How the most expensive vintage ever was sold

'3 Jul 2010 by Jancis Robinson/FT but this is longer

Even Bordeaux's châteaux owners themselves admit to surprise at the sky-high prices of the 2009s, in a tortuous, bad-tempered campaign designed to attract as many euros as possible to France's fine-wine capital. It is finally drawing to a close, in time for France's long holidays, with some UK merchants even suggesting 2009 prices are designed to prop up those of the 2005s.

Four years ago the prices for Bordeaux's last exceptional vintage, 2005, seemed quite extraordinarily audacious and we thought we would never see their like again. In the event, the embryonic, unbottled 2009s have been offered at prices between 50 and 100% up on 2005 opening prices, and some are even approaching 2005 current prices.' 

Read the rest here. 

Apparently sales to the UK have been 'massive'. How far this is for resale to Asia-Pacific remains to be seen but it is clear that a number of traditional UK buyers of en primeur have not bought this year due to the high prices. I suspect that a substantial amount of sales to the UK have been for investment. It remains to be seen how far it will be possible to sell these stock on, so generating the returns investors expect.      

Also story on decanter.com on record UK 2009 en primeur sales and indicating that the Asia pacific did buy 2009s but solely at the top end:

'The story from Farrs is the same. Browett said Far East customers were responsible for more than a third of value sales, but a tiny proportion of volume.

'Sales by value have been 60% UK, 40% Far East, but by volume it's about 85% to 15%, as Far East customers have mainly bought only First Growths and "super-seconds".'

He added, 'There has been virtually no interest from the USA.''

Watch out for snake oil merchants offering 2009 Lafite

As I anticipated I'm getting a number of reports of people being offered cases of 2009 Lafite as well as other 2009 First Growths. The price for Lafite is up to £12,000 a case and possibly in one instance much more.

Remember that the prices of 2009 Lafite and the other First Growths have yet to be released. Nor is it is known how any cases of these wines will be available. Even long established, reputable companies expected to have difficulty in securing good allocations of these wines. Most of these companies will insist on their customers buying other lesser wines if they want to acquire Lafite or similar at opening prices. Understandably customers are not allowed to cherry pick.

Remember that it is very unlikely that companies that have been recently set up will be able to get hold of the top wines when they are first released.

If you are going to buy en primeur deal only with well established companies.    

2009 Bordeaux: interesting article on The Drinks Business

'Trade agrees to disagree with Parker Liv-ex's members survey on the 2009 vintage has thrown up some interesting results from the trade that, at times, run counter to Robert Parker's own review and at the very least forecast the most expensive Bordeaux ever. Liv-ex’s membership numbers over 285 of the world’s biggest buyers and sellers of fine wine. The survey is an annual event and this year’s en primeur campaign has generated more than a little interest.

Jack Hibberd, research manager at Liv-ex, told the drinks business that: “Our respondents were very enthusiastic. They gave the vintage the highest marks we’ve ever seen.”'

Read the rest here.

Berry Bros 1 Robert Parker 1

Press release today from Berry Bros & Rudd

Parker agrees with Berrys on Bordeaux 2009

28th April 2010Robert Parker’s verdict on Bordeaux 2009 has been revealed in The Wine Advocate today and his findings are unprecedentedly similar to those of Berry Bros. & Rudd.

 “2009 is not as consistent as 2005, but the peaks of quality in 2009 may turn out to be historic,” Parker says, adding: “2009 is the greatest in the Médoc and Graves, where it can often eclipse 2005 and 2000.”

 Berrys’ Sales Director, Simon Staples, says he was pleased Parker’s top scores were awarded to some of Berrys’ favourite châteaux including Pontet-Canet, Haut Bailly and Leoville-Poyferre.

“I am delighted Robert Parker has seen the light and agrees with us,” he says, adding his thoughts on the likely resulting high prices: “There have never been so many high scores before and this will only add fuel to the fire on the pricing of the 09s. Sanity is unlikely to prevail on the big brand wines and the top 50 will wait to release after Vinexpo (25th- 27thth May), but there are great wines to be had between now and then and the prices should be reasonable.”

But Berrys warns buyers should be extra vigilant when deciding who they buy their wine futures from.

 Simon adds: “Be careful who you are buying from, high scores and high prices only encourage more skulduggery in the wine world.”

“We have heard horror stories of people selling 2009 Lafite already. People’s desire to buy 2009 might well cause an error of judgement. If you have any doubt at all check out the WSTA’s guide to the en primeur market. I heard only this week that more than 50 companies* have set up this year and are selling wine fraudulently or in excess of market price.”
 

