Bordeaux has been a funny financial beast the past decade. With wealthy buyers around the world increasing (looking at you, China), the price per bottle bottle of Bordeaux went through the roof in the ought’s. Even throughout The Great Recession, people called for the bubble to burst, but it seemingly continued to grow. But perhaps it’s not a burst we’ve been waiting for. Maybe it’s more of a slow leak.
CNBC published an article this week stating that Bordeaux market “…is down a full 33 percent from its peak.” It seems the focus has shifted from Bordeaux to Burgundy. I don’t’ hear any young people talking about buying Bordeaux. It’s all about finding new, interesting, off the beaten path bottles. I have no doubt attention will return to Bordeaux in the future, but the market is clearly tired of these wines and their prices. When they come back down to earth, maybe Bordeaux will be a nouveau-hipster wine. A real retro purchase in five to ten years.
You may recall a handful of posts I wrote in years’ past about the huge rise in Chinese wine buying. Around 2008, the Chinese government cut tariffs on wine imports by 80%, so you can imagine how things took off. But now it seems the Chinese government is putting some brakes back on. Wine-searcher.com reported recently about new austerity measures that have been imposed after “…estimates for spending on banquets and entertainment were made public by researchers in early 2012, the figure was put at $50 billion to $145 billion per year.” Big time money, and not a lot of austerity there, huh?
In 2013, these measures (I’m not quite sure what the measures entail) took effect. Feel free to read the linked article above to the details, but here are the key figures they’ve seen so far:
- “…more than 50 percent of China’s medium- to large-sized companies have slashed their corporate spending.”
- The same vintage of Chateau Lafite was trading at $1,930/btl now trading at $970
- Average price per bottle of local spirits baijiu dropped to $164 down from $323
- 60% to 80% of all Chateau Lafite bottles in China is now counterfeit.
I can’t say I’m shocked by the drop. The good times can’t always roll that hard. Given the philosophy of the government, it seems like there will be a bit of a roller coaster for the foreseeable future, albeit hopefully with slightly less steep drops.
Been a while since I’ve posted, so let’s get back into this with some news, shall we? September and October are big months for harvest in the Northern Hemisphere. It’s normally a splendid time of year, so long as the weather holds in your favor – nobody wants grapes plump with rainwater right at harvest. For once French vintner however, it would have been nice to even have grapes. It seems that another winemaker goofed and picked the wrong vines. There’s a phone call I’d rather not make.
$170,000 in wine stolen, huh? So that must be like, a TON of bottles stolen. Probably a whole truck. What’s that? 380 bottles? Oh. With a little effort, I could fit that in a standard SUV.
It all makes sense when you realize it was bottles of Chateau d’Yquem (pronounced DEE-kem). Made in Bordeaux, d’Yquem is known as the very best dessert wine in the world, hands down. If the grapes aren’t good enough in a given year, they literally won’t make any wine. They won’t even sell the grapes or juice to anyone else. They just trash it. They’re that serious about it. So serious that bottles average $546 (see wine-searcher.com). I’d probably have to steal some too.
As a related point of interest, Dr. Vino posted a list of the top 12 wine heists on his website today. Enjoy.
Here’s an interesting article that Reuters posted on Friday. It seems the British government wants their wine cellar to pay for itself, so they are selling off some bottles to make money. We’re talking £5,000 per bottle here. That’s about $7,500 each. Pricy no doubt, but in the age of fake bottle abound, this is about the best provenance that you can find for your auction purchase.
I’ve been bemoaning the high prices of Bordeaux wines for a good while now, that’s been clear. It seems though, that the auction markets have finally slowed, and prices have fallen slightly more in line. Bloomberg recently reported that Chateau Lafite prices have slid 25%. The Wall Street Journal also mentioned that Lafite 2011’s prices have dropped 18%. 2011 was an off-vintage to be sure, but nothing to sneeze at.
It seems Asian buyers are moving toward other regions to find collectible wines. I still don’t quite know if the bubble has burst, or just shifted. It doesn’t seem like an issue that will come to light overnight, but something that will evolve over the next decade or so. I’ll keep drinking my secret labels, thank you very much.
Following Chateau Latour’s example, Chateau d’Yquem is pulling out of the en primeur campaign. d’Yquem (“dee-kem”), like Latour is at the pinnacle of their class in the wine world, both in price and in quality. d’Yquem however, focuses on incredible, sweet dessert wines. Latour takes the big reds. I think is only the beginning of the flood of top estates pulling their wines from selling futures. The rest are just getting their things in order.