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.