Independent consumer guides to buying en primeur can be found at: http://www.wsta.co.uk/Guide-to-the-en-primeur-wine-market.html and http://www.investdrinks.org/

***

'more than 50 companies* have set up this year and are selling wine fraudulently or in excess of market price.'

Simon may be right here about 50 companies being set up this year. Certainly there are nearly 50 companies that when asked I recommend people should avoid – 'woodchip rather than blue chip'! It is definitely true that there are a considerable number of new entrants into wine investment, some making wild claims about their experience and expertise but 50 this year may be an over-estimate. 

Warning from Bordeaux Index

Bordeaux Index issues warning over Chinese Bordeaux 2009 frauds

Press Release: London, 26th April 2010 – Top London wine merchants Bordeaux issue first warning of illicit trade in unreleased vintage.
 
The quality of the Bordeaux 2009 vintage currently has the world of fine wine in a state of high excitement, with many experts declaring it the ‘vintage of the century.’
 
However, top wine merchants Bordeaux Index (http://www.bordeauxindex.com) today issued a word of warning, revealing for the first time that private clients have already been persuaded to order and pay for 2009 Bordeaux wines that have not even been released yet – from rogue traders based in the Mainland.
 
Such is the quality of the 2009 Bordeaux, many seasoned fine wine buyers – and growing numbers of investors new to fine wine – are expected to buy the vintage ‘en primeur’ (whilst it is still in the barrel). This maximises the potential return on investment, which according to Bordeaux Index could be as much as 20 percent within one year.
 
The vast majority of en primeur Bordeaux 2009 is yet to be released, and no wines of any significant merit have yet hit the market. With this in mind, Bordeaux Index Sales Director Sam Gleave was very surprised to learn that trade in certain high-profile fine wines was already booming – despite those wines not yet being released.
 
“We’ve long had concerns that a vintage like the 2009 Bordeaux could result in fraudulent futures trading,” says Gleave. “We urge buyers interested in the 2009 Bordeaux to deal exclusively with reputable merchants ONLY. Anyone offering top 2009 Bordeaux today is a fraud.”
 

•

 The wine most likely to be offered will be 2009 Lafite. I understand from Sam Gleave that just as in the UK people are in China are being offered 2009 Lafite well before the price has been released. The danger is that the companies doing this have no chance of securing any 2009 Lafite, will pocket the cash and will have disappeared by the time the 2009s are due to be delivered. 

Jancis Robinson MW: Bordeaux 2009 - don't part with a penny!

Excellent warning from Jancis not to part with any money for 2009 Bordeaux en primeur before prices have been released and allocations secured. 

'16 Apr 2010 by Jancis Robinson

Shocking tales are emerging of opportunistic entrepreneurs trying to persuade inexperienced wine buyers to invest in 2009 Bordeaux before any serious prices have even been released - let alone any allocations made. It is a familiar and justifiable practice among well-established primeur merchants such as the UK specialists we list here to ask their customers to submit wish lists. But because there has been such hullabulloo about the 2009s, even in the mainstream media, some lurkers on the periphery of the wine trade have been tempted to try to part innocent investors from their money even at this early stage. They are being...'

to read the rest you will have to subscribe to Janicis' Purple Pages

*

Another dubious claim: invest in 2009 petit châteaux Bordeaux!

The Telegraph ran a piece on wine investment yesterday, which concluded thus:

'Simon Staples, sales director at wine merchants Berry Bros & Rudd, said wine started to catch on as an investment in 1996, a top year in Bordeaux, but really took off from 2003. 

During the financial crisis, investor interest continued to rise because wine, like gold, is a tangible asset. Prices dipped after Lehman Brothers collapsed in September 2008 but picked up again from the middle of last year as confidence returned to the City. Prices of top Bordeaux at Berry Bros are also being driven by huge Chinese demand.

"China has a new thirst for the top 20 brands from Bordeaux," Mr Staples said. "Lafite is going up 15pc or 20pc a month in just about every vintage."

Start your investment with a 2009 Bordeaux from Telegraph Wines'

If you click on Telegraph Wines you go to an offer of 2009 petit châteaux from Averys of Bristol (owned by the UK's largest wine mail order company. These wines may prove to be an investment in pleasure but they will certainly not be a financial investment. Misleading and irresponsible both by the Telegraph and Avery's of Bristol particularly given that the ad came immediately after an article trumpeting the financial returns possible from top Bordeaux.     

Cold calls offering 2009 Lafite@£3995

Several companies are already offering First Growth Bordeaux 2009s, although it is unlikely that prices will be released before the end of May at the earliest. I have been contacted by several people cold called with offers on Lafite 2009.

