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Study Cards on bordeaux, wines, wine

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
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Production cost per bottle are high in Bordeaux, can you split it by appellation/classification? What is causing the differences in cost?
AOC Bordeaux: EUR 0,57 per bottle
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
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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
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What is important to sell Bordeaux wine
  • Classification system
  • 100-point rating system by Robert Parker
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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
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To how many countries Bordeaux wines are sold
To over 170 countries worldwide
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Which contrasted markets are in Bordeaux
  • Great majority inexpensive wines, less than 1 euro/l  / bulk
  • Cru wines > en primeur
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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
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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
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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
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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
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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
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Which Bordeaux Châteaux and when decided to stop selling En Primeur
  • 2012
  • Château Latour
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Advantages for Bordeaux estates to sell En Primeur
  • Testing the market
  • early payment > finance for next vintage
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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
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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
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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
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Is wine tourism important for Bordeaux
Historically not, but the city of Bordeaux it renovated and includes La Cité du Vin, Bordeaux's wine visitor centre.
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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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