95 points, just one rung down the ladder and frankly for the additional $15 per bottle it was much easier to just buy the best.

By contrast, today the difference between second growths and first growths is completely different. In terms of price the first growths are going to hit store shelves at over $1,000 per bottle, while second growths will cost about $400 per bottle. So that price differential is going to be $600 per bottle, that is very significant. But, as this article clearly demonstrates, there will be many high quality 3rd, 4th, and 5th growth wines in the $100 to $150 range. Perhaps the biggest and best surprise is that several of those have upgraded their quality so much that some of them are equal to or better than the 1st growth wines. My how times have changed!

My personal favorites among my top ten suggestions above are Calon Segur, Leoville Barton, Pontet Canet, Pichon Baron, and Ducru Beaucaillou. In great years these are all fabulous wines.

Watch for these names when the 2016 futures become available, I expect these will sell out quickly. Happy hunting.

Reg.

 

Reg’s Wine Blog – Bordeaux price/quality trends, Post # 41, February 28, 2017

A week ago Liv-ex posted a blog update on the 2016 Bordeaux vintage as well as an updated ratings report from several major wine critics on the 2014 Bordeaux vintage now that it has been bottled. I found the results quite interesting and thought I would share my thoughts with you now.

According to Gavin Quinny, himself a Bordeaux grower and winemaker, as well as the author of the Liv-ex blog post in question, the 2016 Bordeaux harvest was the largest since 2006, producing 577 million litres of wine with 10% less vineyard acreage under cultivation. According to Gavin, this was a Merlot harvest, with the Cabernet Sauvignon not performing as well due to severe heat stress June through August. This usually means that Pomerol and St-Emilion will perform better than Margaux, St-Julien, Pauillac, St-Estephe, and Pessac Leognan. Often we forget that these prestigious Appelations account for only 10% of overall Bordeaux production, and the sweet wine of Sauterne and Barsac accounts for only another 1%. By far the bulk of production is in the Vins de France and Vins de Pays designated wines, and it is in these categories where production has almost doubled in 2016 compared to previous years. In fact, Gavin also states that this is now the 3rd good Bordeaux vintage in a row, see link below to Gavin’s full article:

http://www.insights.liv-ex.com/2017/02/bordeaux-2016-largest-harvest-since-2006.html?mc_cid=ef2db154dc&mc_eid=d9373685f8

So we appear to be swimming in a sea of high quality Bordeaux wine, and in theory that should mean that prices will go down. Instead, as you know from my previous blog posts 22 and 23 last June 2016, consumers were hit with 20% to 50% plus price increases on their favorite 2015 Bordeaux futures. Ouch, that was cruel, with 1st growth Bordeaux from the 2015 vintage being offered last year as futures for prices ranging from $1,000 CDN to $1,200 CDN per bottle.

Also of interest in the same Liv-ex blog last week was another article reviewing wine critics scores for the 2014 Bordeaux now that the wine is in the bottle. Critics usually rate the wine initially while the young wine is still aging in the barrel, giving it a quality range, such as 91-94 points, allowing for wine scores to either increase or decrease once the wine is finally in the bottle. So this Liv-ex article was interesting because it recapped the critics wine scores for the now bottled 2014 vintage, see link below:

http://www.insights.liv-ex.com/2017/02/bordeaux-2014-scores-bottle.html?mc_cid=ef2db154dc&mc_eid=d9373685f8

Although Neal Martin of The Wine Advocate has yet to review the 2014 Bordeaux since it has been bottled, Liv-ex did report on the revised ratings of James Molesworth (Wine Spectator), James Suckling (ex Wine Spectator and now on his own), and Antonio Galloni (ex Wine Advocate and now at Vinous). James Suckling was the most bullish at raising his ratings on his top ten 2014 Bordeaux wines in bottle. He has scored eight of his top ten wines higher than his initial range, and the other two wines at the top of his initial range. His biggest surprises are Chateau Ducru Beaucaillou rated at an impressive 99 points,

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and both Chateau Cos D’Estournel and Chateau Leoville Las Cases rated at 98 points.

