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Guillotine hangs over prices
By Elin McCoy |
April 19, 2009, Sunday
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Print Edition
EARLY this month, I sipped and spat out more than 300 barrel samples in Bordeaux's annual en-primeur tastings, and the number of rich, ripe, complex reds and bright whites took me by surprise. That's a problem for chateau owners.
While this isn't a stellar vintage like 2005, nobody expected the 2008s to be any good at all after a poor summer. So buyers were hoping the futures for the latest vintage would reflect economic realities. But dropping prices dramatically in a good vintage? It's not in the Bordelais DNA.
That's why for the media and merchants in attendance, the mood of the week flip-flopped between certainty that sanity would prevail, and concern that it wouldn't.
Like the other journalists, my days were split between morning tastings organized by the Union des Grands Crus, whose 131 members represent the top Bordeaux estates, and afternoon appointments at the first growths and others that snobbishly refused to show their wines outside the chateau.
At every stop, tastings were followed by talk centering on how soaring prices over the past five or six years for the 20 most-in-demand chateaux badly needed adjusting down. Naturally, almost none of the chateaux thought they belonged on that list.
Perfectly balanced
Buyers agreed that the exclusive first-growth properties have to lead the way by releasing their wine for much lower prices as soon as possible to keep the fine-wine market moving. In Chateau Latour's elegant, modern tasting room, where you spit their ultra-pricey juice into a discreet stainless trough washed by constantly running water, I sampled the perfectly balanced, smoky-fruity first growth and listened to managing director Frederic Engerer.
All business in a gray hand-stitched suit and skinny French eyeglasses, he spun the tale of a poor spring, a warm, humid July and cold August, clear portents of disaster. Then a late September and October Indian summer saved the day for those, like Latour, who wisely waited to pick the grapes.
But with price trumping quality this year, would he confirm the rumors that Latour would offer 2008 futures at 100 euros (US$133) a bottle, half the initial cost of the unloved 2007s, nowhere near as good?
"Whatever I decrease, it will never be enough in this environment," Engerer said. He might release a very small amount to start and if Latour didn't sell at the price asked, "we'll hold the wine for three, four, five years, until people smile again."
The picture wasn't much clearer at Chateau Margaux. As owner Corinne Mentzelopoulos' lively beagle, Zorba, dashed around the tasting room, wine maker Paul Pontallier philosophized about the market, saying that in wine and life, there are no certainties.
At second-growth Chateau Ducru-Beaucaillou, owner Bruno Borie warned, "we have to go back to basics, go back to the consumer, instead of the speculators." At his gates, the flags of China and Japan flapped hopefully next to those of the United States and the United Kingdom to welcome international buyers.
Many worried that low prices for the 2008s would hurt sales of the higher-priced, but much inferior 2007s. The crowds were significantly thinner this year, down 10 percent according to the Union des Grands Crus, and 25 percent at some chateaux. Last year's 200-strong Russian contingent was down to one person this time, but the number of Japanese increased.
The tasting room at Jean-Pierre Moueix in Libourne is usually jammed with people crowding in to taste Chateau Petrus. I had the room to myself with one other journalist. At Mouton-Rothschild, in a grand room hung with a medieval tapestry, I tasted alone until two Germans arrived.
Many US retailers didn't show, reeling from the money they put out for the last two Bordeaux vintages, both priced while the economy was booming. Mark Wessels of Washington DC's MacArthur Beverages Inc said he saw no point. "We've only sold half our expensive 2006s, so I'm cashflow negative to the tune of US$300,000 to US$400,000," he said.
About 30 wines really impressed me, all from properties that could afford the kind of selective picking and sorting that makes good wines. Tops was Latour, followed by Haut-Brion and Lafite. I gave high marks to Pontet-Canet, Palmer, Leoville Las Cases, Haut-Bailly, Leoville Poyferre, and many of the Pomerol wines, especially big, brooding Petrus and silky, seductive La Conseillante.
A few Bordeaux chateaux aren't playing the waiting game. Chateau Angelus rolled out its 2008s to merchants three weeks earlier than usual, at 50 euros a bottle, 40 percent off the 2007 price. Will the gloomy outlook force a serious attitude and price adjustment on the first growths? We'll know if Bordeaux prices come under the guillotine during the next few weeks.
