Bordeaux 2013 Prices Seen Underpinned by Declining Yields

Wine prices for the Bordeaux 2013 vintage are set to be underpinned by declining yields amid pressure from merchants and investment consultants in the U.K. and U.S. for price cuts of 20 percent or more.

Yields fell in excess of 30 percent in many vineyards because of cold, wet weather during the flowering season, which damaged Merlot grapes in particular, so overall production levels were reduced by as much as half, according to winemakers interviewed in Bordeaux this week.

Investors and collectors are focusing on the sales campaign for the 2013 vintage after prices for top-rated wines from the region have declined since peaking in 2011, according to Liv-ex market indexes tracking leading estates. The Liv-ex Fine Wine 50 of first-growth left-bank wines has fallen about 3 percent since December after a similar decline last year and drops of 10 percent in 2012 and 17 percent in 2011.

“For most of Bordeaux I think it will be a reasonable price, probably dropping a little bit because the wine won’t age like 2012,” Gonzague Lurton, owner of Chateau Durfort-Vivens in Margaux, said in an interview during tastings this week, referring to the pricing of the 2013 vintage. “It must be a little lower than it was.”

Falling Yields

Yields, following damage to Merlot grapes from coulure, which causes berries to fall off the vine, slumped below 30 hectoliters per hectare (320 gallons per acre) in 2013, compared with more normal yields for the region of 40 hectoliters to 45 hectoliters per hectare, according to producers. Cabernet Sauvignon grapes were also affected by millerandage, which results in uneven berry size.

At Durfort-Vivens the yield was 24 hectoliters per hectare, well below average, and at Chateau Beychevelle in Saint-Julien it was about 29 hectoliters, according to data from growers.

Vintners said that while production was reduced from 2012, quality had been protected to some extent by intensive grape selection during the harvest, partly through the more widespread use of optical-sorting equipment in the region.

The vintage is “not on the same level as 2009 or 2010,” said Romain Ducolomb, technical director of Beychevelle, referring to two standout vintages of the past decade. “But the brand won’t be damaged by this wine.”

Sales Outlook

Producers of wines outside the top-flight first growths and so-called super seconds say that since their prices didn’t rise as fast as those of the leading estates during the Asia-driven bull market between 2008 and 2011, they are not under the same degree of pressure now to cut.

“We won’t come down very much,” said Bernard Audoy, manager of Chateau Cos Labory, a Saint-Estephe estate designated as a fifth growth in the classification drawn up for Napoleon III’s 1855 Paris Exhibition, which remains in force. “We have always been reasonable.”

Chateau Pontet-Canet, a Pauillac estate neighboring Chateau Mouton Rothschild, released its 2013 wine at 60 euros ($83) a bottle ex-Bordeaux last week, unchanged from its 2012 vintage, while Chateau Gazin in Pomerol yesterday cut the release price of its 2013 wine to 38 euros a bottle, down 3 percent from the 2012 vintage, according to Liv-ex data.

Bordeaux producers’ comments on the sales outlook came after wine merchants and investment advisers said in the run-up to the 2013 marketing campaign that prices would need to come down substantially from 2012 levels to generate demand.

Pricing Pressure

“The whole bar needs to be reset,” Jennifer Williams-Bulkeley, managing partner at AOC Investment Advisors in Boston, said by telephone last week. “The Hong Kong market has contracted enormously. That’s the big issue.”

Most estates traditionally wait until international buyers have left Bordeaux following the annual tastings in early April before deciding on the level at which to price their wines. This year they are caught between the pressures of low 2013 production and merchant concern at prevailing price levels.

“We’re in a long-term problem here and I think it will take three or four years for Bordeaux to recover,” James Snoxell, head of buying at London-based Armit Wines, said in an interview last week before the Bordeaux tastings got under way. “There’s actually more supply than there is demand.”

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