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

(Readers please note this blog was originally published August 8, 2018, and had to be republished again September 12, 2018 after our site had been hacked, Reg.)

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 those 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 only know 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 1st growth 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),

and Petrus (2,500),

to name just a few. 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 impossible to get either because there is inadequate supply, prices 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 that I was buying 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 paying 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 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 chateaux’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 # 45, tasting 1988 Chateau Lynch Bages and 1991 Graham’s Vintage Port, April 21, 2017.

In February this year we had the good fortune to taste the 1988 Chateau Lynch Bages, and last month at my son’s birthday dinner we opened a bottle of 1991 Graham’s Vintage Port, from the year he was born. Both were great wines, and worth looking at in more detail.

I bought the 1988 Chateau Lynch Bages in 1992 or 1993 at an LCBO Vintages outlet in Ontario at $43.45 per bottle. This was the last of 3 bottles I had bought. The 1988 vintage at the time was not viewed by critics as outstanding, but it was respectable. It was much better than 1987, which was a complete washout. It was not as tannic or meaty as 1986, but it was more traditional than the softer and fruitier 1985 vintage. And of course it got completely forgotten when the wonderful 1989 and 1990 vintages were harvested. The key adjectives I would attribute to 1988 Bordeaux would be “traditional” and “classic”. I did not buy a lot of wine from 1988, but those that I did buy were meant to mirror or compliment those characteristics, and Chateau Lynch Bages fits well.

The 1988 Chateau Lynch Bages in February 2017 was fully mature and in perfect harmony and balance, showing no signs of advanced age or going downhill. Still a strong rich ruby black in color, long tears ran down the glass after swirling the wine in your glass. On the nose there was wonderful cedar, smoke, black cherry, raspberry and currant aromas. On the palate the wine was in perfect balance, soft, fleshy, round and plump. The classic cedar and cigar box flavors took over, then emerged the fruit, with black berries and currants, figs, and raisins. After the fruit came hints of leather, wet damp earth in a forest, ending with  nice spicy cassis on the finish.

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This was not an overwhelming wine, this was not a blockbuster. This was a mature, rounded, balanced wine, in perfect harmony. The wine improved in the glass, even after having been decanted for over an hour. No sign of being over aged or in decline, but pleasantly parked on a plateau basking in the late afternoon sun. At 29 years of age, I would easily expect this wine to last another 10 years effortlessly, and at least 5 of those years in the current condition. My rating was 93 points, well deserved.

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I was really disappointed when I went to check tasting notes on this wine on www.winesearcher.com while researching what the critics have said about this wine recently. Wine Searcher has 5 critic scores ranging from 93 points to 80 (4 of the 5 over 90 points), the 80 point revue was from La Revue du Vin de France done in June 2000, nothing from Robert Parker (in spite of the fact that he has reviewed this wine 3 times, the latest in June 2000 where he gave it 92 points) and nothing from the Wine Spectator. I don’t know about you, but when I go to check critic reviews I want to see what the best critics are saying, and it is pretty clear to me that when 4 critics appraise the wine at 90 + points and one gives it 80 points, La Revue du Vin de France has clearly goofed, especially when Robert Parker tasted the wine at the same time in June 2000 and gave it 92 points. So what do you think www.winesearcher.com is doing with their sketchy and poor selection of critic reviews? In my opinion they are doing a pretty poor job.

In Parker’s June 2000 review of this wine, where he rated it at 92 points, he expected this wine to keep going strong for another 10-12 years. Well it has been almost 17 years since that date, and this wine is still pristine, and showing all the signs of going another 5-10 years. My reason for going on and on about this is to simply point out that you, as a wine collector and consumer, need to be careful to pay proper attention to the information you get from information websites like www.winesearcher.com or you can be easily misled. Mixed reviews leave doubt, which generally results in one moving on to something else, and in this case you would be really missing out on a classic mature claret in great shape now and for years to come. Too bad that was my last bottle!

