Top Bordeaux growers need to price 2014 wines so they’re cheaper than mature vintages to revive demand, according to Simon Berry, chairman of London merchant Berry Bros. & Rudd.
Vintners set prices for wines such as the 2013 vintage too high, hurting the market, Berry said in an interview. If Bordeaux first-growth producers don’t price 2014 wines below levels at which vintages including 2005 and 2006 are trading, “then what is going to be the incentive for people to get excited?” he said. “The great news on the horizon is that there’s a very good vintage en route.”
Wine merchants have struggled to find buyers for the past three Bordeaux vintages as prices for leading wines have slumped 40 per cent from their June 2011 peak. While investors and collectors use Bordeaux futures to buy wines in barrel in anticipation of later price increases and possible supply shortages, market volatility and surplus stocks have started to undermine that system.
“The great risk is that people have swung away from Bordeaux and won’t come back,” said Berry, who represents the seventh generation of a family associated with the wine merchant which dates back to the 17th century. “I think that Bordeaux has one more vintage to get it right.”
The attention of brokers and merchants is starting to turn to the trade presentation of the Bordeaux 2014 vintage in late March and early April next year.
Market Dynamic
“It all depends on price,” said Berry. “If people at the investment end of the market are going to get back into Bordeaux,” then “prices have to be sensible.” Producers should go online to “see what their wines are selling for and ask themselves why anybody would pay more.”
A case of 2005 Château Mouton Rothschild, a Pauillac first-growth, sold on Liv-ex in late October for £3,500 ($5,500) and a case of its 2006 vintage fetched £3,125 this month on the exchange. Its 2013 wine, not yet delivered and with many more years needed to mature, is already trading at £2,124, according to Cellar Watch data.
Record prices reached during the bull market in Bordeaux between the start of 2009 and mid-2011 were followed by a three-year slide as demand from China cooled and collectors turned their attention to regions such as Burgundy, northern Italy and California.
Berry Bros.’s flagship store has been on St. James’s Street in London since 1698, according to its website. It has supplied the British royal family since the reign of George III, who came to the throne in 1760, and notable customers have included Lord Byron and William Pitt the Younger, who became prime minister in 1783.
Bordeaux wines represented about 50 per cent or more of the company’s operating profit as recently as five years ago, according to Berry. Last year that fell to about 11 per cent.
The Bordeaux producers’ “job is to make it taste fantastic,” Berry said. “Our job is to get people excited about it again, and we can’t do it if the prices are too high.”
Bloomberg News, edited by Hospitality Ireland
