Reg’s Wine Blog – Post # 47, June 19, 2017, the Bordeaux 2016 Vintage, Priced and Over Priced

The 2016 Bordeaux vintage has been appraised and evaluated by critics as a major success (see my previous blog post # 46 for details). A killer frost did some isolated vineyard damage at the end of April in the region, and clearly influenced most growers to raise their prices. Prior to the frost, about a dozen properties had announced their 2016 pricing, and the emerging trend was “no increase” for 2016 (which was expected since most growers had already raised prices for the 2015 vintage by an average 30%). Since the frost damage, most properties have raised their prices for their 2016 wines by about 25%, even if they themselves suffered no frost damage (which was the case for most of them).

So let’s take a look at the price increases applied to the wines in Reg’s Top 30 Bordeaux wine list for 2016. There are indeed a few surprises, some good and some not so good:

  • Leoville Las Cases – 30%
  • Palmer – 14.3%
  • Eglise Clinet – 25%
  • Pichon Lalande – 25%
  • Pontet Canet – 44%
  • Angelus – not released yet
  • Ducru Beaucaillou – 16%
  • Figeac – 47.1%
  • Haut Bailly – 27%
  • Vieux Chateau Certan – 28%
  • Cos D’Estournel – 0%
  • La Conseillante – 32.7%
  • Pichon Baron – 18.7%
  • Trotanoy – not released yet
  • Smith Haut Lafite – 28%
  • L’Evangile – 20%
  • La Fleur Petrus – not released yet
  • Lynch Bages – 14.2%
  • Montrose – 0%
  • Canon – 20%
  • Calon Segur – 17.7%
  • Leoville Poyferre – 19.5%
  • Pavie Macquin – 11.4%
  • Clos Fourtet – 23.6%
  • Pape Clement – 12.2%
  • Leoville Barton – 17.7%
  • Troplong Mondot – 23.2%
  • Domaine de Chevalier – 18.9%
  • Grand Puy Lacoste – 25%
  • Rausan Segla – 18.8%

Only 3 properties above have yet to announce their 2016 pricing. Of the 27 properties already priced for 2016 releases, only two properties, Cos D’Estournel and Montrose have kept their price the same as 2015. There is a strong message here, focus on buying those two wines for openers. But there is more information to be learned. Remember from my previous blog post # 46, Ducru Beaucaillou lost 40% of their 2017 crop to frost damage, yet they only raised their 2016 price by a very modest 16%, so take a good look at their wine as well. La Conseillante lost about 30% of their 2017 crop to frost, and they raised their 2016 price by 32.7%, and Haut Bailly lost 33% of their 2017 crop and raised their 2016 price by 27%. Both those price increases would be justified. It would appear that none of the other 27 wines on my Top 30 list lost any production to frost damage, so how can these other properties justify large price increase. If I am the owner of Haut Bailly and I have lost 33% of my vines to frost damage, of course I am going to raise prices to help finance replanting. But if I am the owner of Pontet Canet or Figeac and have sustained no frost damage at all, how can I possibly justify increasing prices by 44% and 47.1%, especially when I increased price by 30% the previous year? The answer my friend is “greed”, just pure greed.

In my previous blog post # 46, I highlighted 6 wines that I liked because of the low price at $100 or less per bottle in 2015. Those wines have price increases ranging between 11.5% and 25%, and because their base prices were already low, they still end up being reasonably priced in 2016: Leoville Poyferre at $125, Calon Segur at $123, Leoville Barton at $123, Grand Puy Lacoste at $112, Pavie Macquin at $111, and Domaine de Chevalier at $100. Domaine de Chevalier would be my choice.

So there are some good wines to look for as 2016 futures, including Cos D’Estournel, Montrose, Ducru Beaucaillou, Domaine de Chevalier, Pavie Macquin, and Grand Puy Lacoste.