The 1991 Graham’s was tasted in late March 2017 on the occasion of my son’s 26th birthday. Eight of us polished off this beauty in record time, so it must have been very good. The 1991 was the first declared vintage port by Graham’s since their 1985, and it was considered to be a small but high quality vintage. This wine has been reviewed in 1993 by Clive Coates for The Vine (magazine) where he rated it 97 points, in 1994 by James Suckling for The Wine Spectator (magazine) where he rated it 93 points, and by Robert Parker for The Wine Advocate (magazine) in 1995 where he rated it 94 points. Parker noted in his comments that the 1991 Graham’s was without a doubt the best port of the vintage. He described the wine as “…explosive nose of black fruits, licorice, spring flowers, and tar. Thick and full bodied, with a satiny texture and a blockbuster, alcoholic finish, this is a top-notch vintage port.”

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When we tasted this port 3 weeks ago, we observed a dark ruby color in the glass, no longer purple/black as it was in its youth. Great glycerin legs in the glass. On the nose this wine was nicely perfumed with aromas of sweet dark berries, grapes, and tar. On the palate any coarse tannins that may have once been present (as noted the last time I tasted this wine 8 years ago) have  faded away, leaving rich fruit flavors of berries, and plums, as well as licorice, tar, tobacco and chocolate. Sweet without being overpowering on the mid palate, giving rise to a long satin smooth chocolate finish. There is still a little sharpness in the alcohol on the finish, but you can tell that this is diminishing as the wine ages. A very pleasant wine that is now only middle aged, and will continue to improve over the next 10 years before it reaches full maturity. This wine will easily last another 20 years, and will only reach its peak in roughly 10 years by 2027. A very fine port that I rated at 94 points. Drink now and hold for further development.

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Unfortunately, once again when I was researching ratings and critic scores for this wine on www.winesearcher.com I ran into bad information. WineSearcher rated the wine at 89 points on the strength of 3 ratings of 80 points from Jancis Robinson (date not mentioned), 92 points from Cellar Tracker, and 93 points from The Wine Spectator. No mention of the Clive Coates rating of 97 points, or the Parker rating of 94 points.

So what is the big deal about ratings and wine scores you might ask? Poor data collating by WineSearcher (not properly compiling critic reviews and scores) causes them to rate the 1991 Graham’s as the second worst Graham’s Vintage Port of the 18 Graham’s Vintage Ports declared since 1990, at 89 points. This is just plain wrong, simply because they included the Jancis Robinson rating and excluded two other much stronger ratings. Bad data leads to an inaccurate rating and a bad rap for a really good wine. The moral of the story, and the message behind this blog is twofold:

  • Old wines properly kept live much longer than the critics expect them to. A wine critic when he/she forecasts a wine’s lifespan will always err on the younger side, they never want to overestimate a wine’s lifespan, and they never want to assume the consumer has state of the art storage conditions. So properly kept, you should expect your wines to last longer than the lifespan predicted by the critics.
  • Do not blindly believe what an information collating site like www.winesearcher.com reports on a wine’s statistics. Do your own homework, use them as just one of several information sources. Their stats are often selective, incomplete, and lead to the wrong conclusions. If you trusted their information to be accurate and complete, your logical conclusion would be to avoid the 1991 Graham’s, and what a mistake that would be. Similarly, you might think the 1988 Chateau Lynch Bages was too old to be bought safely today, and again how wrong you would be.

30 years ago you had no access to online information about critic tasting reports and scores, about latest auction prices, or what wine the Chinese were now buying. Liv-ex and www.winesearcher.com did not exist, and if you wanted tasting reports and scores you subscribed to The Wine Spectator and The Wine Advocate publications. You also relied more heavily on your own tasting experience, and that was very important because it taught you more about what you yourself like, not what a particular wine critic likes.

