Bordeaux primeur price fall leaves global buyers cold

14th June 2007, Comments 0 comments

BORDEAUX, France, June 14, 2007 (AFP) - Despite a fall in prices for 2006 Bordeaux en primeur wines -- or wine futures -- international markets are showing little interest for the prestige wines, industry sources said Thursday.

BORDEAUX, France, June 14, 2007 (AFP) - Despite a fall in prices for 2006 Bordeaux en primeur wines -- or wine futures -- international markets are showing little interest for the prestige wines, industry sources said Thursday.

After a record-breaking 2005 vintage, prices for 2006 wines -- which have been hitting the market one after the other this month -- are only 10 to 20 percent lower than last year on average. Since last November merchants have said they needed a 40 percent decrease to sell, and the main markets agree.

"This is not the decrease in prices we were waiting for," said Jean-Christophe Mau, Bordeaux wine producer and wholesale merchant with Yvon Mau. "The wines, which are certainly better than 1997, are not good in terms of price quality ratio," he said.

The 2006 primeurs -­ sold in June each year, nine months after their September harvest, and about 12 months before being bottled ­ were dubbed "better than expected" by market-making wine critic Robert Parker, but neither wine lovers nor speculators worldwide have been tempted.

"The demand from the US and the Far East, and by ricochet the UK, has been low to non existent," said Jeffrey Davies, an American wine merchant based in Bordeaux. "By ricochet in the UK, I mean that's because much of the wine bought by the UK market is sold to the US and Far East," he explained.

One reason for the lack of interest from these markets is the vast sums spent on 2005 primeurs, on average 65 percent more expensive than the 2004s, but hailed by connoisseurs as the "vintage of the century".

Another is that the 2006 vintage quality was judged "patchy" by critics.

And a third is the small price decrease, way off the hoped-for 40 percent cut as chateaux owners find it hard to fall back to 2004 price levels, after the fantastic hikes for the 2005 vintage.

Thus a bottle of Smith Haut Laffite 2004 red, for example, which two years ago was 19.20 euros ex-chateau, shot up to 33 euros for the 2005 vintage, and fell five euros to 28 euros for the 2006 vintage.

Similarly, Chateau l'Eglise Clinet, in Pomerol -- an area which got very good reviews, allowing it more price flexibility -- in 2004 was priced at 39 euros per bottle, with 2005 almost tripling to 112 euros and falling for 2006 by only 12 euros to 100 euros.

Currency exchange issues too have played a role, as the current euro versus dollar and yen rates have rendered prices of the 2006s as high, or sometimes higher, than the 2005s in America and the Far East.

And yet another reason has been the ever growing demand for the limited amounts of very top wines, such as the five classified first growths - Haut Brion, Lafite Rothschild, Latour, Margaux and Mouton-Rothschild - and right bank stars like Petrus, Cheval Blanc and Angelus, which seem to sell no matter what.

None of these wines has released prices yet, but signs are they will remain high.

Such wines, says Jean-Luc Thunevin, St Emilion winemaker and merchant, which he described as being considered as works of art rather than consumable goods, are distorting the market. "The prices are higher because of the huge demand for the top labels," he said.

But some wines are selling well, Davies said. "If you combine a classified growth wine (those which have been ranked according to various Bordeaux classification systems) with a 10 to 20 percent price cut and a good Parker score, you get a 'no-brainer," he said, and these are flying out the door. Examples are Giscours, Pontet-Canet, Montrose and Leoville-Poyferre.

And despite lack of interest from many parts of the world, the French supermarket trade, which bought very little of the 2005s, has returned. "The French are savvier buyers, in their ability to ferret out value wines in value vintages," Davies said.

The US, British and Far East markets by contrast are more speculative, buying popular years and then going into hibernation for others, such as 2006.

"Of course then what happens is that they come back when those less popular vintages are in the bottle, like the 2004s, taste them, see the prices and buy," he said.


Copyright AFP

Subject: French news

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