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Bordeaux or bust

Published:  18 January, 2007

At last we have them - another crucial set of figures to add to the much-flaunted, much-vaunted alcohol, dry extract and tannin levels of the wines: the prices of 2005 Bordeaux. And the really shocking thing? Not that a few are absurdly high, even higher than predicted, to the point that Parker himself is advising against them; nor that some people are still prepared to pay them; but rather that they may not be high enough, at both ends of the market, to prevent the collapse of the en primeur system that produced them.

Bordeaux prices, like the chteaux themselves (and their proprietors), come in all shapes and sizes. Many prices are again reasonable this vintage, and there is an abundant supply of very good wines that represent sound value (from the likes of D'Angludet, Chasse-Spleen and La Lagune, to second growths such as Brane-Cantenac and Durfort-Vivens, and second wines like La Croix de Beaucaillou).

The sad thing is that many buyers will not see them, blinded by the dazzling rises for the top 20 or 30; and those who have looked away have often returned to the top wines of 1996, 1998 and 2000, 2001, 2003 and 2004. Rather than dampen down demand for earlier vintages of the top wines, the 2005 campaign has had the effect of fuelling it. Even in this generally successful vintage, many other properties cannot command the prices they need to be sustainable over the long term.

There is an argument that it is buyers rather than sellers who most strongly influence the higher as well as the lower prices, and that if the market is there, chteaux owners should respond to it. And although some chteaux have lost customers, there are many more takers - in the UK and, to an even greater extent, in the US and Asia - who are ready to step into the gap.

Even those chteaux that attracted the biggest gasps seem to be selling through for the shippers who thought the risk worth taking. Reportedly, it was only at the first ex-chteau price for Yquem that the Bordeaux ngociants baulked - roughly twice what they could still pay for the sublime 2001.

All the same, nobody can really think that such prices are sustainable. Jean-Luc Thunevin, best-known for Valandraud, has suggested on the Parker website that this is one reason why some proprietors sought as much as they could for this vintage, the like of which they might not see again for 50 years. I don't think,' he wrote, that this campaign marks the beginning of a new era.' But for Roy Richards of Richards Walford (a Bordeaux ngociant and British shipper), it may mark the end of the old one. He agrees that after the heights of the 2005s, the prices for the 2006s will have to tumble, regardless of quality, but he thinks it unlikely that the first growths will be prepared to settle for so much less.

Already, even now, while some at the lower end may not be getting as much as they need, some at the top may not be getting as much as they want. At the most exalted level, a very different kind of commercial logic may be leading them to regard the whole en primeur system as something of a waste of time. That may be ridiculous - surely it is these chteaux who have been doing best out of a system that allows them to sell a product before it is ready, and at margins and prices so steep that they restrict those of the other players in the trade? Yes. But maybe they could do better still?

Most of the current owners of the Mdoc first growths, who have many other business interests, are accustomed to controlling the distribution of their products much more fully than they do their wines. Aware that the highest prices are being realised where there is both exceptional quality and rarity, the Mdoc first growths seem to have offered a smaller proportion of stock en primeur this vintage. But if they are still not prepared to release much more than half their stock, it may be because they think they can do better themselves.

While they may keep on a few large ngociants, the chteaux may come to play a much more direct distribution role, working with agents in different markets (as JP Moueix does with Corney & Barrow in the UK) as well as with their own sales teams.

Should the system start to unravel in this way, there would be both opportunities and threats for the UK trade. Some merchants who have depended heavily on en primeur sales would surely struggle, unless they were able to fill an agency role. But the advantage for those who would occupy this privileged position would be higher margins and profitability - not least because there would be less transparency than there is now. Sales staff would no longer suffer the indignity of being kept dangling on the end of the phone while the

prospect compared prices on wine-searcher.

At the top end, Bordeaux has been growing into a luxury goods market for some time, with the en primeur market has long been polarised between the privileged few and the rest. And the demise of the system itself has been predicted for years. But with the cloud-capped prices of some 2005s, differences of degree may now become differences of kind. One thing seems certain: we shall know long before many of the 2005s are ready to drink whether they helped to change for ever the way that Bordeaux works.