'08 Bordeaux: first of the big guns out, at -70%

[AlexR]

Hi guys,

2008 Ch. Angélus came out yesterday at 50 euros a bottle, as opposed to 85 for the 2007 vintage.

Owner Hubert de Boüard was quoted as saying in Sud-Ouest: "Either château owners will gaze at their navel, or they will analyze what's happening on the market [and draw the necessary conclusions]. The US and UK are in the midst of a financial crisis and the rest of Europe is not doing any better. The Asians buy little wine on a futures basis. Furthermore, Japan and Korea are suffering too."
He also said: "Angélus 2008 has come out at the same price as the 2004, a time when the estate was doing well financially, and the same could be said for the wine trade and distributors. A time when customers could afford to buy a 12-bottle case in order to drink the wine themselves. However, now, the wines are being bought and resold, and sometimes coming back on the market at under the en primeur price. I am worried about the future of the system, and want to be able to sell Angélus to wine-drinking consumers in the future"

Angélus has put 50% of their production on the market in the first tranche.

It has been customary for château owners to wait a few weeks after the barrel tastings to see what the wine critics (especially one from Monkton, Maryland, USA) have to say before coming out on the market. Well, I respect Hubert de Bouärd for taking the bull by the horns beforehand.

Please, no crocodile tears about those left holding the baby with the 2007 vintage. No one could know at the time how the 2008 vintage would shape up, nor that financial markets would plunge.

The buzz in Bordeaux at present is that 2008 is a Right Bank vintage (sorry for the generalization, with the usual caveats), and Pomerol in particular has good press.

I wish Mr. de Boüard success in selling his wine, as I do the other great growths of Bordeaux.

Best regards,
Alex R.

[JimHow]

Still too expensive.
Fifty bucks for a bottle of wine? Too much.
We are entering into a new world where people will soon be bicycling to work, where water will be rationed, where newspapers will be all eliminated within five years, where health care will be rationed, where the population will continue to grow exponentially while more people continue to starve, where people see their retirements wiped out.
Bordeaux is selling their top wines still in excess of $600 or more in the last, apparently mediocre vintage of 2007.
They still don't get it yet.

[Houndsong]

Don't think the dollar's at par yet with the euro. I think that's more like $70.

[stefan]

That's 41% down; not 70% down, Alex. Still too much. An easy non-buy for me.

stefan

[AlexR]

Stefan,

I figure:

85 minus 50 = 35.
35 divided by 50 = 70% thus a 70% decrease from the 2007 vintage to the the 2008.

No?

Alex

[JimHow]

I think you need to divide the 35 by 85, Alex, the 85 is the base figure.

[Houndsong]

Or as the mathematicians say, "the denominator." I think. Maybe. It's been a while.

[Blanquito]

Stefan, no pressure for a full professor maths academic!

[normexwineclub]

Comparing to 2007 is somewhat hollow. Did anybody buy 2007 en primeur?

2004 didn't sell well en primeur, and largely remained unsold until 2005 pricing was revealed.

Good for Bouard to take the first bold steps, but in the context of the economy it will remain to be seen whether this is enough.

[AlexR]

I did indeed take 2007 to be the base, which is why I spoke of a 70% decrease from one year to the next.

Americans mainly buy politically correct vintages of Bordeaux (sigh), but 2007 sold all over the world, particularly on the Asian market.
How can you call this "hollow"? America is not the only market for Bordeaux wines!

A 70% decrease is not enough? Jeez, what do you want, blood?

Best regards,
Alex R.

