2009 Bordeaux En Primeur Prospects in Asia

‘April is the cruelest month’, penned TS Eliot as the opening line of his iconic modernist poem, The Wasteland.  Little did he realise that 80 years on the title of that poem and its haunting first words heralding spring and the painful emergence of a broken country from difficult times would have various levels of relevance when applied to our post postmodern 2010 societies.  Winter-without-end remains in several major economies including the USA, the UK and Japan. The disposable income necessary to facilitate care-free, fair-weather wine transactions is not easy to come by.  And yet we approach that time of the year again, Primeur week in Bordeaux.  But this April’s cruel irony is that 2009 is already being lauded by some Bordelaise as the vintage of our modern, postmodern and post postmodern times.

With Asia currently propping-up much of the world’s fine wine market throughout this economic wasteland, the eyes of many of Bordeaux’s top chateaux are firmly set on the Far East this spring, even though these countries have only begun to dip their toes in the En Primeur waters as recently as the 2005 vintage.  Following Bordeaux’s last great vintage, there has however been precious little interest in purchasing Bordeaux futures.  Until now?

“So far, only professional people know the reputation of 2009,” says Yasuhisa Hirose-san of Japan’s and more recently Hong Kong’s fine wine retailing giant, Enoteca.  “If the price is reasonable, a lot of people will be interested in 2009 Primeurs.”

From Hong Kong - China’s new gateway and a strong market for Bordeaux in its own right - Doug Rumsam of Bordeaux Index is even more confident, “The market here has picked up significantly since the release of 2005. Mainland clients are now looking at En Primeur for the first time and are willing to look at this as a long term investment. There is already significant interest in 09 as a vintage and I think this is all part of the trend of increased consumption and sales in the region as a whole. Media report more, there are more consumers and more merchants representing the wines of Bordeaux. This is the first really exciting vintage since 2005 and whilst I don’t think HK will rival the UK for EP sales, they will be involved to a greater extent than ever before.”

Stephen Wickens of John Armit’s Hong Kong office is equally bullish, “Yes there is tremendous interest in the 09 En Primeurs already and we are expecting to see a very buoyant campaign. I believe that the decent wines of 2008 have captured the imagination of our clients and they mostly want increased allocations this year.”

Yet Jo Purcell of Farr Vintners office in Hong Kong puts cautious provisos on this optimism for central Asia’s new wine hub, “There are a lot of enquiries, but the demand will very much depend on what the release price is and how we rate the vintage after we taste at the end of March.”

Lee Crymble of the Singapore and Hong Kong based fine wine merchants (and restaurateurs) Vinum nicely summarized the complicated nature of Asia’s En Primeur market and its relevance for them, “For en primeur our clients only want the best wines in the best vintages. Outside of the 1st the 2nd growths and their right bank equivalents I don’t see it being particularly important. Prices are very transparent nowadays and margins are low so it is extremely competitive in Singapore. The last few years have contributed less than 3% to our annual profits and it is more of a service to our clients than a revenue generator. We obtain a lot of our en primeur clients though due to the financial stability/strength of our company so the clients know that they will actually get the wines they pay for 2 years down the line.  If we don’t sell the wines during the en primeur campaign then we won’t sell them until not only are they physical, but drinkable! This is why it isn’t so interesting for us.  Our clients are drinkers not speculators and they want gratification now, so the prospect of buying in 2010 for drinking in a few years doesn’t tend to appeal. Especially if the rise in value of the wines after en primeur is negligible, or even worse can be bought cheaper once in bottle.”

Singapore based Wee Lee Tan of top wine merchant Crystal Wines explains their market:  “100% of our En Primeur sales come from private collectors. Reasons for such purchases vary. There are habitual followers every year, some are speculative (buy only in top years), some buy because the vintage is significant to them, and for some it simply means cheaper now than later (hopefully). For the trade, the parting of cash in 2 years advance is unthinkable! En Primeur is NOT a consideration at all for most restaurants and hotels.”

Vinum’s Lee Crymble concurred, “Private clients. Trade aren’t interested at all.”

Clinton Ang of the longstanding family owned wine merchant Cornerstone (Hock Tong Bee) in Singapore threw in the investment fund card regarding his company’s customer base for En Primeur, though echoed the comment about trade, “Mainly Private and wine investment companies/individuals as trade normally purchases physical wines.”

From the far north of Asia, Hirose-san chimed, “In Japan, most of customers are private collectors.  Wine investment opportunities are less in Japan.”

“There is already news from the press and visiting Bordeaux negociants that the 2009 is going to create some hype,” commented Wee Lee Tan from Singapore.  “Our fair guess would be that demand could be as strong as in 2005 and 2008. In fact, in my view, perhaps stronger as more and more people becomes aware of such campaign and the obvious benefits of being able to purchase them at “opening price”.”

Wee Lee’s point about interest sparked in 2008 is well made – but interest for this vintage last year was dead in the water until the occurrence of two converging factors:  1) release prices were very reasonable and 2) key journalist reviews of the wines were very good.  This brings us to the crux of April’s cruel situation, quality of the vintage (scores) vs price.  But which is more important to Asian consumers?

“In Japan, it is 70 % pricing and 30% journalistic ratings,” Hirose-san said with Japanese precision.

