An end to Bordeaux bashing?

[AlexR]

As we all know, Bordeaux has had a serious image problem due to a great extent to dizzying price rises of the best wines. Never mind that these represent only a tiny share of production, they are synonymous with the word "Bordeaux" to many people in English-speaking countries, and that seems unlikely to change. Then the Chinese came on the scene and raised prices further, leaving traditional markets feeling bitter and abandoned. In addition, due to the “fox and the grapes syndrome”, people began attacking Bordeaux as over-hyped and “all the same”, when it was not “green and weedy”.

A journalist friend of mine says that Bordeaux lost a generation of wine drinkers. And that may very well be true. However, this period, which I would say started roughly about 10 years ago, seems to me to be coming to an end.

There is definite renewed interest in Bordeaux these days. Some good recent vintages, healthier economies, and the inevitable return to one of the world’s great classic wines all account for the change. Also, those of us who remember affordably-priced classified growths are slowly but surely going out to pasture… Young people don’t make that comparison.

The Bordelais are especially looking towards the US these days, where there are encouraging signs of an expanding market.

What goes around comes around…

Have the Bordelais “learned their lesson”? The only lesson in Bordeaux is supply and demand… The much-predicted bubble did not burst. The château owners and négociants continue to bite the bullet in (reputedly) poor years, and try to rake it in with the good ones. The system has withstood any number of shocks and criticisms.

Therefore, I would say that the future looks rather bright for the great wines of Bordeaux, and that Bordeaux bashing has become a lot less frequent. I just hope that the wine trade finally manages to get its act together to sell the good “lesser wines” of Bordeaux.

Best regards,
Alex R.

[AKR]

The wines that really seem to have lost the US consumer interest, from my vantage point, would be Australian wines. I remember 10-20 years ago that those had small allocations in my cellar and we'd occasionally have them show up at tastings or what not. People would actually talk about them too, and there would be chatter on wine boards.

Then for a variety of reasons, perhaps the rising Oz dollar, their extraction and aging concerns, and the decline in their ratings champions, they seem to have lost out in the fight for wallet share.

[AKR]

Mark G. posted this link on WB....its from 1971

http://bbrblog.com/2016/09/04/inside-barrel-bottle/

[Carlos Delpin]

The absurd high prices of the California high end wines have also helped temper the perception of Bordeaux pricing.

[marcs]

Not to mention the surge in Burgundy pricing. A range of very good Bordeaux classed growths are now comparable to or less than good Burgundy premier crus, and generally cheaper than the celebrated Napa Cabs.

Also, the Bordelais have cut back a bit on the overextraction since 2010, I think that helps. Seems like they have shaved a solid percentage point off the alcohol (although I realize you can overextract and then remove alcohol).

[JimHow]

Also, the Bordelais have cut back a bit on the overextraction since 2010, I think that helps. Seems like they have shaved a solid percentage point off the alcohol (although I realize you can overextract and then remove alcohol).

I was wondering that myself, Marc, that does indeed seem to be the case.
Has there been any discussion about that in the wine media?

[AlexR]

Jim,

It's so hard to nail down trends with any degree of accuracy (how typical is typical?)... However, I have been experiencing, and many of my friends concur, that the "over-the-top" wines that garnered "wows" and Parker points in the past are toning things down.
Apparently even Pavie is less spoofalated now.

All the best,
Alex R.

[brodway]

Alex

when you consider the mentality of the millennials, i think the lost generation of wine drinkers concept would only be exacerbated.

most of the younger wine drinkers i know, think that spending anything more than $30 on a bottle of wine is completely a waste of money. unlike the older generation of baby boomers, i find that millennials would rather spend their money on Starbucks at $5 a pop for 20 days in a row then enjoy a $100 bottle of Bordeaux in a single sitting. i'm not a market research type, but those are my observations watching my kids, their friends, my nieces, nephews and friend's children as it comes to spending decisions.

[brodway]

The much-predicted bubble did not burst. The château owners and négociants continue to bite the bullet in (reputedly) poor years, and try to rake it in with the good ones. The system has withstood any number of shocks and criticisms.


If you read Arv's note under 2016 futures thread, he wisely points out that the Bordelais have deeper pockets due to corporate relationships and can withstand longer periods of cash flow stagnation. By no means that does indicate that corporations would rather choose millions of bottles of wine over cash. Based on current market pricing i don't know more than a handful of people buying classified growth Bordeaux. This was not the case 15 years ago. Recently i was invited to a home of someone who enjoys wine and he just built a small cellar. While perusing his collection, i spotted several bottles of 1982, 1989 and 1990 Bordeaux. Upon closer inspection, i realized that many of the bottlers were empty, so i asked why he kept them. He referred to them as trophy wines, which he could no longer afford. I think that message resonates to many other collectors that are choosing other wine options. There's immense competition out there and although Bordeaux will always be Bordeaux, some people are painstakingly choosing not to replenish their stash of Bordeaux

[Claudius2]

Folks,
I checked some export data and found that China imports are now 532 hectolitres or 27% of all exports.
However, it represents only 18% of sales by volume.
Yet the USA accounted for 159 h/l yet the VALUE was greater than that of China.
And my regular travels there suggest that most buyers of wine are (from a western perspective) cheapskates as they are assuming anything with BORDEAUX on it is good.
So checking the value, most Bordeaux wine sold in China is basic AOC Bordeaux, Cotes or supermarket brands.