So do yourself a favor, do not rely too heavily on what an information and search website like www.winesearcher.com says about a wine, because inaccurate or incomplete information will often lead you to the wrong conclusion. My suggestion is that you use it as only one source of information, and that you do your own analysis of the facts it presents to you. I will write another blog soon to give additional pointers on how to research wines on an information collating website. But above all else, always remember that there is no substitute for trying these wines yourself. So drink wines young, old, and in between. Learn to recognize the difference between young and tannic verses fully mature, soft and rounded, and decide for yourself which you prefer. This is all part of your wine learning and appreciation experience.

Learning what you like can be so much fun!

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.

 

 

 

Reg’s Wine Blog – Post # 22, Bordeaux Wine Prices and the 2015 vintage – up, up and away!

You may or may not have heard, the 2015 Bordeaux vintage for classified growths is being priced now, and various properties are releasing their opening prices. The good news: a very good year for Bordeaux classified growths if you go by what Neal Martin of Robert Parker’s The Wine Advocate has to say. The bad news: wine prices are headed up, in some cases way up.

The Liv-Ex wine blog out of the UK does an excellent job of tracking wine prices, and they also track how responsive wine prices are to wine critic scores, and Robert Parker’s scores in particular. The most recent Liv-Ex blog on opening wine prices ex-negociant can be read by using the following link, http://www.blog.liv-ex.com/category/releases/bordeaux-2015-en-primeur. The dramatic price increases being described are averaging 30% higher, and in some cases (like Chateau Margaux), they are much higher (by 83.6%). Will the 2015 Chateau Margaux be too expensive for most people?

Let’s look at Chateau Margaux for a moment, with an opening price to the trade up a staggering 83.6% from last year. The Chateau is selling to the negociant at 384 euro per bottle, the negociant is applying his 17% markup and selling futures at 4,260 pounds sterling per case of 12. That futures price equates to $6,050.00 US or $7,750.00 CDN per case, but that is not the price you will pay, that is the price that your wine importer will pay, companies like Chateau and Estate Wines in the US or the LCBO or SAQ in Ontario and Quebec. These companies will apply their own markup, and those markups vary widely. Let’s assume you get lucky and the local markup is only 25% on the futures offering, so you will be paying $7,562.50 US or $9,687.50 CDN per case. On a per bottle basis that works out to $630 US or $807 CDN per bottle. Those are for Bordeaux futures, which means pay now and wait 18 months for your wines to be delivered, ouch!

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But there is more, if you choose to wait for the wine to be released on the store shelves before buying, the price you will pay will be higher, usually another 25% higher because the retailer will be paying more to buy the wine than the futures price, and applying his own markup accordingly. That means you can expect to find 2015 Chateau Margaux hitting retail store shelves in September 2018 at about $800 US or over $1,000 CDN. Wow, over $1,000 per bottle for wine that you will have to store no less than 10 years before you dare try to enjoy it. Are you in price shock yet? I know I certainly am.

So how good is the wine? For this price it had better be really good. Neal Martin has recently replaced Robert Parker as The Wine Advocate’s Bordeaux critic, and according to Neal the wine is rated 98-100 points from barrel samples. It is normal for the wine to be initially given a range (in this case from 98-100 points) until the wine itself is bottled a year from now. According to Neal you should “Beg for a bottle and worry about the cost later.” Clearly Neal expects the wine to fly off the order shelves and be impossible to get. It also appears that Chateau Margaux may be the top Bordeaux wine of the vintage. And if all this were not convincing enough, Margaux’s winemaker and head of operations Paul Pontallier passed away on March 27th 2016 at 60 years of age after running Chateau Margaux for 33 years. Paul will be sorely missed and 2015 will therefore be his last vintage as winemaker and head of operations, again adding to the importance and sentimental value of the 2015 Chateau Margaux.

