Bordeaux - Wine Business
20 important questions on Bordeaux - Wine Business
Wine business: châteaux and numbers
- Over 7.000 estates
- called châteaux, but are also farmhouses
- number is shrinking > very small properties taken over by neighbours
- average size over 17 ha
- annual production over 800 million bottles
Production cost per bottle are high in Bordeaux, can you split it by appellation/classification? What is causing the differences in cost?
Medoc: 2,35
Classed growth: 9,80
Causes:
- vine density,
- harvest costs,
- higher viticultural cost,
- lower yields,
- grape selection,
- barrel ageing; new barrels, time in barrel
Production costs Bordeaux 2011
- Bordeaux AOC > 0,57
- Médoc estate > 2,35
- classed growth > 9,80
Not costs of bank etc. Included
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What are additional productions costs which make classified Bordeaux wines expensive
- Increased vine density
- harvest costs
- hugely higher viticultural costs
- rigorous grape selection
- barrel ageing
What is important to sell Bordeaux wine
- Classification system
- 100-point rating system by Robert Parker
What is Place de Bordeaux and how does it work
- A unique commercial system
- Producers (estates, coops, large wineries) sell wine to merchants (négociants, handle 80% of wine by volume
- Négociants sell those wines to wholesalers/retailers
- In between there are the brokers: courtiers
- Châteaux sell their wine to négociants
- Negociants sell it to distributors (importers, wholesalers, retailers)take about 15% of sale price Cht. Receives
To how many countries Bordeaux wines are sold
Which contrasted markets are in Bordeaux
- Great majority inexpensive wines, less than 1 euro/l / bulk
- Cru wines > en primeur
How works En Primeur sales in Bordeaux
- Châteaux sell their wines in spring after harvest
- buyers and journalists taste bottle samples in April at the châteaux
- the châteaux release their prices in May-June
- the châteaux/their négociants put up for sale small amount of their wine = first tranche
- price influenced by reputation château and reviews of experts
- depending of sales, price will be adjusted for subsequent tranches, usually going up
- most rare wines on allocation > négociants/trade buyers also have to buy in less good vintages, not to loose their rights
What is the idea of En Primeur sales in Bordeaux
- To secure consumers hard-to-buy wines and at a lower price than they will appear in fine wine shops when bottled and shipped.
- Estates benefit from early payment for their wine
- system dates from period after WOII, when Chts truggled financially
What does the succes of the En Primeur sales depend on
- The quality of the wines
- top vintages highest demand
- The prices of the wines
- too high > estates, négociants, retailers too many stocks
- The state of the market
- average vintage following outstanding vintages > estate may have to reduce prices or stuck with that vintage
What is the En Primeur price of the Bordeaux wine
- Includes bottled wine brought to the storage of the buyer a year after the primeur tasting
- ex cellar > excludes taxes due in buyer's home market
- held in secure storage, right condition until sent to buyer > the longer, the higher the price for the buyer
Why is the continuing debate whether the En Primeur system in Bordeaux still works
- In the boom period of the 2000s e.g. China bought a lot or Bordeaux wines >
- En Primeur prices rose considerably >
- Châteaux asks high prices, even for average vintages
- This led to Bordeaux prices falling > investors lost money
- Critics are concerned their reviews influence the prices, because the wines they tasted are not ready yet
Which Bordeaux Châteaux and when decided to stop selling En Primeur
- 2012
- Château Latour
Advantages for Bordeaux estates to sell En Primeur
- Testing the market
- early payment > finance for next vintage
Disadvantages for Bordeaux estates to sell En Primeur
- Potentially selling at lower price than might be obtained for the bottled wine
- potential for financial mismanagement of losses by négociants > can effect reputation of estate
Advantages consumer Bordeaux En Primeur sales
- Ability to secure sought-after wines and theoretically at the lowest prices
- Option to keep or trace sought-after wines
Disadvantages consumer Bordeaux En Primeur sales
- En primeur tasted wines (by journalists and buyers) may be different than the final bottled wines
- Négociants/shippers may go out of business before the wine arrives
- Prices may fall before the wines arrive due to
- economic conditions
- quality of following vintages
Is wine tourism important for Bordeaux
Explain la Place de Bordeaux in reference to the Wine Business.
- Commercial system, allocating wine to negociant
- Trading structure unique to Bordeaux
- Producers sell to negociants (merchants, take 15% commission for 80% of the wine sold by volume) via local brokers (aka courtiers 2% commission) to distributors (importers, wholesaler, supermarket, agent etc) to customer.
- No need therefore for own sales force
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