 

 

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Remember, all these wines score over 95 points by the average of the best 5 wine critics in the business. Some others such as Figeac and Pontet Canet I would avoid on principle alone as they are clearly just price gouging the consumer.

Speaking of overpriced Bordeaux, I noticed that the Bordeaux first growth properties generally applied less of a percentage price increase for their 2016 wines, as follows:

  • Margaux – 9.7%
  • Cheval Blanc – 2.2%
  • Mouton Rothschild – 9.4%
  • Haut Brion – 9.1%
  • La Mission Haut Brion – 12%
  • Lafite Rothschild – 8.3%

Could it be that first growth owners are getting concerned that they may be pricing themselves right out of the market, as I have been suggesting for a while now? Or could it be that a modest 10% increase on these wines now costs between $100 and $150 per bottle, and their prices are just getting totally out of control. Of course there are always some who just do not know the meaning of restraint, so Chateau Ausone, a first growth from St. Emilion, and already one of the more expensive first growths, announced a price increase of 29.6% for their 2016 wine,ouch! This sounds like more greed in action.

There is an excellent interview reported on Liv-ex between Bernard Magrez (owner of Chateau Pape Clement and eleven other Bordeaux properties) and Liv-ex Director Anthony Maxwell conducted June 2, 2017 (to read the entire interview use this link, http://www.insights.liv-ex.com/2017/06/liv-ex-interview-bernard-magrez.html). In that interview Bernard makes several interesting comments:

When asked about Bordeaux price increases in general, Bernard responds saying:

“In my opinion, the error of some in Bordeaux is to believe that prices can keep going up. It happened with very great wines due to demand from China, but it won’t happen again.”

When asked about the speed at which some growers are raising prices, Bernard responds saying:

“It is an issue of ego and greed. They just want to have higher prices than their neighbors.”

When asked about the price a consumer will pay for his wine, Bernard responds by saying they will pay a decent price. When pressed to define what he means by a decent price, Bernard responded as follows:

“It’s the price that the consumer is willing to pay. If he thinks it’s too high, he won’t buy. And that’s life! Our boss is the consumer who puts the bottle on the table to drink it with his friends.”

So indeed it is the consumer who is the boss, and sometimes we have a tendency to forget that. Bernard states elsewhere in the interview that it is a much more competitive wine industry today with so much high quality competition from other maturing wine regions, the implication being that Bordeaux must be careful not to overprice their product, or they stand to lose their traditional markets to the competition.

I also found Bernard’s comments about the influence of wine critics on wine prices since Robert Parker’s retirement to be very interesting:

“I think there will be less speculation. 100-point scores today are not the same as they were from Robert Parker. Currently there are four or five major critics such as Suckling or Galloni. It is clear that the merchants look at the average of the top five as well as the competitiveness of prices.”

In fact what I gave you in my previous blog post # 46 was the combined average score of those top 5 wine critics (Martin, Suckling, Galloni, Molesworth, and Anson). I also gave you Reg’s Top 30 list of the most competitively priced wines rated 95 to 98 points by those 5 top critics in the business, and I quoted current 2015 futures prices on all 30 wines. Now in this post you can see the actual 2016 increases, and you have plenty of information by which to make your own purchasing decisions. You even have the thoughts of Bernard to guide you in terms of fair pricing, greed, and that consumers have the power to say “no”.

Here’s to Bernard for having the courage to tell it like it is, and for having seriously upgraded Chateau Pape Clement since he bought it in the 1980’s.

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You the consumer can see for yourself how producers such as Cos D’Estournel and Montrose are far more consumer friendly by not increasing their 2016 prices at all, verses producers like Figeac and Pontet Canet who are out of control by raising prices over 40% in 2016. You can also see how much the quality standards with properties such as Domaine de Chevalier, Pavie Macquin, and Grand Puy Lacoste have risen to rival the quality of top producers. Now it is up to you to shop for your 2016 futures wisely. I know I will be doing the same, happy hunting!

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).

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

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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.

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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

 

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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.