Bordeaux 2016: What merchants are saying about price

Bordeaux should make fewer pricing decisions 'behind closed doors', says a report ahead of en primeur tasting week as new research suggests international merchants are hoping that 2016 prices won't sour the fine market's recovery story.

Liv-ex, the online wine trading platform, said today (29 March) that errors in valuing Bordeaux en primeur wines have cost the trade ‘hundreds of millions of euros’ in lost sales in the past decade.

Bordeaux en primeur sales as a percentage of total sales on the Liv-ex platform since the 2007 campaign. Credit; Liv-ex.

Bordeaux 2016 barrel samples have yet to be properly tasted by critics, including Decanter’s Jane Anson, yet the pricing debate has started early.

Presenting 2016 as an opportunity to build confidence and a ‘new dawn’, Liv-ex said pricing decisions in Bordeaux should be less ‘opaque’ and take better account of stock in the secondary market.

From a final consumer perspective, it comes down to the economic incentive for taking a gamble on an unfinished wine. The Liv-ex report re-inforces evidence that this rationale has too often been lacking in recent campaigns – albeit not for every estate, and several Bordelais would claim to have made gestures to the market.

Early price expectations for 2016 en primeur wines: Before the main tastings

What Wine Lister’s 49 founding members think should happen to Bordeaux 2016 prices. The survey includes some of the world’s top fine wine traders, Wine Lister said. Credit: Wine Lister.

It is the first time in a while that merchants have headed into an en primeur campaign after seeing a year of recovery for top Bordeaux in the fine wine market. And although some winemakers have labelled Bordeaux 2016 as ‘the best I have made’, the new-found market optimism is fragile.

En primeur prices for 2016 need to drop by 4% on average versus 2015, according to a survey of the 49 founding members of analysis group Wine Lister, and seen by Decanter.com. Merchants in the Americas said a 1% increase would do.

Perhaps crucially, those at the Place de Bordeaux said a 2% increase would be appropriate, setting them apart from the UK and Asia.

There is naturally some haggling taking place.

Some traders point out that the situation is complex.

At BI in the UK, Giles Cooper said that any wines approaching a 10% increase versus the 2015 price ex-Bordeaux could be playing with fire. The current euro to sterling exchange rate would translate that into a 25% rise, for example.

‘But it’s all relative,’ he cautioned. Each estate has its own market situation in terms of stock and back vintages, to an extent. ‘Last year, we thought some prices were too high. But those wines that achieved great things sold really well.’ He highlighted Haut-Brion, with BI selling 250 cases en primeur.

It seems likely that there is still a lot of wine still in the supply chain, but this does not appear to be causing undue concern outside of Bordeaux.

See this year-old chart from Liv-ex:

Bordeaux en primeur, Bordeaux 2015, liv-ex

Stocks of Bordeaux wine by vintage ahead of the Bordeaux 2015 en primeur campaign. Credit: Liv-ex.

Several large merchants have adapted their portfolios to the point where Bordeaux en primeur is no longer a make-or-break campaign. Some also use it as a chance to promote back-vintages alongside en primeur releases.

Clearly, though, the trade would like Bordeaux en primeur to do better and the 2016 vintage is seen as an opportunity.

‘The market conditions are better than for some time,’ Liv-ex MD and co-founder James Miles told Decanter.com. ‘The information is there to make really accurate decisions on pricing.’

Cooper added, ‘We’re really excited to taste [this vintage].’

London is still acknowledged as the international fine wine market’s bellwether, as Jane Anson wrote in an excellent recent analysis.

Brexit, then, is the obvious wild card in this pack. There is a feeling that Article 50 has been priced in to exchange rates already, but only a fool would guess the outcome of UK-EU relations from here.