WineFi Weekly

Welcome to the fourteenth edition of WineFi Weekly👋 
📅 June 24th 2024

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The Bordeaux En Primeur Post-Mortem

Price drops

2023 release prices were on average 22.5% lower than the 2022 vintage.

Leoville Las Cases released early with a significant price drop, followed by slightly smaller declines before the campaign paused briefly for Vinexpo Hong Kong. After this break, the strategy appeared to shift towards lower prices and reduced volumes. Esteemed estates like Pichon Lalande, Palmer, and Montrose reportedly released 20-30% less wine to avoid flooding the market.

While this may appear to be a significant concession, it's important to remember that the 2022 vintage was generally seen as highly overpriced. Liv-ex members had anticipated a 7% price increase for 2022, but the actual rise was 20.8% compared to 2021. Additionally, fine wine prices have decreased over the past year, with the Bordeaux 500 Index, which monitors prices of 50 top Chateaux, dropping 13.4% since May 2023.

To put this year’s release prices in another context, comparing them to the market prices of previous vintages reveals that 2023 release prices are actually 2.8% higher than the average prices of the past ten vintages. Given last year’s overpricing and the current market conditions, the impact of this year’s price drops is effectively zero.

Vintage Quality

As the most respected Bordeaux critic, Neal Martin’s word is seen as law by many. In his report, Martin declared 2023 “The Dalmatian Vintage”. He explained: “Spots of astounding quality are scattered from Bordeaux’s head to toe. Outside those spots, then there are all manner of shortcomings, including some of its more famous names. Nobody will deny that, unlike 2022, 2023 is a heterogeneous vintage.”

This, he went on, precludes 2023 from being considered a great vintage, meaning it can’t really be considered as a peer of 2016, 2020, and 2022. Despite this, he wrote, some producers “pulled out magical wines from their top hat”.

Neal Martin (Vinous), Antonio Galloni (Vinous), Lisa Perrotti-Brown MW (The Wine Independent), and Jane Anson (JaneAnson.com) all place the 2023 vintage in the middle of the past 15 years. Martin and Perrotti-Brown both rank it seventh, Anson rates it a bit higher, and Galloni ranks it eighth.

Buyer’s Market

One of the key dynamics of this year’s Bordeaux En Primeur campaign is the clear indication that we are in a buyer’s market.

Unlike previous years, chateaux have not employed tactics to bundle offers, which would require the purchase of less desirable wines to secure allocations of more sought-after ones. The overall low demand has likely stripped producers of the leverage needed to enforce such strategies.

Almost no wines have sold out. Even relatively successful wines like Pontet-Canet and Lafite Rothschild remain available at their opening prices through most merchants.

In an effort to move inventory, negociants have reportedly been offering discounts of up to 10% on some high-priced releases. One merchant surveyed by Liv-ex noted that a 5% discount has become “industry standard these days.”

These factors have contributed to an overall sense of an “open bar” for buyers, who can cherry-pick the best opportunities at their leisure. En Primeur has indeed transformed into a buyer’s market, providing unprecedented flexibility and choice for discerning collectors.

The Investment Perspective

From an investment perspective, the goal is to pick wines that are undervalued related to their characteristics, and the price and characteristics of previous vintages. It makes no sense to buy a wine that is priced higher, and rated lower than wine from the same Chateau 5 years ago.

This graph of Haut Bailly is a good example.

The 2023 is the second highest priced wine over the last 10 years, and comes up fairly similar to the 2019 in terms of critic scores. It therefore makes very little sense for buyers to take an allocation of the 2023 when there are equivalent back vintages trading much lower.

That being said, some Chateaux did hit the mark. Lafite released at £1,860 for a 12×75cl case - over 20% lower than the average market price of the last 10 years of Lafite.

Conclusion

All in all, a less than successful year for the Bordeaux Chateaux.

We believe that there is some value to be found, and some Chateaux have priced savvily. If you’re a believer in the near-term revival of the Bordeaux Market then it may be smart to pick up some of the better value releases while prices are dampened. Unfortunately for many of the releases, there are back vintages with unequivocally more value.

En Primeur remains a tricky subject investment wise - it used to be the case that the En Primeur price would be the lowest price you could ever get a case for. This is no longer the case, and so the tactic is becoming less machine gun ‘buy everything that you can get an allocation of’, and more of a sniper ‘pick off the releases with value’.

Source: Liv-ex