Bordeaux Prices

[David Pian]

As we can all see, Bordeaux prices are skyrocketing nowadays, especially for those classified growths. A bottle of 04 Lafite I enjoyed a year and half ago for just $325 is now sold for over $1000!!!! The 2000 vintage of the same wine literally doubled in price during the same time period! Oh how I missed the days when I could buy some nice 05 Montrose for well under $100, and 04 Margaux for $199.99, ... ... ... The list goes on and on and on. The point is, I'm not even talking about the last century or some remote medieval times: this is all happening within the last year or two. Isn't that puzzling

Some blame it on the Chateaux's, some say it's the importers, some think the culprits are the distributors and retailers, and many even blame it on China... What are your thoughts as to what the causes of the recent price rise are? Do you think this is a "wine bubble" we are experiencing? Why or why not? Love to hear from you on this topic that has bothered me for quite a while now. As fervent Bordeaux lovers just like myself, I'm sure you all have the same complaints. Thanks!

[Jeff Leve]

Some blame it on the Chateaux's, some say it's the importers, some think the culprits are the distributors and retailers, and many even blame it on China... What are your thoughts as to what the causes of the recent price rise are? Do you think this is a "wine bubble" we are experiencing? Why or why not? Love to hear from you on this topic that has bothered me for quite a while now. As fervent Bordeaux lovers just like myself, I'm sure you all have the same complaints. Thanks!

Hi David

Thanks for posting. I always get myself in trouble for answering questions like this. But I do not care Wine prices are driven by supply and demand. Wines sell for what people are willing to pay. While I would never pay $1,000 for a bottle of wine, for some people, that's not a problem. This following is not popular with many people. But the Chateau are only charging what people are willing to pay. Making money is never a problem for sellers. It's only an issue for buyers.

Are we in a bubble? Your guess is as good as mine. We were in a bubble and it popped in 2008. During 2008 and 2009, incredible deals flooded the marketplace. Those with cash stocked up. Things are looking different today. Look at auction prices. Demand is no longer focused on the First Growths. Many of the Second Growths and other good wines have recently jumped in price. They looked like great deals, when consider what the Firsts are selling for.

If you want to get a read on the health of the marketplace, it will take a bit more time. The next two indicators are, the pricing and sales of the 2010 Bordeaux futures. That will be followed by what happens to prices for Bordeaux wines when they are in bottle and hit the stores. If 2009 sells through and prices rise, you can expect prices to continue climbing. If the prices remain flat, the wine market will remain soft. If 2009 crashes, the wines in the pipeline will also crash.

Bordeaux is not the only collectible wine. But it is a strong benchmark to help determine where the wine marketplace is headed.

What do you think about it? In your view, where are prices headed?

[David Pian]

Thanks Jeff, I really liked your response! Hey, what do you know, I'm definitely looking for insights, not popularity. Well, I don't know, I'm kind of in between.... really, who knows! But to be quite honest, I invested heavily in the 09 Bordeaux futures, primarily Lafite. And why Lafite? Because of the Chinese of course. I'm only doing it short-term, as a speculation for lack of a better word. And I hope you don't think less of me, afterall, I'm a business buy, and I'm in it for profit. My hope is, it could very well be a "bubble" (that's the worst case scenario, which doesn't bear a high probability in my opinion...), but before the bubble bursts, I'm hoping to pick up the upward-curve. But that's not my belief, only the "worst case scenario". As far as how I truly feel (which I'm not quite confident about), please refer to the following link: http://winedr.blogspot.com/2011/01/l...ting-word.html. Just some random thoughts, something I've been pondering lately. Take a look at it, and let me know if you agree. I'd love to hear your feedback on that. Thanks Jeff! ... and veryone else, please feel free to kick in!

[Jeff Leve]

David.... Investing in 2009 Bordeaux futures is a dangerous game. It's hard to predict where prices are going to land. Much of it depends on what you bought and how much you paid. Unless you know people to sell to directly, without paying sales commissions, prices need to rise at least 25% for you to make money. If you purchased Lafite, and probably Latour, you will probably be fine. At the moment, it looks like there is more money to be made by investing in Second Growths that are already in bottle. They look cheap these days when measured against the First Growths and current futures pricing. With few exceptions, the pricing boom seems to be for Classified Growths and not Right Bank wines.

[David Pian]

Yeah, Lafite was my focus, not even Latour... I was going for what's really hot in the global market, with my eyes on China. I don't know what it is about Lafite, and according to your review and other critics, the wine probably doesn't even stand out as good as Latour. But for the Chinese, Lafite is like a cult, and I have no idea why... I guess I'm just betting on China being a price mover in at least this one wine, and maybe a few others too, but yes I definitely agree that the first growths are probably what will sustain the high price level.

[Christer Byklum]

Asia is all about honour and not to loose face. Lafite was ranked first, and that mean that if you give someone this wine, they will se that you find them worthy of the very best. A bottle of Lafite or two for $ 2000 to close a huge business deal is normally not that much. I think it is as simple as that......

[David Pian]

I agree Christer... Although I'm not quite sure about the rest of Asia, but definitely very much so in China. Another fun fact is over in China, people love to blend Lafite with Coke, a phenomenon that just bewilders me...

[Christer Byklum]

The coke mixing was a few years back I hear from people regularly visiting the area. But fake Lafites is getting huge over there, because most have no idea what it should taste like, and on ebay, empty bottles of Lafite and Carruades can reach crazy high prizes......

[Jeff Leve]

I agree Christer... Although I'm not quite sure about the rest of Asia, but definitely very much so in China. Another fun fact is over in China, people love to blend Lafite with Coke, a phenomenon that just bewilders me...

David... This is not true. While it may have happened years ago, today that is not the case. I spent some time in China last year. They are becoming a sophisticated wine buying, wine drinking and Bordeaux wine loving country. Their learning curve is fast.

[mustafa camlica]

Jeff,

This is good news. Market needs some balances and today Lafite prices are crazy.

[David Pian]

David... This is not true. While it may have happened years ago, today that is not the case. I spent some time in China last year. They are becoming a sophisticated wine buying, wine drinking and Bordeaux wine loving country. Their learning curve is fast.

I agree Jeff. I think people are definitely more educated in wine nowadays in China, which creates this huge market potential that I'm definitely excited about! But the funny story is, my parents had a bottle of the 04 Lafite last year, it was a gift. My dad absolutely loved it, and started buying wine ever since, but my mom drank it with ice, and said she just didn't want that intensity in her wine. When they told me the story, it just killed me... I guess I'll have to get my mom a little more into wine appreciatioin next time I go back to China...

[Tom Mann]

I am in Bordeaux this week for meetings with negociants - but from what I have heard already, I don't expect to see lower prices for the 2010s...

[Jeff Leve]

I am in Bordeaux this week for meetings with negociants - but from what I have heard already, I don't expect to see lower prices for the 2010s...

Generally speaking, better vintage do not seem to sell for less. Are you tasting any 2010 this week? If so, what do you think of the wines?

[Tom Mann]

Better than the vintage of the century??? The wines are different in style, sure, but I don't think it would be wise to charge more...

Will taste a few 2010s on Weds.

[Jeff Leve]

I look forward to trying the wines in April. I am almost done with all my bookings. What have you tasted that you really liked?