[JimHow]

If something was $85, and now it is selling for $50, isn't the $35 a 41% decrease from the $85, and not 70%?
Not that it matters, I agree it is a significant decrease any way you look at it.
I just think that the economy has tanked back to 1997 levels, so we need 1997 prices, not 2004 prices. We need to be able to see Ducru and Pichon Lalande and Cos for $50 apiece back like when we bought the 1995 versions of those wines, and Lafite and Haut Brion for under a hundred bucks, like back in the "old" days of 1997.
Back then I got bottles of 1994 Haut Brion on sale at Martignetti's Liquors for $50 a bottle... That was a decade ago, not some ancient time.
I truly believe we are going to need some earth-moving reductions in prices if Bordeaux is going to survive as the pipeline starts to clog up with 2005s, 2006s, 2007s, 2008s, etc., etc.
There have been radical changes in the world since we did Miami '08 and the 2007s were being scored by RMP and others. The American economic empire has been brought to its knees, and the world systems have come down with it.
Yet, Mouton '06 and '07 are still up over $600. We need the '08 to be like the $90 1995 Mouton of yore....

[William P]

Alex, Almerica is in rescession, Europe is in recession, Asia does not buy quantities of Bordeaux. Everyone is suffering and it will probably get a little worse. Down 41% after the huge price increases during the 00s is not a lot for many people.


PS, I make no apologies for buying mainly politically correct vintages (though I did not buy the 2005 Bordeaux) My 05 money went to the darkside.

[AlexR]

William,

People often buy Bordeaux according to numbers rather than quality, so your way of perceiving things is not really surprising.
Nor your conviction that this is the right way to go .

I believe you are wrong about the Asian market. There is a lot of money there now, and a strong rise in imports.
The world is changing.

Down 40% is not very much? That seems an extravagant thing to say. Do you know anything else that goes down to that extent?
Doesn't seem very realistic to me.

Best regards,
Alex R.

[ChrisW]

Dear Alex,

I think that a return to 2004 prices is not sufficient.

It seems as if everyone has forgotten that the 2004 en-primeur campaign really did not go well, even though the economy and the USD/EUR rate were at that time much more favourable than they are now. The 2004's were only sold when the 2005's were released at even higher prices and the world had moved into a next stage of madness. Wines of 2004 (or of good vintages such as 2001) can now be bought for less than the en-primeur prices.

Regards,

ChrisW

[ChrisW]

I just read on another forum that the Angelus 2008 is not selling well at all at the announced release price.

I really think that the Bordelais have to further reduce prices if they want to trigger people in today's economy to pay significant sums of money as advance payments for buying a vintage which is not one of the many "vintages of the centary".

ChrisW

[William P]

"People often buy Bordeaux according to numbers rather than quality, so your way of perceiving things is not really surprising."

This is a funny statement Alex, because it is unclear wheather you intend to lump me with the first group or not. The first group being the people who buy according to numbers. I suspect you do. And if you do, that is rather insulting. For me, people who buy the numbers have no experience with wine or Bordeaux so they depend on pundits and shelf-talkers to make their decision for them.

Having met me but once and maybe reading a my few cyptic poorly written tasting notes is hardly a basis to judge how and what I buy. Because I bought deeply in 1982, 1996, a few 1998, 2000 and very selective 03 does not mean I follow numbers blindly. Individual wine purchases are based on my experience as well as my wallet.

Nor does it mean I ignore the other vintages, I am, however, much more selective. I buy deep in great years because I feel the quality is better top to bottom. Having posted a few notes over the years, you probably are aware that I am not the one posting about my Mouton or Haut Brion experiences. Leve I am not. My cellar is distinctly lower class.

For me I find greater value in the years that are consider great, well until 2005 (I don't think 2003 is great. It has some very interesting wines but great, nah and I don't really know about 2005. 2005 may be great in 20 year but the mortality tables tell me I should buy too many).

[normexwineclub]

I'd be surprised to see Asian countries purchasing en primeur in significant quantities, let alone 2007. Are there facts supporting this?

If 2007s are selling all over the world, particularly Asia, I don't comprehend why prices are dropping 41% in a better quality vintage than 2007.

[stefan]

>>
Down 40% is not very much? That seems an extravagant thing to say. Do you know anything else that goes down to that extent?
>>

The American stock market. Housing prices in some American localities.

