The anticipation continues to build regarding the quality of the 2009 Bordeaux vintage, barrel tasting now underway as the “experts” attempt to drink their way through hundreds upon hundreds of wines.  Makes you wonder how much justice is done on behalf of the final batch of tastings on any given day.  Despite cleansing with water and crackers, my palate would be on life support by the end of the day.  That being said, however, the developing consensus from early barrel tasting seems to echo the earlier pronouncement by vintners that this is to be one outstanding vintage.  While there seems to be some question regarding degree of extraction in selected wines, many seem to be destined for stardom.  Of course, the real test will come ten years down the line as the wines will have settled, aged a bit and begin to reveal what they really will be when they grow up.  En primeur or futures are expected to be setsomewhere between the end of April and June, offering those interested in getting in early an opportunity to place their orders.  The question at hand is do you plunk down some cash for future delivery of these wines?  Let’s examine this one step at a time.

If you’re  looking to start or add to your Bordeaux collection, buying on futures is one alternative, the other being the purchase at market price when the wine is released.  Buying on futures involves paying in advance for the wine.  The 2009 vintage in bottle, for example, will not be available until late in 2011.  It’s analogous to futures investing in the financial markets except you wait longer for the wine to arrive.  Why consider futures?  There are two potential advantages. 

One is that the wine is highly allocated, limiting availability.  Fortunately for consumers, Bordeaux wines are usually produced in sufficient quantity so that allocation is not a huge issue (unlike the finest Burgundies that may only see only 50 cases produced for a given vintage).  One wildcard here is that the Chinese mainland has now become the largest purchaser of Bordeaux wines, something that was a non factor ten or even five years ago.  So while many of the top vintners such as Lafite and Mouton Rothschild, Margaux, Latour and Haut Brion produce five to ten thousand cases per vintage, some of that inventory is likely to be soaked up by thirsty Chinese wine enthusiasts.  It’s possible that the Chinese could absorb more inventory than expected, maintaining a platform under the futures prices and balancing global economic weakness. 

The second reason to purchase on futures is a potential discount from the expected release price.  Clearly, this involves some educated guess work.  If you knew that Chateau Lafite Rothschild 2009 was to be released next year at $800/bottle but that you could acquire some on futures for $640, you might take a stab.  Of course, there’s also a possibility that the wine is released to the public in 2011 at the same $640.  In that case, you would have tied up your monies for a year and a half with no price appreciation, incurring the “opportunity lost” to place the funds in a financially rewarding investment (paying down debt, investing in the financial markets, etc.).

Sometimes, it helps to research the relationship in pricing between futures and actual bottle release in former high profiled vintages such as 2000 and 2005, keeping in mind that the state of the economy will likely influence this relationship.  We saw the internet bubble burst in 2000, undoubtedly sapping some funds that might have been directed toward the futures wine market.  On the other hand, life seemed to be a peach during the outstanding 2005 vintage.  As for 2009, we all know what we have been through over the last two years and it has severely impacted the high end wine markets around the globe.  While the wine auction market has regained some ground, make no mistake that it’s still fragile and could tip easily.  So the verdict is out on how pricing will work for ’09 futures. 

If you’ve decided to enter the futures market, you need to access a vendor who has experience with futures.  My suggestion is that, over time, you build a relationship with a couple of vendors.  This relationship is the key to credible ordering, tracking and receipt your inventory.  Be certain that you trust the vendor.  Ask for references, inquire about his or her history in the wine market and most of all, what happens if the wine never shows.  You don’t want to “loan” your dollars to the vendor for futures, only to have the inventory vanish.  I’ve had good success working with two separate vendors over the years, proven by one of them replacing my order after it was heisted along with a larger shipment that came into New York City from France.

There is an alternative approach well worth considering when everyone seems to be stampeding in one direction, in this case toward the ’09 Bordeaux.  Watch the competitor vintages for pricing softness.  As mentioned earlier, the 2000 and 2005 Bordeaux vintages were outstanding with the ‘03’s nipping on their heels.  There is still inventory from these vintages to sell and they now have to compete with the ‘09’s.  The result may well be pricing pressure on wines from these earlier vintages.  If the wine world is scampering after the ‘09’s but ignoring the earlier vintages, that may be your chance to pick up your favorite Bordeaux.

Still another tact is to sidestep all the whoopla about the first growth Bordeaux and explore the second through the fifth growths and those outside the traditional classification system.  I have written about the second growth Leoville Triplets (Barton, Poyferre, Beaucaillou) in a recent article as well as one of my favorites for the money, Chateau Pontet Canet, sitting just a stones throw from the storied Chateau Mouton Rothschild.  Watch the pricing of these from any of the top recent vintages as the ’09 come on to the market. 

Finally, don’t ignore the entry level Bordeaux tier.  Outstanding vintages usually lift all boats, the entry level wines offering a unique opportunity to access fabulous and age worthy wine at affordable prices.  A couple of wines that come to mind are Chateau Puygueraud (St.Emillion) and Chateau Pipeau (Cotes de Francs) both of which run ~$35 or less.  And if you want to walk the less travelled path, take a look at some of the more average vintages passed on by the “hype” train.  There you’ll find even more affordable prices that will offer you the enjoyment of what Bordeaux has to offer.

Tags: Bordeaux, en primeur, futures