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Bordeaux wine futures under attack


Latest update : 2008-02-15

Critics argue that the Bordeaux primeur system, which offers wine for sale two years before it is bottled, is pricing most wine lovers out of the market. Retail prices for top bottles have even reached as high as 1,000 euros.

Bordeaux's upcoming wine futures campaign - known as the primeurs - is ruffling more feathers than ever this year, with French detractors attacking a pricing system that is pushing some bottles out of the reach of most wine lovers.

"Are they going to try and sell us bottles at 500 euros (730 dollars)?" asked Alain-Dominique Perrin, former head of the world¹s second biggest luxury group, Richemont, in an interview this month with one of France¹s most popular wine magazines.

"If there is a moral in this wine world all the top ones must go back down to 100 euros," he said of the 2007 Bordeaux vintage, which will be tasted by critics in the first week of April and sold in the following months.

The Bordeaux primeur system, which offers wine for sale two years before it is bottled, is unique in the wine world and has always attracted much attention, both positive and negative.

In the last two years, prices paid for top wines have reached record wholesale prices of 400 to 500 euros per bottle, as demand exploded, with customers paying per bottle retail prices of up to 1,000 euros for a few of the most sought after wines like Petrus, Ausone and Cheval Blanc.

The president of the Union des Grands Crus de Bordeaux, which organises the annual primeur tastings, Patrick Maroteaux, described Perrin¹s comments as bitter. He said his take on the wines of 2007, which included calling them wet and mediocre, was wrong.

"He will be very surprised when he tastes them seriously," he said.

Given that Perrin is from outside Bordeaux, and owns several wine estates in other parts of France, notably in Cahors where winemakers can only dream of matching top Bordeaux pricing, his comments could be dismissed as jealousy.

However another critic, this time from Bordeaux, the now retired winemaker at Chateau Petrus, one of the most famous Bordeaux wines, also weighed in against the primeurs this month.

Jean Claude Berrouet, who worked at Petrus from 1964 to 2007, told another magazine that wines had been hijacked by a system that encouraged speculative investors to buy now at relatively reduced prices and sell later at higher ones.

"We have taken wine hostage and we need to set it free," he said.

Berrouet also said the primeurs tastings were too frenzied, and that wines needed to be judged over time, not in a great rush as currently happens.

For his part, Perrin, now executive administrator for Richemont (owner of Cartier, Montblanc and Van Cleef and Arpels), also said top wines were over-priced in relation to production costs.

"To make a bottle of Chateau Mouton Rothschild or similar, all payments included, it comes to between 10 and 12 euros at most," he said.

Consumers were therefore paying about 80 times cost of production for the most sought-after wines, when the highest expected in the luxury industry is only 17 times cost of production, Perrin said.

There has been little response to his outburst among top Bordeaux owners.

"It is evident the costs of production are higher than that," said Paul Pontallier of Chateaux Margaux, one of only five chateaux in Bordeaux with the coveted ranking of "premier cru," meaning first growth.

Asked for an estimate, Pontallier said it was impossible. "It depends so much on the vintage, the proportions of first, second and third wines, the treatments, on what costs we include. I cannot give a number without giving a three-page explanation," Pontallier said. "Some vintages cost twice or three times another."

Other Bordeaux winemakers said Perrin¹s estimates were correct but denied there was any moral issue.

"It's about right, 15 euros would be the maximum," said Jean Christophe Mau, owner of Chateau Brown in Pessac Leognan, and Chateau Preulliac in the Medoc. His own costs were between eight and 10 euros a bottle, he said.

"But pricing has nothing to do with morals, and everything to do with supply and demand," Mau said.

Basile Tesseron of Chateau Lafon Rochet pointed out that Bordeaux producers were limited to selling one product, once a year, and were unable to increase sales volumes in any significant way.

Tesseron also said that the top chateaux represented only a microscopic part of Bordeaux¹s overall production, or less than 2.0 percent.

"There are about 7,000 chateaux in Bordeaux, and most do not reach retail prices of 10 euros," he said.

Date created : 2008-02-15