Lee Crymble of Vinum gave them equal billing, “They go hand in hand. One won’t work without the other.”

Wee Lee Tan from Crystal elaborated on this view, “Both ratings and pricing are important for the success of campaign. Exorbitant prices will almost kill any interest in the vintage. Ratings are a major drive factor too, without good ones the wines will not sell well. In this instance, I must say Mr. Parker’s ratings are most influential, at least here in Singapore, over other ratings that might be available such as Wine Spectator.”

From Hong Kong’s representative for John Armit, “I expect rather high release prices so that’s already factored in to some extent, the reviews coming out of Bordeaux at the end of this month could be crucial.”

Doug Rumsam from Bordeaux Index has a somewhat differing perspective from his compatriot, “I think the journalistic ratings spark interest and price determines the surge of demand thereafter. Both are important factors but if Chateaux say the crop is amazing and one or two key journalists disagree, the wines simply will not move. I suspect this year chateau will wait until after journalists publish their scores, which is why I take this view, last year, obviously it was a little different.”

However Clinton Ang of Cornerstone firmly believes pricing to be more important, “Pricing because even without ratings out for 08 campaign, release prices enabled demand to be stellar due to the value release pricing.”

So thus far, all the clairvoyants seem to suggest there will be strong demand in Asia for Bordeaux En Primeur.  But what exactly will buyers scramble for?

“First growths and Super Seconds are most popular,” said Hirose-san of Enoteca, rather unsurprisingly.  “Smaller / lesser known Chateaux are not popular in Japan for Primeurs.”

In Singapore, Wee Lee Tan of Crystal suggests there is a bit more scope, “Generally, the campaign in Singapore is limited to probably 50 top chateaux in a very good year. Weaker vintages, the campaign is limited to only firsts and seconds mainly. In other words, wines whose prices that do not differ much after 2 years later, are probably not of interest at all. Why pay now, when you can get later at more or less the same price?”

Clinton Ang of Cornerstone restates the importance of price, even as it affects the breadth of purchases, “Lots depends on release prices, if between 05 and 08, I would anticipate a broad based purchase pattern from 1st to 5th growths.  If at 05 prices, demand will be limited to the 1st growths.  08 prices – not likely.”

Yet Vinum’s Lee Crymble is even more conservative when considering the types of Chateaux that will sell En Primeur this year, “1st, super seconds, top Pomerol’s. Little opportunity for lesser chateau unless they have a very high score.”

The British merchants in Hong Kong are preparing for the cherry-picking.  Purcell of Farr suggests the interest will be for, “first growths, and super seconds.  However they (customers) are being advised that they will have to buy across the board in order to get allocations of the top wines.”

“I have had more interest in First Growths than anything else and as usual Lafite is still the pick of the bunch with clients asking if they can pick up huge quantities.” Rumsam from Bordeaux Index commented with the swift stipulation, “Merchants always reward clients who buy across the board so there will be opportunity for those who view the vintage as a great success and buy broadly. Bordeaux lovers always have their favourites and buy house wines to lay down in good vintages, so I expect us to sell a good chunk of wines that are loved in our market: Lynch, Duhart, Beychevelle, Angelus, both Pichons and Cos to name but a few. Lesser chateaux depends on pricing and scores from key critics.”

Wickens of John Armit seems to be in a more enviable position: “Many of my clients have favourite lesser chateaux in addition to the Iconic wines, so we can sell across the board and as you know it is in the better vintages that the lesser chateaux and second wines are a safe bet and offer a good value alternative to the top wines.”

The soothsayers have spoken and it appears we are indeed gearing-up for a strong En Primeur campaign here in Asia.  But the relative level of success in these wasteland times is conditional and extremely fickle.

“2005 was successful as the marcoeconomic climate was extremely bullish, liquidity was rife thus even with release prices considered “expensive”, there was enough demand and liquidity to soak up all supply,” said Cornerstone’s Ang.  “2008 was a well priced vintage so although the macroecon climate was not good, demand was there as prices allowed “consumers” to purchase. 
2009 demand will be successful if it’s priced well. A pricing between the 05 and 08 release prices would create a demand not limited to 09 but allow continuity into the future.”

“Bottom line,” warned Tan of Crystal, “consumers are rational in their purchases. Some would purchase mature vintages over the campaign that could give instant gratification, if prices are seen to be too high.”

Yet Wickens of Armit HK still thinks there may be demand and money, regardless.  “Many of us have received requests for large allocations of the first growths irrespective of the price.”

Jo Purcell of Farr however gave what I feel is an extremely astute, cautionary final comment; “If the price is too high then the traditional / regular en primeur buyers will not buy.  The whole point of buying en primeur is to give the end user a financial return on tying up his cash for two years before the wines are released.  If you look at 07 and 06 this has not been the case, and in fact for 05 only now are some people starting to have made some money.  The mainland Chinese will not buy en primeur since they are only interested in purchasing wines that are physically available.  There will be “speculators” who will wish to buy, however, if the price is wrong and these guys buy our fear is that when they haven’t made any return after two years they will be most upset and then no longer be interested in buying future en primeur.  So this year the Bordelaise will need to be careful – the old established markets may not have the cash to buy en primeur, yes there are potentially new en primeur buyers – however, if the wines are priced too high you will eliminate the traditional en primeur market, and destroy a potential future en primeur market.”