Bordeaux has launched its futures campaign for the 2016 vintage, and the wines are drawing comparisons to classic vintages like 2000 and 2005. But will American consumers play a sizable role in the campaign as they did for those past years?
Second-growth Château Cos-d'Estournel opened the en primeur campaign for red wines on April 24. Sauternes estates Châteaus Coutet and Guiraud have also released their futures. In all three cases, the vintners held stable on their 2015 pricing. If other châteaus follow their lead, this could mean a reboot to the Bordeaux en primeur system.
Wine Spectator senior editor James Molesworth has tasted more than 300 of the 2016 wines from barrel, revealing numerous wines with classic potential. While the wines still need to mature, and sweet wines and dry whites appear less promising than reds, this looks to be a strong year for both the Left and Right Banks.
Cos-d'Estournel offered its first wine at €120 ex-négociant, or about $131.50. It released second label Pagodes de Cos at €32 ex-négociant and Cos-d'Estournel blanc at €84. All three prices are the same as the 2015 vintage en primeurs. After markup, leading U.S. retailers were offering the first wine for about $155 per bottle, or $1,860 per case.
"[Owner] Michel Reybier wanted to send a strong message and to have the wine distributed around the world and into the hands of consumers as fast as possible," said Aymeric de Gironde, director of Château Cos-d'Estournel. So far de Gironde says he is "thrilled" with the response from clients in Europe, Asia and America.
Thanks to a strong dollar, a price of $155 a bottle is slightly below what 2015 Cos futures are selling for. It's also much lower than the 2009 and 2010 vintages, both of which earned 97 point scores.
Is It Enough?
The question remains whether stable pricing is enough to bring consumers back. Bordeaux futures are based on a fundamental premise: The initial price offered by the châteaus will likely represent the best price consumers see. By the time bottled wines reach retail shelves, the cost could be much higher, and the top wines could be harder to find, if the wines find demand to match their potential quality. The 2016 vintage offers the kind of quality that should appreciate. But will it draw consumers?
"We'll see," said Jeremy Noye, president and CEO of Morrell & Company in New York. "The 2016s will be interesting in general. No matter how good of a vintage, when it follows another successful vintage, typically the demand isn't there. But this might be the campaign to break that mold. Cos is the first indication that it has potential."
Demand for bottled Bordeaux is robust in America, Bordeaux's third-largest market in volume and value—25.2 million bottles worth $214 million in 2016, ahead of the U.K. but trailing China and Hong Kong, according to the Bordeaux trade group CIVB. But the demand for futures in the U.S. has slowed to a drip since the 2005 vintage. "The 2005 was the last robust campaign in the U.S.," said Noye.
American consumers started skipping futures sales as prices escalated a decade ago. The financial crisis of 2008 exacerbated the decline. U.S. sales of bottled Bordeaux have grown in recent years, but not en primeur sales. "Bordeaux business is really strong, but the [consumer] demand for futures is zero," said Ralph Sands, senior wine specialist for K&L Wine Merchants. Increasingly, American consumers prefer to run the risk of paying a few dollars more once the wine is bottled, leaving futures as a business-to-business trade, between négociants and a few stalwart retailers.
"The core group of clients who once bought every year—because as anyone who really knows Bordeaux knows, what's fun is the difference in the vintages—those people are older now. There's a real disconnect between this region and the younger generation," said Sands. "[Bordeaux] needs to bring it back to the consumer."
Wine drinkers have noticed that the prices don't move dramatically by delivery time. Great Bordeauxs from several recent vintages can still be purchased at prices comparable to their cost when they were futures. "True avid consumers don't want to advance the money," said Noye. "There's no guarantee the price will go up. No one knows what the currency exchange rate will look like in two years. And it's an interesting economic market globally—what's happening here, currency-exchange rates, and Brexit in the U.K."
Interesting Times
Global uncertainty is one reason château owners may be tempted to follow Cos-d'Estournel's example and hold prices relatively stable. France is currently holding a volatile presidential campaign, with political novice Emmanuel Macron facing far-right nationalist Marine Le Pen in a runoff. The outcome holds consequences for the euro and for the European Union's future.
Across the Channel, Brexit has roiled Bordeaux's oldest export market. Even with Cos holding prices steady, the wines are 10 percent more expensive in London due to the weak pound. The U.K. has slipped to fourth place in volume and value for Bordeaux exports.
China now reigns as Bordeaux's No. 1 market in volume and value, selling 74 million bottles worth $352 million last year. "In 2016, we saw a 30 to 40 percent increase in fine wine sales, and increased demand for modest classified growths—Lynch Bages, Lascombes, Beychevelle, Pontet-Canet, Canon—and Burgundy," said Richard Li, vice president of fine wine at leading importer and merchant ASC Fine Wines in China. "Government consumption is gone, but business consumption is warming up."
But that doesn't mean futures are an easy sell. Li cautioned, "In China, it's only a tiny portion of the population who is buying fine wine, and an even smaller number buying en primeur." Chinese consumers had a particularly bitter experience with the 2009 and 2010 vintages. "They didn't get the expected return and they lost with the exchange rates," said Li.
"It has been very difficult for importers to sell young vintages at a margin," said Vincent Yip of importer Topsy Trading in Hong Kong, Bordeaux's second-largest market in value, worth $335 million last year. "We understand that, from the château owners' standpoint, the business is strong and working well. But customers—and importers like us—are not only remembering the 2010s, they are sitting with stocks of these premium 2010s, 2009s. I am quite sure only a few bottles were consumed."
After a couple of years of tepid interest, this year's barrel tastings in Bordeaux were marked by a noticeable return of Chinese clients. "Unexpectedly, we had a large number of Chinese visitors. Bordeaux thought the Chinese were not interested in the futures, not since the 2010," said Philippe Dhalluin, CEO of Château Mouton-Rothschild. "The reality was the rest of the world buys futures and China buys when it's bottled. Now we're not so sure. Perhaps it's changed."
Li noticed the traditional big Chinese players present during the tastings, as well as regional importers, which he believes is a sign that the négociants’ clients in mid-sized cities are discovering futures.
Philippe Castéja, CEO of négociant Borie Manoux, echoed that. "The middle range like Bordeaux Supérieur has developed well in China, and we're shipping to mid-sized cities, not just the largest six to 10 cities everyone was focusing on."
And in America?
Consumers in the United States face a different currency situation than Britain. A strong dollar means those Cos-d'Estournel futures are selling for 5 percent less than the 2015s did last year. But talk of possible tariffs by White House officials has château owners nervous.
If recent campaigns are an indicator, American consumers will be price- and quality-conscious. Châteaus that hold prices steady and overdeliver on quality can expect attention. With stable pricing, Noye expects demand for first- and second-growths and the "overperformers in the middle" like Châteaus Malescot-St-Exupéry, Pape Clément, Canon and Clinet. He said he would take a stance in a select number of wines this vintage. "Things that sold well last year in the under-$40 retail range."
Sands of K&L is even cautiously optimistic. "The release of Cos-d' Estournel, a great wine that rivals or even surpasses the first-growths, at the same price as 2015 is the right move for the marketplace and sends the right message to everyone in the business. I hope it kickstarts a brisk campaign!"