In the most recent the cold call was to DD on their mobile offering Lafite 2009 at £3995. The caller said that they were just back from Bordeaux and that the 2009 vintage is fantastic and a great wine investment opportunity. Although the caller mentioned the company’s name, DD couldn’t be absolutely sure afterwards what it was.

The company had worked with Bordeaux – it wasn’t clear whether the caller meant the châteaux or the négoce – helping them to manage the cash flow. This was why they had been given a priority allocation of Lafite and could offer it at £3995 a case.

 
DD told me that he thought it very odd that they were only offering one wine and so early in the en primeur campaign. At the end of the spiel DD asked some questions that the caller couldn’t really answer. “The spiel was cracking up, so I told him I wasn’t interested,” DD told me.    

A senior broker for one of the UK’s most respected merchants said “Whoever is offering Lafite now at that price is a charlatan and should be locked up. This campaign is going to be bloody and stressful. Allocations will be tight and we will allocate the best wines to our best customers. They look after us, so we look after them. No Tom, Dick or Harry can phone up and expect to buy a case of 2009 Lafite. This is standard practice across the trade.”   

2009 Bordeaux en primeur – some sources of information

The big en primeur tasting week is now well over and journalists and buyers are now posting their impressions of the 2009 vintage on various sites. Here is a small selection:

Journalists:

Jancis Robinson MW`

http://www.jancisrobinson.com/articles/a20100408.html

Decanter
Bordeaux 2009 - Scores, tasting notes, news and views - En Primeur coverage on decanter.com

http://www.decanter.com/specials/296209.html

Tim Atkin MW: How good are the 2009 Bordeaux?
http://timatkin.com/articles/article.html?cat=Latest%20articles&id=486

Panos Kakaviatos

http://www.connectionstowine.com/bordeaux-2009/bordeaux-2009-complete-tasting-notes/

Guardian video with scenes from the en primeur tastings

http://www.guardian.co.uk/lifeandstyle/video/2010/apr/07/bordeaux-2009-wine-france

Jane MacQuitty: A crimson classic: Bordeaux vintage is everything we heard on the grapevine

 http://www.timesonline.co.uk/tol/life_and_style/food_and_drink/wine/article7086273.ece

Anthony Rose: 2009 Bordeaux – power and the glory
http://www.anthonyrosewine.com/journal/2010/4/my-top-100-bordeaux-2009-power-and-glory

*

Companies:

Berry Bros & Rudd

Berry's Bordeaux blog: http://bbrblog.com/category/berrys-in-bordeaux/

Bordeaux Index

http://www.bordeauxindex.com/primeur.php

Corney & Barrow blog
http://www.candbscene.co.uk/bordeaux/bordeaux-2009-day-1

Farr Vintners

http://www.farrvintners.com/en_primeur.php

Includes blog by well respected Bordeaux expert – Michael Schuster.

Eighteen55 Clarets Ltd offer 2009 Lafite already

Eighteen55 Clarets Ltd: premises in Forest Hill, London SE23

The Enquiry

I received this enquiry from DC about buying 2009 Lafite yesterday afternoon:

'I was reading your website with interest, doing a bit of background research, after being cold-call telephoned by Eighteen 55 clarets. I haven't invested in wine before but the person on the end of the phone was very plausible and persuasive. He first contacted me in February, when I said I wouldn't want to invest. But he contacted me again yesterday, again sounding very plausible. He wanted me to invest around £5,000 in an en primeur case. I think it was a lafite rothschild (at least it was the first time he rang me). He said that it was almost guaranteed to grow within the first 2-3 months, and if I wanted to sell after that I could. Or I could wait till it had matured for the 2 years after which it would be bottled.'

My response 

Eighteen55 Clarets Ltd was founded on 23rd June 2008 and the current registered office is at 61 Waldram Park Road, London SE23 2PW – the offices of the Forest Hill branch of estate agents, Next Move. Its sole director is Altaur Rahman (DOB: 16.4.1973) of Catford. The company's first set of accounts are now just slightly overdue (since 23.3.2010). 

They are offering 2009 Lafite en primeur before the château has released its opening price – unlikely to happen before the end of May and pretty likely not to be until June. Nobody yet knows what you are going to have to pay for 2009 Lafite, which is likely to be in great demand whatever score it gets from Robert Parker. A very good Parker score will probably only push the price further into the stratosphere given the likely interest both from the Chinese and from investors. If this turns out to be the case, then can Eighteen55 Clarets be sure that they can secure stocks of this wine?          

I trust that the salesman made it clear how speculative a purchase this would be – unknown price and with no guarantee of getting the wine. The company's terms and conditions do quite properly make it clear that: 'Eighteen 55 CLarets is a non-stockholding retailer which means the wines listed are subject to availability.'