While this isn't a stellar vintage like 2005, nobody expected the 2008s to be any good at all after a poor summer. So buyers were hoping the futures for the latest vintage would reflect economic realities. But dropping prices dramatically in a good vintage? It's not in the Bordelais DNA.
That's why for the media and merchants in attendance, the mood of the week flip-flopped between certainty that sanity would prevail, and concern that it wouldn't.
Like the other journalists, my days were split between morning tastings organized by the Union des Grands Crus, whose 131 members represent the top Bordeaux estates, and afternoon appointments at the first growths and others that snobbishly refused to show their wines outside the chateau.
At every stop, tastings were followed by talk centering on how soaring prices over the past five or six years for the 20 most-in-demand chateaux badly needed adjusting down. Naturally, almost none of the chateaux thought they belonged on that list.
Perfectly balanced
Buyers agreed that the exclusive first-growth properties have to lead the way by releasing their wine for much lower prices as soon as possible to keep the fine-wine market moving. In Chateau Latour's elegant, modern tasting room, where you spit their ultra-pricey juice into a discreet stainless trough washed by constantly running water, I sampled the perfectly balanced, smoky-fruity first growth and listened to managing director Frederic Engerer.
All business in a gray hand-stitched suit and skinny French eyeglasses, he spun the tale of a poor spring, a warm, humid July and cold August, clear portents of disaster. Then a late September and October Indian summer saved the day for those, like Latour, who wisely waited to pick the grapes.
But with price trumping quality this year, would he confirm the rumors that Latour would offer 2008 futures at 100 euros (US$133) a bottle, half the initial cost of the unloved 2007s, nowhere near as good?
"Whatever I decrease, it will never be enough in this environment," Engerer said. He might release a very small amount to start and if Latour didn't sell at the price asked, "we'll hold the wine for three, four, five years, until people smile again."
The picture wasn't much clearer at Chateau Margaux. As owner Corinne Mentzelopoulos' lively beagle, Zorba, dashed around the tasting room, wine maker Paul Pontallier philosophized about the market, saying that in wine and life, there are no certainties.
At second-growth Chateau Ducru-Beaucaillou, owner Bruno Borie warned, "we have to go back to basics, go back to the consumer, instead of the speculators." At his gates, the flags of China and Japan flapped hopefully next to those of the United States and the United Kingdom to welcome international buyers.
Many worried that low prices for the 2008s would hurt sales of the higher-priced, but much inferior 2007s. The crowds were significantly thinner this year, down 10 percent according to the Union des Grands Crus, and 25 percent at some chateaux. Last year's 200-strong Russian contingent was down to one person this time, but the number of Japanese increased.
The tasting room at Jean-Pierre Moueix in Libourne is usually jammed with people crowding in to taste Chateau Petrus. I had the room to myself with one other journalist. At Mouton-Rothschild, in a grand room hung with a medieval tapestry, I tasted alone until two Germans arrived.
Many US retailers didn't show, reeling from the money they put out for the last two Bordeaux vintages, both priced while the economy was booming. Mark Wessels of Washington DC's MacArthur Beverages Inc said he saw no point. "We've only sold half our expensive 2006s, so I'm cashflow negative to the tune of US$300,000 to US$400,000," he said.
About 30 wines really impressed me, all from properties that could afford the kind of selective picking and sorting that makes good wines. Tops was Latour, followed by Haut-Brion and Lafite. I gave high marks to Pontet-Canet, Palmer, Leoville Las Cases, Haut-Bailly, Leoville Poyferre, and many of the Pomerol wines, especially big, brooding Petrus and silky, seductive La Conseillante.
A few Bordeaux chateaux aren't playing the waiting game. Chateau Angelus rolled out its 2008s to merchants three weeks earlier than usual, at 50 euros a bottle, 40 percent off the 2007 price. Will the gloomy outlook force a serious attitude and price adjustment on the first growths? We'll know if Bordeaux prices come under the guillotine during the next few weeks.
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