June 14 (Bloomberg) -- When offers of 2009 Chateau Cantemerle futures hit his inbox, Chris Adams, president of New York retailer Sherry-Lehmann Wine & Spirits, didn’t hesitate to snap up 50 cases.
The 2009 vintage is another great one in Bordeaux, and futures buying heated up last week as more chateaux released prices for their still-in-the-barrel wines.
“We’ve already sold out of La Fleur-Petrus at $135 a bottle,” said Adams.
Ditto chateaux d’Angludet at $30 and Duhart-Milon Rothschild at $60, now selling elsewhere for $80-plus. I rated all three highly at the April en primeur tastings in Bordeaux.
But the biggest names are holding back, leading to speculation that prices will be the highest ever. So far, most labels are 5 percent to 70 percent more expensive than the sticker-shock futures of the fabulous 2005s. Some, like Pagodes de Cos, are definitely overpriced.
Worries about promised austerity cuts and European economic woes haven’t slowed U.K. buyers. London merchant Berry Bros & Rudd received nine times more wish lists than for the 2005s, said sales director Simon Staples in a phone interview. Incoming orders for Chateau du Tertre at 264 pounds ($384) a case brought its computer system to a halt for 10 minutes.
“We sold out 700 cases in an hour,” said Staples. “And 3,500 of Chateau Batailley (also 264 pounds) went in four days.” At around $40 a bottle in the U.S., the rich, soft Batailley is one of this year’s good values, though you can buy the 2005 for nearly the same price and drink it tonight.
U.S. enthusiasm for the 2009s is more lukewarm than for the 2005s, said Ralph Sands, Bordeaux specialist at the Bay Area’s K & L Wines.
“Venture capitalists will buy first growths like Latour no matter what, but this year most wish lists have price ceilings,” he said. “We’re selling more $20 bargains than ever before.”
And then there’s Asia, where many are getting into futures for the first time. Chateau owners at the VinExpo trade fair in Hong Kong late last month fanned the flames as hard as they could, according to David Milligan, president of negociant Joanne USA.
To woo customers, Hong Kong outposts of London merchants translated their tasting notes into Chinese.
Gary Boom, managing director of merchant Bordeaux Index, said he expects Asian orders to be a quarter to a third of the company’s $20 million to $30 million futures’ sales.
“Asian demand is only shaping the prices of the first growths and their second labels,” said Boom. “If the U.K. doesn’t buy because they’re too high, Asia won’t provide a bailout.”
Nick Pegna of Berry Bros. agrees. “China is all about brands. There won’t be enough 2009 first and 2nd growths to go around,” he said. But will the Chinese buy if they can have past vintages for less?
Cause for Celebration?
Even if 2009 is another “vintage of the century,” should you put your money down now?
The rationale is that you’ll pay the lowest possible price and celebrate when bottles costing much more arrive in 2012. Alas, that appreciation scenario isn’t guaranteed. In a study noted in its April Market Report, U.K. electronic-trading platform Liv-ex compared the initial release prices for 81 chateaux from vintages 2000 to 2007, with what bottles sold for three years later.
In great vintage 2005, 30 increased less than 15 percent or actually declined. Only first growths and a few others increased dramatically. Carraudes de Lafite, Chateau Lafite’s second label wildly prized by the Chinese, for example, went up a whopping 196 percent. The website of London broker Farr Vintners lists the current price of the 2005 next to each 2009 offer.
Then there’s the currency risk. On June 10, the euro was trading at $1.20, but further drops could wipe out the reasons for buying in advance.
The biggest risk is whether a merchant will deliver in two years’ time. Great vintages always spawn unscrupulous sellers who simply take the money and run, and in a tough economy, undercapitalized merchants may also go out of business. So if you decide to play, buy from merchants with a futures track record such as Sherry-Lehmann, K & L, Bordeaux Index, Farr Vintners or Berry Bros.
My quality-for-price picks of chateaux that have released prices are based on my April tastings in Bordeaux. At $25 and under: rich La Tour de By, savory Lalande-Borie and delicious Blason d’Issan, second wine of Chateau d’Issan. At $25 to $35: Ormes de Pez, juicy, balanced d’Angludet and exotic Tronquoy-Lalande. At $35 to $45, Batailley, and luscious sweet wines Doisy-Daene and Doisy-Vedrines.
Expect more offers this week. I’ll be checking the cost of usually well-priced Chateau Lagrange, exceptionally harmonious this year, and very pure, fragrant Chateau d’Issan. If prices aren’t stratospheric, I’d be happy to drink complex, sophisticated Belair-Monange or intense, seamless Figeac, plus a half-dozen more.
Will the famous first growths reveal all before Bordeaux’s Fete du Vin June 24-27? They like to play one-upmanship by vying to be the last out, so maybe not. They’ll be above my paygrade for sure.
Don’t faint if some start at $1,000 bottle.
(Elin McCoy writes on wine and spirits for Muse, the arts and leisure section of Bloomberg News. The opinions expressed are her own.)
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