Wine Market Struggles to Adjust in New Era(2)
And people have not cut back on their overall wine consumption, according to Lulie Halstead, chief executive of the research and consulting firm Wine Intelligence. “But what we are seeing is that people are trading down a bit in price,” she said, spending less at restaurants while occasionally splurging more for the wine they serve at home.
Data from Wine Australia, an industry marketing group, supports that analysis. Australian wine exports declined 5 percent in volume terms in the 12 months through the end of February, but the value of those exports fell 16 percent, suggesting cheaper wines are making up more of the mix.
Predictions based on the weather during last year’s growing season suggest that the 2008 Bordeaux will rank as average-to-pretty-good. The châteaux are expected to release their prices for the new vintage by the end of June, based in large part on the buzz from this week’s reviews. Mr. Staples said that if the top châteaux decided the market would not support their price, they have sufficient cash to simply keep the 2008 vintage off the market, holding it for as long as 10 years, if necessary, when it would be ready to sell to retailers and restaurants. He said he was optimistic, though, that negotiations would succeed.
There is concern, however, for the many smaller Bordeaux producers, who need the liquidity the futures sales bring. Wine merchants who depend on en primeur sales and the négociants — who act as middlemen between the châteaux and the wider market — could be especially hard hit. The American wine critic, Robert Parker, noted as much in November, predicting on his blog that there would be “plenty of casualties.”
In an e-mailed message last week, he sounded similarly bearish. “In terms of wine prices, even the luxury end are soft, but have not fallen as much as real estate, art, and stock,” Mr. Parker said. “However, buying of top wines has slowed considerably, and what unfolds over the next six months will push prices lower, I suspect.”
David Sokolin, a fine wine dealer in Bridgehampton, New York, notes another potential pitfall. “If the producers cut prices sufficiently for the 2008 en primeur to move their product, they could undermine the prices of the 2007 vintage,” he said. That would hurt merchants and investors holding the back vintage, because their stocks of those wines would lose value. All of the first-growth, or highest ranked, producers — Château Lafite Rothschild, Château Margaux, Château Latour, Château Haut-Brion and Château Mouton-Rothschild — declined interview requests, citing the press of business before the start of the tastings.
But Jean-Guillaume Prats, director of Château Cos d’Estournel, a Bordeaux second growth, acknowledged that prices have come down over the past six months. “That’s true of every fine wine around the world,” he said, “and it’s also true for many luxury items.”
Mr. Prats hinted that the producers would seek common ground with merchants. “Speculation isn’t in anyone’s mind at the moment, in any area,” he added. “It’s good that the market is going back to fundamentals.”
Francis Cruse, director of the Union des Maisons de Bordeaux, the négociants’ union, blamed the madness spurred by the excellent 2005 vintage.
“Prices need to return to the level where people who like to drink good wines can afford them,” he said.
But Angélique de Lencquesaing, one of the founders of iDealwine, an online auction site in Paris, said it was hard for producers to accept lower prices. “In England and other countries people have a view of wine as a financial product that can go up or down in value,” she said. “In France, wine is sacred.”
