ateau Pichon Longueville Comtesse de Lalande and Chateau Ducru-Beaucaillou released prices for 2013 wines in the past week, confirming growers’ resolve to hold close to 2012 levels amid low yields.Pichon Lalande kept its 2013 price at €57.60 ($79.40) a bottle from Bordeaux wholesale merchants, unchanged from its 2012 price. Ducru-Beaucaillou cut its price to €66, down 5% from 2012, according to data compiled by the Liv-ex market.
Collectors had been looking to so-called en primeur sales of 2013 wines, before they are bottled and delivered, to give impetus to the Bordeaux market, amid pressure on growers after cold, wet weather hit the crop. The Liv-ex Fine Wine 50 Index has fallen for the past eight months and is down more than 4% since the start of this year.
“Prices are too high,” Miles Davis, partner at Wine Asset Managers LLP in London, said in an interview. “The system as it is, because of the price, is broken. So if they want to fix the system, it’s up to the chateau owners to bring the price down.” The fund, which is invested in Bordeaux and doesn’t buy futures from the region, manages $20 million.
Pichon Lalande is a wine estate in the Pauillac district of the Medoc, north of Bordeaux, ranked as a second growth in the 1855 classification drawn up for Napoleon III’s Paris Exhibition of that year and still in force. Ducru-Beaucaillou is another second-growth winery further south in Saint-Julien.
Price Declines
Davis said investors who bought the five first-growth wines en primeur in any of the previous four vintages from 2009 to 2012 have seen prices retreat from their release levels, with declines particularly steep for the highly priced and critically acclaimed 2009 and 2010 vintages.
Chateau Lafite-Rothschild is currently trading about 47% below its 2010 release price, while Chateau Mouton-Rothschild is down 38%. Chateau Margaux is 32% lower, Chateau Latour is down 24% and Chateau Haut-Brion is down 26%, according to data compiled by Davis based on Liv-ex prices.
While producers have been able to count on selling their wine to the Bordeaux negociants, or traders, barely six months after harvest, stocks have been building up during the run of poorer vintages since 2011, potentially putting financial pressure on merchants left holding it.
Cash Flow
Top Bordeaux producers “don’t actually need the cash flow,” Davis said. “Anyone who goes to Bordeaux and just looks around can realize the last thing they need is any cash. They’re spending fortunes doing up the chateaux, vineyards and everything. The place looks amazing. The chateaux are getting the cash from the negociants, and from there on is where the problem lies.”
Leading left-bank estate Lafite cut its price by 14% last month, while Haut-Brion, Mouton and Margaux announced reductions of 10%. Latour no longer participates in en primeur sales, preferring to release its wines once they have attained greater maturity.
On the right bank in Saint-Emilion, Chateau Cheval Blanc and Chateau Ausone, both priced their wine at €300 a bottle last month, according to Liv-ex. For Cheval Blanc that was a 12% cut from the previous vintage, while for Ausone it was a 15% reduction.
Merchant Stock
Two other top Saint-Emilion producers, Chateau Angelus and Chateau Pavie, each cut their 2013 price by 8 percent to €165.
For the group of eight wines comprising the four left-bank first growths participating in en primeur and the leading four Saint-Emilion estates, the average price cut for 2013 was 11% and the median 10 percent, according to Liv-ex data.
Davis said that the price cut was about 7% on average for the 40 top estates he tracks on both sides of river, while for a basket of 38 growers tracked by Liv-ex, the average decline was about 6%.
While growers have been able to sell their wines to merchants, most have not sold through beyond that to end-buyers, with the exception of a couple of estates including Chateau Lynch-Bages and Chateau L’Eglise-Clinet, Davis said. Lynch-Bages, a Pauillac winery, cut its 2013 price by 17% to €50 a bottle.
“All the wine is staying with the negociants,” Davis said. “It’s just a great shame. It was a good system.”
