Will Anyone Still Want New Bordeaux?
Bordeaux's great wines have been considered unassailable but that may be coming to an end. The economic downturn combined with peak prices for prized vintages like the 2005 Bordeaux and the grim forecast for the 2008 vintage may mean that the Bordeaux boom could go bust. Said to be hardest hit are the negociants, the middle men between the wine chateaux and the wine retailers. The negociants are finding it harder to sell wine and some have, according to an article in Decanter, been calling banks to get lines of credit.
The devaluing of Bordeaux could have huge consequences. Many wine investment funds will see their value drop since the great houses of Bordeaux are the blue chips of the wine world. Reuters reports that the value of Vintage Wine Fund, which invests heavily in Bordeaux wine, fell 33% last year. Also many of the biggest collectors of Bordeaux have been bankers and others involved in the finance industry. Like luxury brands, the names of the top chateaux are shorthand for a certain level both of spending power and taste. As the London Times reports the bankers weren't just drinking the wine, they were trading it as well. The London International Vinters Exchange (Liv-ex) rose a whopping 183 percent between 1998 and its peak last year. But between June and December the Liv-ex index was down 22 percent and could continue to fall despite a small bump up last month. There have also been rumors of wine chateaux up for sale including even the legendary Chateau Latour.
The system of en primeur in which merchant and critics taste the wine in the barrel each spring may end up being a test of just how much interest remains in new Bordeaux wines. For years the system has served both winemakers and buyers allowing wineries to get money for their wines before delivery and buyers to get the wine at what may be a lower price. But with the word out already that the 2008 wine may be less than exciting, the prices will have to be majorly dropped in order to get the attention of the buyers. And no one seems to be predicting that that will happen. Vintage Bordeaux has been relatively resilient in the marketplace so far but even that may be changing.
The comments on the Decanter article are interesting. Some people are clearly thrilled to see the Bordeaux snobs get their comeuppance. One commenter also linked over to an article from 1999 which spun a similar story of gloom and doom and called for a price correction. Since that time prices have risen astronomically, mainly on the lure of good vintages. This current crisis may just be more of the same but it will take a well-regarded vintage to put Bordeaux back on top.