A 40% drop for Angelus does not tempt me to buy.

stefan

[tim]

Down 40% is not very much? That seems an extravagant thing to say. Do you know anything else that goes down to that extent?
Doesn't seem very realistic to me.

I think it largely depends on the basis of the reduction. If the price rose 50%, one year, then went down 33% (thereby negating the initial rise), then its really flat over the long term. 2005 drove the prices up, then they stayed up for 2006 and 2007. But much like the housing bubble in the US, the prices were inflated.

One of the local retailers here in France basically suggested to skip the entire 2008 vintage unless there is some major price reduction. The only two wines that he said were a buy based on his barrel tastings were Figeac and Pichon Lalande, and still only if the prices come down.

[AlexR]

The Bordelais aren't dumb.
They charge what the market will bear, just like each of you in your various professions
(with the important difference that wine is an agricultural product).

People have grumbled about pricing, a major effort has been made.
If the crisis persists (can one blame the Bordelais for this too?), they may even reduce further.

Economics is economics. However, the demand is worldwide and the traditional markets carry less weight than they use to.

All the best,
Alex R.

[Claudius]

Guys,
I have asked a few local importers if they are doing 08 indents.
Most are either waiting for the prices or already shaking their heads.
A few were stuck with 2007s that nobody would buy and thus there are plenty of unsold wines from not only 07 but also 06 (to a lesser extent).

Those waiting prices indicated that they will nly buy a few wines that are reliable across vintages and they don;t want overpriced 1st growths either - maybe a few for trophy hunter wanting a vertical.

I just dropped some wine off for sale at Langtons auctioneers (included the over-rated 2000 Carrudes de Lafite) and there are pallet loads of wines for auction coming in from importers. Things are not looking good...

[JimHow]

You may be right, Alex, the Bordelais I am sure know their markets better than anyone else, just like I know the marginal rate to charge for a divorce, or OUI, or bankruptcy in Lewiston, Maine, before someone will decide to go elsewhere because it is too expensive. I can only relate to my experience, and I have definitely cut way back on my purchases of wine. I may make some purchases like 2006 Cantemerle for $25 each, but I'll buy two or three bottles as opposed to a case or more.

[AlexR]

Jim, others,

Yes, a percentage of the winedrinking public is down on Bordeaux. Some people would like Bordelais to "punished" and are all gloom and doom.
OK.

I am rooting, understandably, for the Bordelais to be able to sell their wine.

Please don't horsewhip us. Things are hard enough as it is!

Best regards,
Alex R.

[JimHow]

Hey, I loved meeting Alfred Tesseron a couple years ago. He's clearly an honorable man. But he made no apologies for the fact that he was going to Asia and elsewhere, and trying to get the highest price for his wines during the economic bubble. And good for him, why not? But he was pricing out those of us in the room who were there to honor him, those of us who have been drinking Pontet-Canet since before it was the "in" thing to do. Now the worm is turning on prices. And don't blame us for not biting. I have no plans to ever buy Pontet Canet again if it continues to be priced at $60, $70, $100, etc., etc....

[AlexR]

Never say never... )))))))

Fair enough, Jim.

It will be interesting to see the pricing the next good vintage (or, rather, the one the media says is good).

All the best,
Alex

[JimHow]

I do think you are right though, Alex, when you say the Bordelais know their markets. We can all relate our anecdotal experiences-- I can say that I see a bunch of $1600 Latours from '05 languishing on the shelves in NH, for example-- but I'm sure the Bordelais are keenly aware of their bottom lines and their markets. I think like just about everyone else in just about every other type of business in the world, there is going to be some suffering ahead....

[PappaDoc]

Alex,

I posted an ancedotal incident that occured in the last 12 months.


"If you ever wanted to part with some of your collection, there are a lot of buyers paying crazy money for wines at Hong Kong Auctions.

