Overpriced 2010 Bordeaux Futures a Hard Sell

Moon-shaped lanterns floated over a Chateau Haut-Brion dinner during Vinexpo last month. Owner Prince Robert of Luxembourg brushed off talk of 2010 prices, launching into tales of his early screenwriting career.

Now we know: his 2010, still in barrel, can be had for $1,159 a bottle. My advice? Don’t bother.

The long, drawn-out Bordeaux futures campaign finally climaxed on Fourth of July weekend. Haut-Brion, Lafite, Latour, and the other first growths released stratospheric prices while most Bordeaux-obsessed Americans lazed, indifferent, at the beach.

The powerful 2010 vintage follows right after the fantastic 2009, making the wines a tough sell. Prices trickled out very slowly over two months and, on average, they’re 10 percent to 20 percent more than the 2009s, the most expensive Bordeaux in history. With today’s weak dollar, U.S. buyers pay even more.

All this has American retailers moaning and griping. Ralph Sands, Bordeaux specialist at the Bay Area’s K & L Wine Merchants, says, "I’ve lost 70 percent of our loyal buyers over these prices. The Bordelais are living in a bubble."

Top 2010 second growths are more than $200 a bottle. Ditto the first growths’ second labels.

Yes, there are "bargains" — if you think in relative terms.

Good Neighbors

One deservedly hot seller is smoky, elegant Pontet-Canet, going fast for $170 a bottle. The estate sits next door to Mouton Rothschild, whose 2010 costs six times more. The sensational Grand-Puy-Lacoste ($90) is an even better buy, though the price is 20 percent over the 2009.

Chateaux Calon-Segur ($110), Gruaud Larose ($75), Giscours ($74), Pedesclaux ($38), Cantemerle ($36), and Corbin ($35) all made excellent wines trading at fair prices. Ducru-Beaucaillou ($240) is stunning and less than the 2009. Second label La Croix de Beaucaillou ($55) comes with a new Jade Jagger label.

U.S. and U.K. retailers say they purchased smaller amounts of fewer chateaux than last year because demand just isn’t there.

"It’s not just high prices," says Sherry-Lehmann chief executive officer Chris Adams. "The releases dragged on so long we lost momentum."

Simon Staples of London’s Berry Bros & Rudd was recuperating from futures frenzy in a pool in Spain when I reached him. Last year he received 45,000 wish lists from customers. This spring, he says, the number was 7,500. Still, BBR sold more than 50 million pounds worth of futures, their second best campaign ever.

Pricing Science

"Bizarrely, we had good interest in the first growths," he said. "but we could only get 360 cases each of Lafite and Latour. Last year we sold 1,100 cases of each." (The 2010s have now escalated to $1,700 a bottle.)

The most overpriced wines, Staples says, didn’t sell.

The "science" of pricing involves a mix of factors. No one wants to come out at less than their neighbors.

St. Emilion’s Cheval Blanc was one of the year’s miscalculations. The barrel samples I sipped in April were deliciously plush, but at $16,000 a case, 2010 costs $6,000 more than 2005, which you can drink tonight. BBR unloaded only 30 cases compared to more than 200 of 2009.

Maybe owner LVMH’s calculation included the $18.5 million price of the chateau’s new cellar, with a sensual design by architect Christian de Portzamparc. As a colleague put it, "If I were a grape, this is where I’d like to be crushed."

No Sale

London broker Farr Vintners didn’t sell a single case of Chateau Lascombes at $1,296 ($108 a bottle). Every recent available vintage costs less.

Did the owners put the price up to help sell the chateau? If so, it worked. Two weeks ago French health insurance group MACSF signed a deal to buy it from U.S. private equity firm Colony Capital LLC for 200 million euros.

To make the 2010s more attractive to his customers, California-based JJ Buckley cut margins and allows buyers to pay only 60 percent down.

How much will Asia buy? The second largest number of visitors at Vinexpo came from China and the Bordelais wooed them. At the lavish Fete de la Fleur at Chateau Lascombes, the menu was also in Chinese, and the decor included statues modeled on a Chinese terracotta army.

Sam Gleave of London’s Bordeaux Index says their Hong Kong office sold to more than 500 new clients. "Asia is gaining a clearer understanding of how buying futures works," he says. "And they only know today’s high prices."

Back to the Futures

Maybe so, but Maggy Chan of Hong Kong’s Maxford Wines says she bought fewer futures than in 2009. Decanter magazine reported last week that Aussino, one of China’s largest wine retailers, with 200 stores in 100 cities, will stop promoting the Left Bank crus classes because of dangerous pricing.

"The main reason to purchase futures in the past was that it was always the lowest price for a chateau’s wine, and that’s no longer guaranteed," says Paul Favale of negociant Joanne USA.

If the dollar strengthens against the euro, the wines might be cheaper when they arrive in two years.

And you can always wait for 2011.