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Antonio Galloni scored his top ten wines at the top of his initial ratings ranges, while James Molesworth was more conservative by rating his top ten in the middle of his original ratings ranges. Worth noting was that both Molesworth and Galloni gave Vieux Chateau Certan high marks (Molesworth 96 and Galloni 97).

Reg's Wine Blog - photo 41.8

 

Galloni also gave Chateau Pichon Baron Longueville and Chateau Calon Segur high marks at 97 and 96 points respectively.

Reg's Wine Blog - photo 41.6

 

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What I particularly like about this Liv-ex article is that we can see the continuing of a trend towards much more choice for the consumer looking for top quality wine at much lower prices. In years gone by you would see the usual first growth wines in the top ten with one or two other Bordeaux wines. By the time the 2009 and 2010 vintages were in the bottle, Parker had rated 19 wines from the 2009 vintage at a perfect 100 points, and 10 more from the 2010 vintage as well. You will recall that 5th growth Chateau Pontet Canet was rated a perfect 100 points in both 2009 and 2010.

Reg's Wine Blog - photo 41.7

So this trend continues today, with Ducru Beaucaillou, Cos D’Estournel, Leoville Las Cases, Vieux Chateau Certan, Pichon Baron Longueville, and Calon Segur all getting high scores at or above the ratings given to 1st growth Bordeaux.

Does that mean it is time to stop buying Lafite, Latour, Margaux, Haut Brion and Mouton Rothschild? No, not necessarily, if you have $1,000 or more to spend per bottle then by all means go right ahead and do so. But honestly, if you can get the same quality of wine out of a bottle costing you $250, would you not rather prefer to have 4 bottles of great wine for the price of one bottle of first growth?

The LCBO (Liquor Control Board of Ontario) just ended their last futures offering of 2014 Bordeaux last week, and I was pleasantly surprised to see that there were several great values still to be had from their list, including the following, to name but a few:

  • Chateau Canon                                                       95-96               $109.00
  • Chateau D’Armailhac                                            93-94               $ 79.00
  • Chateau Gruard Larose                                        93-94               $112.00
  • Chateau Lynch Bages                                           95-96               $199.00
  • Chateau Pichon Baron Longueville                   95-96               $199.00
  • Chateau Rauzan Segla                                          94-95               $125.00
  • Chateau Talbot                                                      94-95                $ 89.00

 

Reg's Wine Blog - photo 41.15Reg's Wine Blog - photo 41.10Reg's Wine Blog - photo 41.11Reg's Wine Blog - photo 41.12Reg's Wine Blog - photo 41.17Reg's Wine Blog - photo 41.16

The 2014 vintage will start hitting store shelves later this year, and when it does you can expect to see the above prices 30% higher. And that will be the last time that you see the 1st growths at or near $1,000 per bottle. The 2015 1st growths will hit the shelves in late 2018 at $1,300 – $1,500 per bottle. If I had to guess on how the trade will price the 2016 vintage, I would think most owners will price their wines similar to their 2015 prices. They will not lower prices, because that would simply cannibalize and hurt their 2015 sales in 2018. I also do not expect they will raise prices very much because they have a lot of good quality wine in the system, and they do not want to price themselves right out of the market. Besides, I think a lot of retail sticker price shock is yet to come when the major price hike last year on the 2015 vintage finally hits the retail shelves in September 2018.

Smart buyers will be buying high quality cheaper 2014 Bordeaux as the last of the futures offerings close out now (if still available), and snapping up the best 2014 bargains that hit retail shelves later this fall. They will also be watching closely for the odd bargain when the 2015 futures get re offered again this year. There is no doubt that 1st growth prices are going to be driving more and more people to look for the same quality in a cheaper bottle. Fortunately, there is an ample selection of high quality cheaper alternatives, and plenty of critics and advice to guide you towards those alternatives.

Ah, the free enterprise system is alive and well. Happy hunting!

Reg.