Okay, this wine sounds pretty good, however we now have another problem. The more Neal talks about how good this wine is, the higher the price will go and the more difficult it will become to find any, especially if Chateau Margaux turns out to be the best Bordeaux wine of 2015. Neal will also be tasting and rating this wine again once it is bottled and before it is released on store shelves, so do not be surprised if the retail prices I have mentioned above turn out to be lower than the actual retail prices once the hype has moved into top gear. I would not be surprised to see 2015 Chateau Margaux at $1,000 US and $1,250 CDN on the store shelves just in time for Christmas 2018. Indeed when Neal says “beg for a bottle”, a bottle may be all you can ever hope to get, and it may also be all you can afford.

So have Bordeaux prices gone too high? How high is too high? I remember 30 years ago often being in New York City, Washington, and Buffalo on business and buying the 1982 vintage of Chateau Margaux, Lafite Rothchild, Mouton Rothchild, Latour, Haut Brion and Cheval Blanc at $40 US per bottle. That’s right, $40 US per bottle, and at the time Robert Parker was calling the 1982 vintage “the vintage of the century” and had rated all the top wines at 95 points or more.

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If the 2015 Chateau Margaux hits store shelves in the US at $1,000 US per bottle, the price will be 25 times higher than the 1982 vintage was selling for in 1986. That is crazy, and that is also too high for most people.

So is it time to say goodbye to your favorite classified Bordeaux estates? Maybe, and for those devotees reluctant to jump ship, you can resort to buying the Chateau’s second wine. In the case of Chateau Margaux that would be Pavillon Rouge, which is much cheaper, but will still end up hitting the retail shelves in 2018 at a minimum of $200 US or $260 CDN per bottle. That will be a 45% increase (certainly much more reasonable than the 83.6% increase for Chateau Margaux), and the wine itself is rated by Neal at 93 points, certainly a respectable score but not a potential 100 point wine. Still, you get five bottles for the price of one, something worth considering.

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In terms of volume of production and therefore availability, there are 200,000 bottles of Pavillon Rouge produced annually (16,667 cases) verses only 150,000 bottles (or 12,500 cases) of Chateau Margaux produced. So you will have an easier time getting Pavillon Rouge with 33% higher production, and less demand because all the action is going to focus on the “grand vin”.

What other options are available for the price conscious consumer without straying too far from Bordeaux classified growths?My first suggestion is to look for a chateau with higher annual production, this generally means staying away from most Pomerols. Look for less than perfection, so avoid 100 Parker point wines, and look for underrated value, such as a 5th growth wine producing at 2nd growth or better quality level. A good example of this is Chateau Pontet-Canet, a 5th growth from Pauillac, with annual production of 240,000 bottles or 20,000 cases.

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It is also worth keeping an eye on the estate’s 2nd wine, Les Hauts de Pontet-Canet, which also produces 240,000 bottles or 20,000 cases annually.

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Neal Martin rates the 2015 Chateau Pontet-Canet at 94-96 points, pretty high quality, in fact a perfect place to be, any higher a rating would be having a much more pronounced impact on price. The estate also has an excellent quality track record, having delivered 100 point wines in both 2009 and 2010, so they are right now at the top of their game. Initial futures pricing is at 795 pounds sterling per case, which according to my calculations above for Chateau Margaux, would lead to retail prices at about $150 US and $200 CDN per bottle. So for the value oriented consumer, the 2015 Chateau Pontet-Canet is going to hit retail shelves at least 20% cheaper than Pavillon Rouge, and it is higher rated by Neal Martin (94-96 verses 93). In terms of comparison with Chateau Margaux itself, you will be able to buy at least 6 bottles of Chateau Pontet-Canet for the same price as one bottle of Chateau Margaux, at what amounts to a slightly lower score (94-96 verses 98-100).

Are Bordeaux prices out of control? Yes, for now they are, but they operate in cycles and 3 or 4 poor growing years from now prices could be a lot lower again, so don’t despair. There are lots of bargains to be found if you have a mind, and the will, to shop carefully. With lots of second wines available today for most of the major estates, there are many more ways today to find value with classified growth Bordeaux than there were 20 or 30 years ago.

So good hunting,

Reg.