Last spring a young 29 year old man from California bought 40 btls of 1990 Angelus from me at a 20% off sale. They ended up costing him $320.00 a btl (he wanted every btl Zachys had). I congratulated him on being able to drink a great wine for a long time. He laughed and told me he had a Partner he grew up with in Hong Kong that had every btl sold for $1,000 per btl. This was right after Hong Kong totally removed tax on imported wine. He told me he was shipping the btls by air.

By the way he is a Stanford Grad, very smart young man!PappaDoc

We've heard Steve H and others recount the tales of second label wines being sold in Asia at rediculus prices thinking that second labels of Lafite and Latour are the same thing as the First Growths and sell at $1,000 in Hong Kong.

I've had Russian customers buy every btl ( 36 btls) 2002 Lafleur Pomerol at $180 to sell in a Strip Club in Brooklyn at $1,000 per btl.

The market will always bear what someone is willing to pay. I quote from "The Wine Spectator" "UpFront" Aug 31st 2008.

"Chinas' and Hong Kongs' gross domestic products are continuing their double-digit growth, and other Asian economies are close behind. Newly wealthy consumers are flocking to wine. Adding to the buzz this year, Hong Kong has eliminated all duties on wine. The local govenrment is commited to making the territory into Asias' wine hub" Page 23 Wine Spectator goes on to further elaborate on Bordeauxs dominance in this market. "The General consumer interest in learning about and tasting wine is growing very quickly, even faster than America."

If I were a single 30 old person with some Knowledge on Bordeaux, I'd pack up and go to Hong Kong and become rich in a couple of years. After taking some classes in Cantonese or Mandarin.

I suggest any BWEers in that catagory to "GO EAST, YOUNG MAN!"

A friend of mine ( Jack Pashkin), whose Father was a Jewler came up with a replacement for the "Gold Scale" a measure for inflation in the U.S.

He coined his measurement "The Pizza Scale" He decided that the price of a slice of pizza reflected the true buying power of the U.S. Dollar. his idea in short. That scale, 25 cents for a slice of Pizza in 1967, $2.50 for a slice of Pizza today. This even followed the most critical pricing for any economy. I bought Gasoline in my home town of Mt. Vernon NY in 1967 in "Oil City" for 40 cents a gallon high test. Today I bought High Test for $2.01 per Gallon. The Pizza scale of five times the 1967 price!

A slice of Pizza cost 25 cents in 1967 a new fully equiped Corvette cost $5,000 at the same time.

Today in N.Y. a slice of Pizza costs $2.50 and a new fully equiped Corvette costs $50,000. So inflation is up ten times.

It seems to me that the inflation rate of First growths has far exceeded the Pizza Scale as I have newspaper Ads from Major NYC retailors selling Petrus , Lafite and Mouton in the 1960 era for less than $20 per btl.

1982 Petrus sold for $550 per case at Garnets in NYC in May of 1983, Laflure 1982 was $ 255.00 per case, Leoville Las Cases was $180.00 per case and I bought Ducru Beaucallou at $180 per case and 82 La Lagune for $90 per case.

Seems to me Mr. Pashkin and I need to educate the folk in Bordeaux on pricing.

I guess the responce will be something P.T Barnum said.

"There is a sucker born every minute."

I still buy Bordeaux, but my price limit is $30.00 and that really narrows my choices.
2005 De Malleret Haut Medoc at $14.99 was my favorite buy in the last six months.

[PappaDoc]

Sorry high price for High test Gasoline this past Summer was over $4.00 per Gallon (Pizza Scale stayed true at ten times 1967 rates)

Prices have truely dropped for Gas in the last six to eight months. I paid $2.01 for high test in New Jersey today. ( the price is less because of state sales tax being lower and they refine Gasoline in New Jersey as well.). NYC prices are about $2.75, but that can flexuate very quickly. I stand by "The Pizza Scale", and would kike to support Jack Pashkin for next head of the Federal Reserve. Hey he can only do better!

