A bit of a deviation to normal, but if you’ve ever looked into buying wine to keep for the long term or make a return on some hard earned cash, then it’s likely that you’ve heard of ‘En Primeur’. My recent WSET Diploma (Wines and Spirits Education Trust Level 4) feedback assignment lead me to research the ins and outs of Bordeaux En Primeur and I figured that those amongst you who perhaps have considered buying wine as an investment might be interested in knowing a little bit more.
For me, wine is to be enjoyed and drunk. I am however a sucker for an old, rare bottle of wine every now and again; I shared a bottle of 1981 Mouton-Rothschild on my wedding anniversary this week for instance, and we often buy vintage champagne to age and enjoy at a later date when it will be worth 3 times the price paid and taste absolutely superb. I have also considered in the past buying En Primeur, just for the fun of it, like gambling at the races, so it was interesting to delve a bit deeper into whether the system actually works still. I of course would be talking of spending only hundreds of pounds, not tens of thousands…so, excuse the essay speak, but here’s an abriged version of my assignment for you to mull over if interested as to whether En Primeur is actually a good way to buy top Bordeaux wines at a good price… a hefty post for a hefty subject!
What is En Primeur?
“En Primeur” defines the traditional trading practice in Bordeaux where wine is released for sale, before it is released to the open market. The wine is sold when the wine is still in the barrel which is where it stays until it’s ready for bottling before being released to the purchaser, supposedly being then worth more than was paid.
Today, around 70% of wines in Bordeaux are sold this way.
Why does En Primeur exist?
En Primeur, as we know it, began just after WWII as a way to release cash to top chateau owners so money could be used to invest in the next year’s harvest and wine production. Wine merchants agreed to pay for and buy the wines shortly after harvest, well ahead of release which meant they were able to get first dibs on stocks of the best wines at a bargain price, then sell on for a profit on release.
It’s only been since 1974 that the consumer has also been able to take advantage of En Primeur prices and buy early, at a risk that the wines will improve and gain value.
How does En Primeur work?
Firstly, I need to explain a little bit about the structure of the Bordeaux Wine Industry:
The Bordeaux market place is a three-tier, negociant lead system and is known as the Place de Bordeaux.
1) Negociants, or wine merchants have been trading wine in Bordeaux for hundreds of years, buying wine from the Chateaux, often blending the wines and distributing the wines to customers all around the globe offering a speedy route to market. Negociants give the Chateaux the visibility they need within the marketplace and allow them to concentrate on making the wine, not selling and marketing it.
2) Courtiers, or brokers mediate between the negociants and producers and have been in place since the 17th century when Chateaux owners (noblemen who did not speak a foreign language) didn’t want to negotiate directly with the wine merchants who were mainly English and Dutch.
3) Chateau owners/ producers grow the grapes, make the wine and bottle it.
En Primeur Process
Every year, during the spring following the harvest, cask samples of the young wines are tasted and assessed by the world’s wine trade and press who then publish their reports of the wines. The wine producers then work alongside the courtiers and negociants to decide on a fixed price for the wines, based upon the general consensus and hype of the feedback given.
Once the wine is priced, it will be released and offered to the negociant by the broker, who will then offer the wine as ‘en primeur’ to wine investors and customers the world over who will pay for the wine at that time. The wine will be available to the end consumer approximately 2 years after the vintage once it has been bottled. Many consumers may never see their wine and have purchased purely for investment purposes and sell on.
Is En Primeur worth it?
In a quick answer, in my humble opinion, no, not as it currently stands. It’s a great concept, but in the last few years, it appears that the En Primeur price is no longer the good deal that it once was, defeating the entire purpose from a consumer perspective.
The entire process seems outdated and cumbersome, treating wine only as a commodity and prices have become over inflated. Although there is room still for En Primeur, afterall, it’s important to keep that cash flowing, it’s about time that the Bordeaux wine trade started to consider and engage the end consumer or risk further alienation from their customers.
In order for En Primeur to win back its worth, here’s my 2 cents to get the value back into En Primeur (opinion based on my research for my assignment);
Sort out the pricing of En Primeur
Prices have become overinflated and pricing should be based on each vintage, regardless of the previous year’s successes or failings. For example, bumper vintages in 2009 and 2010 saw enormous En Primeur price hikes, and although the following poorer vintages of 2011, 2012 and in particular 2013 were priced lower, prices were still artificially high due to the accumulative effect of high prices of the previous vintages.
From an investment perspective, older, better vintages are available for less, so these are better value than new En Primeur.
Fix the price, then have the trade tastings and reviews
Pricing the wines before the tastings would enable the critics to gauge a fairer opinion of the wine and give more accurate reviews. Other premium wine regions such as Burgundy and Barolo also use En Primeur, yet the prices are revealed beforehand.
The reviews of some more influential critics, Robert Parker and his scoring method, can make or break a wine and has a huge impact on the wine’s price. Parker really threw a spanner in the works this year when he decided to score the wines once the prices had been announced. Even Parker says it himself: “The consumer is getting screwed by all this market manipulation”.
Parker wasn’t the only one that couldn’t drum up enthusiasm for the 2013 vintage, images of this year’s En Primeur Tasting Rooms empty were a common sight followed by a lot of industry talk from critics not being bothered to attend due to the perceived poor quality of the vintage.
The impact of the journalist opinions is even influencing the way the wines are blended to appeal more to the palates of influencial wine journalists used to big, new world styles, but with this comes compromised longevity in the wines.
Reevaluate the role of the middlemen
The current complex 3-tier system with so many middlemen not only encourages the divide between the consumer and the wine producer but adds 12-17% to the end price of Bordeaux wine in general. Each Courtier adds a 2% fee for their mediation and Negotiants then add a further 10-15% margin to each transaction.
Is the role of negociant redundant?
Perhaps not. Each Chateaux having their own global, direct sales and marketing teams may be a step too far for Bordeaux considering the visibility that the negociants provide and the ease of the route to market.
The role of the negociant could be used to the consumer’s benefit by bringing some of the newer, lesser known estates into the limelight and detract from the top chateaux somewhat and focus more on great wines that are better value for money.
Is the role of broker/ courtier redundant?
Probably, yes but I doubt it’s going anywhere. Since the breakdown in language barriers and ease of communication in the digital age, it is looking like the role of the courtier is becoming increasingly unnecessary. Tradition and sentimentality will reign here and because a lot of money is being made in this sector, those strong relationships that have been built over the years won’t be going anywhere.
Taste the wines later – 6 months is too early.
The wines at time of tasting are extremely undeveloped and hence the wines are very unrepresentative of the final end product. Not only does this make it difficult to judge, but some winemakers blend the wines to make the younger wines more appealing to the tasters, thus jeopardising the wine’s ability to age.
Chateau Latour, for instance pulled out of En Primeur in 2012 for, amongst other reasons, that the wine was tasted too young. Perhaps, by extending the length of time in barrel before tasting, 12 months for example, the wines would be more representative and blending emphasis will be based on quality and aging potential once more.
Have you bought En Primeur before or wine as an investment? I’d love to hear your experiences or if your thoughts on the above!