My advice
Even from a very well established merchant I would be wary of buying 2009 Lafite before the price has been released and not being certain of being able to secure this wine, especially as allocations to merchants are likely to be very small. As Eighteen55 Clarets were established in June 2008 they have no real track record over supplying Bordeaux en primeur. I would advise against buying en primeur from Eighteen55 Clarets Ltd.  

En primeur: wonderful potential for fraud

The main 2009 Bordeaux en primeur tasting week is now drawing to an end. Several thousand journalists and wine merchants have descended on the Bordeaux region this week to taste the 2009 vintage, which is still in barrel and will not be bottled until  sometime next year. Bordeaux will have received more visitors for this primeur week than normal as 2009 is reputed to be a particularly good vintage.

Over the next few weeks the leading Bordeaux châteaux will gradually release their prices with the First Growths (Latour, Lafite, Mouton-Rothschild, Margaux and Haut-Brion) quite possibly not releasing their prices until June. The whole long drawn out en primeur process is like a stately waltz – makes panda mating look indecently quick!

Soon merchants will be releasing their 2009 Bordeaux en primeur offers – indeed for the first time the odd merchant was offering wines before the wines had even been tasted and several months before prices would be released! If you decide to buy en primeur you will pay upfront for wine that you will receive in 18 to 24 months time. This can be advantageous if the  price of the wines rise dramatically from that the initial release price. It is also a way of getting hold of wines that are produced in very small quantities and are rarely seen after their en primeur release. The rarity argument, however, applies more to Burgundy than to much of Bordeaux where many of the famous wines are produced in relatively large quantities.

With en primeur you are essentially extending an interest-free loan to your wine merchant, while trusting that they won't have gone bust or disappeared before your wines are shipped to you or to a bonded warehouse. You are trusting that your merchant will pass your order and your money down the often complex en primeur chain that will include a Bordeaux négociant company and then the château itself. Incidentally any company that tells you that they buy directly from the top properties in Bordeaux is talking nonsense. That is not the way the Bordeaux system works. The châteaux sell to a number of négociants in Bordeaux (often called La Place). The négociants then sell around the world.

Before buying en primeur it is essential to do a little due diligence as in the past a number of apparently reputable en primeur companies have gone bust, leaving their customers disappointed and without the wine they ordered and without a refund. There have been some instances when companies offering en primeur have just been completely fraudulent – just trousering the money and placing no orders. This is what makes en primeur such a potentially wonderful vehicle for fraud. The customer places their order knowing the wine won't arrive for best part of two years. It is only when the two years or so are up and there is no sign of their wine or the company that people start to get worried.

There have probably been even more instances of legitimate companies getting into financial problems, using customers en primeur money to shore up the business only for everything to unravel leaving some very angry, wineless customers. For it doesn't matter how impressive your certificate of ownership looks with crests and embossing, it will be worthless if title (right of ownership) to the wine has not properly passed down the chain. Ownership is complicated since for much of the time your en primeur wine cannot be identified as it is a fraction of some wine in an oak barrel. 

The château retain title to the wine until the Bordeaux négociants pay for the wine they have ordered . At this point a certificate of ownership is issued. Full title to wine does not pass until the wine has been bottled and ownership can be identified.

Thus it is crucial that you make some checks on the financial health and track record of any company from whom you are considering buying en primeur. Down load the latest company accounts and check when the company was founded. If I was going to buy en primeur, wouldn't buy from a recently formed company – the risk is too high. Deal with well established companies who have a track record of buying and delivering wine ordered en primeur. This may be particularly important for 2009 Bordeaux as if there is a huge demand, especially for the top wines, as some predict then it may only be established companies that have the contacts to source the wines.

Also watch out for any cowboys tempted to clamber onto the 2009 en primeur bandwagon with a boiler room team to fleece you and disappear into the sunset.   

I'd distrust any cold calls from unknown companies.

 

Why a blog for investdrinks?

I started http://www.investdrinks.org/ in 2000. So why an investdrinks blog as well?

For the simple reason that it is easy and quick to use a blog. The investdrinks site, however, will continue, although perhaps not very regularly updated. For the reason of possible libel/defamation, comments will be moderated. Alternatively you may prefer to contact me through budmac@btinternet.com

Another reason for starting investdrinks blog is that the 2009 en primeur campaign is likely to be a blizzard of hype. There will be many offers from legitimate companies but it is also quite likely that there will be some dubious companies leaping onto the 2009 bandwagon trying to sell wine that they have no intention of buying. Instead they will take your money and disappear long before the Bordeaux 2009s are due to be shipped in late 2011 or early 2012.