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 How is the success of a vintage judged? Is it driven entirely by the quality of the vintage or the single most important factor is the price? Do the critics have the final say in the matter? Does the consumer have the key to set a chain reaction, the results of which give a decisive answer? Should we ignore all the fancy and, as some call it, an ornamental tradition and look at the simple math of it like in any other business: the cost price and selling price, demand and supply? Let us try to find these answers for the Bordeaux 2013 vintage
THE MATH
Bordeaux 2013 characterized by significantly low yields is undoubtedly a winemaker’s vintage. The success stories this year have a gentle texture on the palate. With low alcohol levels the wine has a distinct fruit character and very little or no potential for ageing. According to the pundits, generalization by appellation is not possible this year though some wines in Saint Emilion and Pomerol have done exceeding well. It is about individual Chateau performance this time. Every Cru had a different problem and what was true for one did not apply to the other.
Traditionally the vintages with not too much ageing potential were offered at affordable prices to the consumers but strangely enough that is not exactly the case this year. There is competition amongst the chateau owners to prove that they have optimally priced their wines. Asian buyers’ reluctance to buy and the plummeted demand in Asia for this vintage is also noteworthy in considering the price and fixing a price strategy since Bordeaux is a big exporter in the Chinese market. The lukewarm demand requires a relook at the market before setting the price. Most of the prices should be out by mid May or earlier.
Paul Pontallier, Enologist and Manager Director, Chateau Margaux
When I had met Paul Pontallier during the En Primeur tastings at the magnificent property, he had said “This vintage will be known as a challenging vintage but will equally be known for wines where their terroir manifests itself in an extremely clear manner. Also, 2013 vintage is fortunate to be in the times it is. The great technological advancement as well as financial progress we have had in the last 40 years allows us, especially in the Grands Crus to take decisions, make sacrifices, make the efforts to take out a part which was absolutely unimaginable say, 40 years ago”.
After the En Primeur week when I asked him about his opinions about Chateau Margaux 2013 prices, he was very enthusiastic and said, “with climate and terroir our best companions, we produce wines. About the market, we are well aware that it is the customer who steers the market. So like every year we are ready to follow the direction which the customer indicates to us. He adds, “this year, though the big terroirs have had the best of 2013 vintage , we must most probably have a “goodwill gesture” towards the consumer, because 2013 is not a great vintage for sure. Although until today we have not yet decided about the magnitude of this gesture.”
Melanie Tesseron, General Director and Co-owner, Chateau Pontet Canet
Releasing Prices: crux lies in the pricing?
 Pontet Canet sent ripples in the Bordeaux market when it released their prices quite early in the En Primeur campaign. The prices were released on 26th March 2014 and Melanie very confidently says, “there was a lot of problem this year in viticulture but as far as business goes it was not difficult. We had put out Pontet Canet on the 26th March 2014 and the Place de Bordeaux (the wine merchants) responded immediately, as you see, the first evening we sold three quarters of our produce. Friday, the business was closed and we had 30% additional demand which we could not honor, taking into account the weak production this year (50% less than the previous year). When I asked about the strategy of Pontet Canet to sustain momentum, she says , “the truth is found in the glass of wine. I think our strategy has spoken for itself and has been validated by the international buyers from around the world who have come again this year to taste our wines at the property.” No mincing words here. I think such a confidence can only result from a definite faith in one’s product and its undoubted quality. Their price was the same as the last year and that raised many an eyebrow considering this year’s small heterogeneous vintage. Melanie says “this price is justified because as I just mentioned our production was very little.” The price had worked because everybody wanted to taste Pontet Canet-NOW!
THE AFTERMATH
In a tête-a-tête conversation, Francois Leveque the honorary president of the Syndicats de Courtiers (Union of Brokers) of the Place de Bordeaux (the merchant and the distribution system of Bordeaux), one of the most famous courtiers in the Bordeaux wine region and specialist in the sales of Grands Crus, shared his thoughts upon the business prospects of 2013 vintage and the aftermath of En Primeur predictions:
Your general opinion about the 2013 vintage
Well, we had lesser number of people than the previous years, thanks to the press predictions about 2013 being a disappointing vintage. But those who came were greeted with great wines. So it was very interesting to see that, for people who came to taste the vintage, 2013 offered a bag full of pleasant surprises. I give full credit to the technological advancement Bordeaux wine region has made in the last 10 years. Right from the vine growing techniques to the wine making techniques, everything has changed for so much better. Talk about sorting, manual or optic, now we have only the best of berries. With sophisticated techniques in the vineyard and the cellar now, we have only two kinds of wines as far as the quality is concerned-the good wines and the very good wines.
