Bordeaux Pricing Has US Retailers Reassessing The BusinessApril 29, 2011
As 2009 futures prices for classified Bordeaux zoom into the stratosphere and first growths command over $1,000 a bottle, even elite U.S. merchants are reassessing the business. And those staying in the game are stocking far less inventory than a decade ago.
“I spent years selling Bordeaux. Now their wines are priced for a market like China, but not mine,” says David Breitstein, owner of the single-location Duke of Bourbon in Canoga Park, California. “The last vintage my customers could really afford was the 2000. But we can’t sell Bordeaux at $1,000 a bottle today.”
At Kahn’s Fine Wines & Spirits in Indianapolis, Bordeaux commanded half of all premium wine sales in 1990. Today its share of Kahn’s premium business is 20% and shrinking. Owner Jim Arnold, who invested $1 million in 2009 Bordeaux futures, is having trouble moving the wine. “I’ve sold less than half of my 2009 Bordeaux futures,” Arnold says. He continues offering futures only because so many retailers in his market have dropped the business. “I’ve got less competition in Bordeaux than ever before, but I’m still upside down in the category,” he says.
At Club Liquors in Menasha, Wisconsin, owner Doris Szymanski routinely sold classified Bordeaux through the 1980s and 1990s. She sold her final first-growth, 2003 Mouton Rothschild, recently for $300 a bottle and has no plans to restock again. “Bordeaux has gotten so crazy that I can’t even find wholesalers in Wisconsin who are offering the best labels anymore,” Szymanski says. “It’s a game for big timers now—not stores like mine.”
In 2010 the value of Bordeaux imported into the U.S. fell to 99 million euros (about $147m), down 60%. China has taken up the slack, with exports to China and Hong Kong more than doubling last year to exceed 425 million euros ($630m). Last year, Hong Kong became the worldwide center of wine auctions, which are dominated by Bordeaux sales, outgrossing London and New York combined.
Johnson Ho, owner of Pantheon Wine Shoppe in suburban Chicago, is now advertising 2009 Latour and Margaux at $1,200 a bottle each. Pantheon is in Chicago’s North Shore, one of the country’s wealthiest enclaves, but demand has withered. “I buy a fraction of the Bordeaux I once got,” Ho admits. “I’ve gotten more than 200 inquiries by phone from Hong Kong about the 2009 vintage, though I decline to take those calls.”
At Minneapolis retailer Haskell’s Inc., owner John Farrell Jr. continued to invest in Bordeaux through the 1990s, even as prices escalated. “I didn’t think $200 and more a bottle was so bad, but some time after that I became unnerved,” Farrell says. Currently Farrell stocks the best Bordeaux only in limited quantities.
Many merchants remain committed to the category. John Kapon, the CEO of Acker Merrall & Condit in New York, notes that Bordeaux prices experienced a mild retreat in 2008 and 2009 during the worst of the recession. But they’ve been in full flight again since April 2009 “and we haven’t looked back,” he says. His first growth prices at auction (Acker is both a retailer and auction house) soared 42% last year overall. “I’m still very bullish on Bordeaux,” says Kapon. But he has curtailed orders. “Where we once might take 50 cases of something, today we’ll take perhaps 25,” he says. “We don’t sell the wines as easily as we did 20 years ago.”
Ron Junge, president and owner of Brown Derby Stores in Springfield, Mo., which has 19 locations, doesn’t sell as much Bordeaux as he once did. Junge got one-fourth of all his wine sales in Bordeaux in the 1980s. Today that share has been reduced to less than 5%. He adds that young shoppers rarely ask about Bordeaux anymore. “For them, buying classified Bordeaux would be like reaching for the stars,” he says.
|Bordeaux Wine – Leading Export Markets By Volume – 2008-2010|
|(thousands of nine-liter cases)||Percent Change2|
|Total Top Seven||13,779||11,976||13,964||-13%||17%|
|Bordeaux Wine – Leading Export Markets By Value – 2008-2010 (millions of Euros)||Percent Change2|
|Total Top Seven||1,153||890||1,065||-23%||20%|
1 addition of columns may not agree due to rounding.