Check this:
https://www.thedrinksbusiness.com/2017/ ... s-in-2016/

For those thinking that Bordeaux wine is expensive, there is a sea of cheap Chateau selling wines that vary from undrinkable to excellent, and these days, I really could not be bothered with trophy wines.
Maybe I am getting old but I am happy to drink mid level wines including St Emilion GCs and lower priced GCC's, Cotes du Castillon, Cru Bourgeois and the cheaper classified Growths.

I am also going to disagree that Burgundy is expensive.
Okay, okay, I am NOT talking about luminaries such as DRC, Leroy, etc, but a decent premier cru white or red Burgundy can be had for reasonable prices.
I am in the process of importing some wine from Remoissenet - one of the very best white producers, and increasingly good reds - and they are reasonably priced.
Now, if you buy Montrachet, Chambertin or even Batard, don't expect a cheap bottle. Yet these are in high demand.
However, the premier Cru Beaunes (Greves, Marconnets, Teurons) are E25 ex cellar (and I got a wholesale discount in any case).
So that is about $US28.

If you will drink wines like Givry, they start at less than ten Euros, or about $US11.
The wine would be more in wine shops of course but I have often been surprised that Burgundy is relatively well price CD.
I was however taken aback recently at the prices of a lot of Australian CD prices (NSW and Victoria).

The Premier Cru whites from Meursault, Chassagne and lower ranked Pulignys (that village is always more) are around E34, or $US38.
The top Pulignys are about E10 more.

If you buy Burgundy in the top vintages such as 2005, 2010 and 2015, the village wines from better producers are quite good buys, and there are still very few non-Burgundy PN's that I could be bothered drinking.

It is also worth noting that buying American wines is, for most other countries, very expensive as the greenback is very strong.
Several local importers here bring in a few top wines but the prices are pretty high.

[Claudius2]

The wines that really seem to have lost the US consumer interest, from my vantage point, would be Australian wines. I remember 10-20 years ago that those had small allocations in my cellar and we'd occasionally have them show up at tastings or what not. People would actually talk about them too, and there would be chatter on wine boards.

Then for a variety of reasons, perhaps the rising Oz dollar, their extraction and aging concerns, and the decline in their ratings champions, they seem to have lost out in the fight for wallet share.

Arv
Wine often tends to be fashionable, and you probably will note that I am not a lover of the very high alcohol, hi extract shiraz wines that were popular in the USA and some European markets particularly in the 90s.
Please don't assume however that they do not age, assuming temp controlled cellaring.
I have got some of these bruisers in storage and even the wines from the late 90's are fine now.
I recently imported some 2001 wines from Australia and they are absolutely singing at 16 years of age.
Yet I won't buy reds anymore with very high alcohol. When they age, you still get the hot alcohol character.

Having said that, my trip to Aust last month revealed that the Victorian and NSW wines were better than ever, with not a single dog tried on the trip.
The makers were criticised for over-blown, woody, 100% malo chardonnay in the 80s and 90s, and the chardonnays now are much more stylish and balanced.

In the 90's, a lot of winemakers started pumping out those massive, hi alcohol hi extract reds simply as the market demanded them.
Some I know even complained that they did not suit their own palate but they found that they got big points from Parker, WS, etc by making big wines.
So obviously cash is king.

In my lifetime, change in the Aussie wine industry has been enormous. There is now more emphasis on freshness and balance and not on power.
But to be fair, the international industry has changed out of sight.

[AlexR]

Stuart,

You wrote, “Based on current market pricing i don't know more than a handful of people buying classified growth Bordeaux”

I do not doubt this for an instant. However, there are different groups of people, in different socio-economic environments and, above all, in different countries that buy despite the price increases. The great growths have not gone into a sinkhole!
It’s only natural: we all tend to gauge reality by what we see around us. But the market for great Bordeaux is worldwide. What may be true one place is not true somewhere else. China is a good case in point.

Claudius,

You wrote “However, it represents only 18% of sales by volume.
Yet the USA accounted for 159 h/l yet the VALUE was greater than that of China”.

I believe that statement to be incorrect.

http://www.capital.fr/economie-politiqu ... 16-1213746

As for Burgundy, the ex cellars prices you quote translate into something rather different at retail...

However, just so you don’t think I delight in contradicting you, let me heartily agree with your statement : « For those thinking that Bordeaux wine is expensive, there is a sea of cheap Chateau selling wines that vary from undrinkable to excellent, and these days, I really could not be bothered with trophy wines.
Maybe I am getting old but I am happy to drink mid level wines including St Emilion GCs and lower priced GCC's, Cotes du Castillon, Cru Bourgeois and the cheaper classified Growths.”

All the best,
Alex R.