What is the importance of En Primeur Campaign in the business of Bordeaux wines?
As far as business of Grand Crus is concerned it is only 5%. But is noteworthy that the chateaux sell 84% of their wines En Primeur. It is very important because it allows the owners to finance their next vintage, to get paid. Otherwise they will have to wait for another one and a half years until the wine is bottled, to start getting paid. As for the consumer, he is buying the wine which is rare, less priced and a wine which will be value-added in the future.
What is the current mood in the buyers? Do you see a certain tendency in the Asian buyers for 2013?
Well, for this vintage, the mood is lukewarm because the buyers are not sure if there will be a plus value- the increase in value of the wine with time or not. As far as Asia is concerned, they bought a lot in 2009, even in 2011 but this year they are fewer in numbers here. Also, I think they have difficulty understanding the En Primeur and its relevance.
In a heterogeneous year like this, what do you think the price will depend upon?
There are many factors which will affect the price, the current economic context globally, the quality of the wine of course and the value of euro to name a few. Taking these factors into account we negotiate the price with chateau owners.
Why should 2013 be bought when 2012 can be bought at the same price?
There are many who are offering prices less than that of 2012. For example, yesterday we had Lynch Bages selling at lower than 2012. Imagine for a quality like Lynch Bages you are paying a lesser price than the last year! Also Montrose 2013 in Saint Estephe is a success story, they have really great wines. And we must remember the produce was very low, 30-40% lower than the last year. Therefore 2013 should be bought for its quality and for its price!
Many say that 2013 is being manipulated to keep pricing up-what do have to say?
Manipulation? No way. The wine makers have made their wines; now they will do their best to sell them at the highest price possible… we must understand that is the principal in any business.
Has En Primeur lost its relevance?
No-not at all. It is very relevant in the present times and it will be valid for years to come. There is a problem though; those who buy En Primeur are not very certain if they are doing good business. Honestly, this has been the case in the past few years in Bordeaux. The price to put the wine in the market has become very high and thus the margins have dipped, as opposed to in the past. And therefore the distributers and buyers are not sure about making money.
As a courtier what role do you play to make the business successful for everyone?
Our role is to give judgment about the quality of wines. We are the experts of tasting. Though in the En Primeur and especially in a year like this, it is complicated to judge the definitive quality of all the wines. Our other role is to have sound knowledge about the market- we guide the wine maker on the quality of his wine and we also conduct market research. We guide the major players of the market on the quality of wine and on a ‘good price.’
Is 2013 a good investment?
See, whether it is a good investment or not would be judged in the years to come. In 2008 there were many who were not satisfied with the prices. Come 2009 and then the prices of 2008 looked competitive. The pricing is the gamble of the future-a gamble on the quality and the price. In this heterogeneous year it is difficult to judge the quality as I earlier mentioned. I firmly believe that every vintage must be looked at in the context of and amongst other vintages. Given the time, 2013 will position itself well, I am sure of it.
OUR JUDGEMENT
 As I was taking leave of Francois Leveque, I was building my own arguments from the buyers’ side!
We know that Bordeaux wine producers have seen merrier times. For example, vintage 2009 was an extraordinary one and the best brands commanded average price increase of more than 200%. In vintage 2010 the price increase commanded was 12%. In addition, there was demand from the emerging markets in Asia. This year though, the prices have dropped but they are not nearly sufficient to attract the consumers who are paying 30% more than in 2008.The brokers and the property owners left with unsold stock of 2011 and 2012, the falling demand and the hesitant buyers, certainly paint a picture which does not look quite bright- at least at the moment.
There are arguments about the fact that heterogeneity and initial instability of this vintage may open gates for wines from other countries, especially from the new world which are sound in their pricing strategy. This cannot be totally wrong but there are others who believe that amateurs will wait, because numerous bad vintages do not happen in a row!
As far as the pricing policy of 2013 is concerned, the answer may not be as simple as it may seem. With such a dip in production and cost of production sky rocketing, market will not accept higher prices. Each owner may have to find his own price for the consumer. The sunny side of this is competitive pricing could attract new consumers for example markets which are sensitive to value for money.
It is certain that this year when the supply is exceeding the demand, nothing should be taken for granted. To initiate a current of demand, to be able to compete with new world wines and to be able to sell to drinkers all around the world, it must be made sure by the chateaux that they price their wines at just the optimum level.
Let us wait and watch.
Pallavi Vatsa
Tags: En Primeur, Bordeaux, Paul Pontallier, Chateau Margaux 2013, Melanie Tesseron, Pontet Canet, Francois Leveque, Syndicats de Courtiers |