[Tom In DC]

Hi Alex!

If you bought a share of stock for 100 euro per share and it went down 70%, wouldn't it's new value be 30 euro?

The glamor wines of Bordeaux -- yes, the ones by which nearly everyone measures the Bdx market -- are seriously overpriced. When we visited Mouton last fall, I thought that the sample we tasted would compete very favorably against a high-end California Cab. Unfortunately for the Mouton folks, most of those high end Cali Cabs sell for well under US$200, or dramatically below the price for which I expect Mouton-Rothschild to sell any recent vintage.

Regards,
Tom

[JimHow]

I was just checking the prices of 2007s futures on the Premier Cru website because I want to buy something from Tessa's birthyear for Werner and Chris. Mouton, Margaux, etc., are all priced over $400. Is anyone going to buy at that those prices?

[normexwineclub]

I thought I saw a post somewhere in this thread that said the 2007s were selling all over the world, particularly in Asian countries. That struck me as curious.

[JimHow]

They're closing 23 schools and laying off 600 teachers in Detroit.
The Boston Globe is close to going under after 150 years in business.
2005 Carruades is "on sale" at Zachy's for $268.

[PappaDoc]

And three other stores are charging more.

Applejack Wine & Spirits CO: Denver. No minimum order. 10% of most solid cases that are not already discounted. Delivery charges apply. CARRUADES DE LAFITE, 2005 $269.99
Bottle
09-Apr-2009

--------------------------------------------------------------------------------

K & D Wines and Spirits NY: New York. No minimum order. Mixed case discount on full cases of still wine. Delivery charges apply. Free within Manhattan and after 150 USD in NY State Carruades De Lafite Pauillac Bordeaux, Pauillac, 2005 $299.00
Bottle
09-Apr-2009

--------------------------------------------------------------------------------

Brown Derby International Wine Center MO: Springfield. No minimum order. Delivery charges apply. Carruades De Lafite, Pauillac, 2005 $299.99
Bottle
09-Apr-2009

Can it be that speculators will finally get burned on hopes of "flipping " the 05 Carruades?

I'd say at least 100 customers have told me about buying 82 Bordeaux as futures and now they've sold them at Auction for ten times the price.

Just take a look at the prices of the 89s, 90s, 96s, and 2000s that we bought on the cheap. Check out what they cost now. Yet they in the case of the 2000s they can still be less expensive then the 2005s.

I'm just worried about the price of Burgundy, Rhones, Italians, Germans and Spanish gems. The Asian and Russian market have already "discovered" California wines and Customers ask for Opus, Silver Oak, Mondavi Reserve, and Caymus. If I try to suggest something else I sometimes get glared at. I can sway younger customers by showing reviews on our computer as Parker has that "Svengali Effect" all over the world.

We also have an enomatic machine where people can taste 16 free samples. That helps a lot as folk don't have to gamble by buying a btl. We've had many wines over $100 per btl since its' been in use last Summer. Even 05 Mouton, although that was only a half ounce pour, usually the pours are 1-2 oz.

In the end I will resist putting my 96 Carruades up for sale on "Wine Bid" although I'm tempted by the thought of getting $250-$300 for a btl that cost me $35 plus sales tax. I'll drink it.

[JimHow]

You're right, Pappa Doc, I'm sorry to pick on Zachy's, I just seem to have been focusing on their price for Carruades in the past year. And Zachy's does have good sales sometimes, I've bought a lot of wines at reduced prices there, you just have to wait 'em out. I predict I'll buy a number of 2006 Bordeaux from Zachy's when all is said and done.

I'm sipping on a 2006 d'Angerville Volnay Champans right now that is very lovely.

[Rieslingfan]

Have any other '08s come out? It would be very interesting if they have not (waiting to see if Angelus actually sells).