[marcs]

These days you can get good, reliable Bordeaux like Cantemerle , Meyney, or Haut Bergey for $20-25 a bottle in an "off" vintage like 2014, a more well known wine like Malescot is still well under $50 a bottle. And today's "off" vintages are better than all but the classic vintages used to be. There is plenty of value in Bordeaux these days.

A decade ago prices looked like they were on an unstoppable rocket ride but now they have leveled off and moderately declined in real terms up and down the price spectrum. In 2007 you would not have predicted that most of the top-tier year 2000 second growths would be under $200/bottle today, but they are.

[Claudius2]

Alex
I'm quoting a source that relates only to 2016 sales and the level of Chinese imports increased last year, after having fallen the previous two years.
I am also not sure that the two articles handle HK imports the same way.

From experience, I know that HK has historically been a solid market for the classed growths, and that was never true for China.
Their interest in the most expensive wines is a recent phenomenon, as is the case with the usual luxury brands from Europe.

The prices of a premier cru Remoissenet, when I include all the taxes and importing costs, are equivalent to a mainstream champagne brand (Moet, Mumm, Verve, etc) at a supermarket here.
Now, Moet produces about 28 MILLION bottles a year, most of it NV labels including a few second labels like Mercier.
I drink quite a bit of it here in balmy Singapore - it is simply too hot most of the time for Bordeaux. Pity actually.

The production of Remoissenet's Beaune Marconnets 2015 which cost me E22.5 (about $US25) is 75 cases.
I have the total production data of all their wines from 2015, which isn't normally published.
Some of their wines amount to one barrique, and even the regional wines such as Givry (from the Mercurey region) is only a few thousand bottles.
Given the price of land in Burgundy and the high costs of production there, I actually feel like I am getting a good deal.

I am drinking at my keyboard a 2004 Moss Wood Cabernet from Margaret River which costs about $A140 retail (or about $US110) and I am wondering if I should not have just bought more Burgundy....
No it is a very nice wine in its own right but I feel a bit underwhelmed.

Anyway having said all that,

[AlexR]

Claudius,

I’ve gone back and looked at the link you posted, but quite honestly, I don’t see how it relates to the statement you posted about Chinese imports of Bordeaux being worth more than American ones.

In the past year, China (mainland and Hong Kong) imported Bordeaux worth over three times that imported by the US. Even taken on its own, mainland China exceeded the figures for America.
As for 2015, it is a similar story.
https://www.mon-viti.com/articles/comme ... ffres-2015

There had previously been a dip in Chinese imports, but this was partly due to the low production of wine in 2013. So the 2014 figures were slightly down, but pretty much in keeping with 2016 and 2015 with regard to other export markets.

You hear all sorts of things about the Chinese market for Bordeaux… A friend of mine who lives here in Bordeaux wrote a book on the subject I think you would enjoy:
https://www.amazon.com/Thirsty-Dragon-C ... B0161LY9T4

All the best,
Alex

[AKR]

Maybe Chinese folks are buying it some kind of store of value, outside their paper monetary system.

It seems like prosperous citizens there are quite desperate to have assets abroad, or in forms that can't be easily seized by authorities.

So, like London real estate, its being priced not for its consumption value, but also including a 'reserve parachute' element that doesn't mean anything to some of us.

But if you were a Saudi princeling or Russian oligarch, that Knightsbridge flat has some value beyond keeping you dry when it rains, and warm when its cold.

Investment grade Bordeaux stored in Singapore, HK, or a Geneva Freeport might offer the same benefits to a Chinese entrepreneur whose wealth is tied up in his home country, and can't easily send his capital abroad, but can buy luxury goods.

[Claudius2]

Alex,
The initial source I cited which showed USA value being ahead of China I can't find any more.
However, there is still a gap between the large purchase volume and average price, which is lower even using the data you linked to.
So I will accept that the value of the Chinese market has exceeded that of everywhere else.
Was surprised that Belgium drinks so much Bordeaux, and again, at a lower than average price point.

Having said that, HK has been a Bordeaux strong point for many years as the locals (those with spare cash that is) often adopted the western love of wine.
However, I could tell you quite a few stories about their crassness when it comes to wine like drinking room temperature Dom Perignon from plastic coffee cups and putting ice in Mouton Rothschild....

I am however wondering when the Chinese are going to start to actually drink the fine wines they have been hoarding.
Wine storage is getting to be big business over here (including mine).

Arv
At the moment, the Chinese and most other Asians with money are keen to extend their asset base beyond asset classes that are denominated in RMB.
And the Chinese govt is now making it much harder for Chinese people to offshore both cash (in any denomination) and other asset classes.
Expect a big reduction in real estate valuations in the next few years.
I can vouch for the fact that many Chinese assets look great on paper yet are unsaleable due to massive over-supply. I know as I own shares in some of them and have friends working inside them.
There is enough real estate space (commercial, residential, mixed development, etc) to last 10 yrs at the current sale rate providing NO NEW BUILDING and that caveat is not happening.
However, real estate prices have not yet corrected in tier 1 and 2 cities despite massive over supply thus it will be a mess when this bubble bursts.