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Top Retailers Weigh In On 2012 Bordeaux Futures Campaign

June 21, 2013

Despite a 25%-35% price reduction among the most sought-after classified growths and a steady stream of pricing announcements in April and May, the 2012 Bordeaux futures campaign continues to defy easy description. Shanken News Daily recently checked in with five top U.S. retailers to get their views on the state of the campaign.

While Dennis Overstreet of the Wine Merchant Beverly Hills said his limited 2012 offering of 25 estates “received the strongest purchasing response in the last three years,” other retailers were less sanguine.

“The campaign has been soft—even for a less-than-exciting vintage,” said Chris Adams of Sherry-Lehmann in New York City. Ed Sands of Washington D.C.-based Calvert Woodley took it a step further, saying his sales were “virtually non-existent.”

“We haven’t taken a significant position on 2012,” said Gary Fisch of Gary’s Wine & Marketplace in New Jersey. “The lack of demand suggests that many of these wines will continue to be available, making it unnecessary to commit resources at this time.”

Other retailers are seeing some signs of progress. “2012 is better than 2011,” said Michael Binstein of the 29-unit Binny’s Beverage Depot in Illinois. “What I like about this campaign is that it has started to restore some sanity in terms of sensible pricing.”

We also asked each retailer what advice they would offer to Bordeaux producers about futures strategies. Their responses are below.

Binstein: “Producers should be thinking about the next 12 years and not just the next 12 months. This should be about building a long-term sustainable business, and not about hitting the jackpot one year and then jacking up prices beyond justification the next. Anybody can have a good year, but not everybody can have a good decade.”

Adams: “Over the past two releases (2011 and 2012) we’ve heard that some chateaux are using the lowest price for one of their wines currently in the market as a basis for their en primeur pricing. For example, they might price 2012 at 15% below 2004 and then claim that the 2012 is the lowest priced wine available in the market. I think that’s a bad strategy, because the 2012 isn’t in the market. It’s in a barrel at the property. Meanwhile, the 2004 has been purchased and held by someone else—a negociant, wholesaler, retailer or collector—who has incurred the cost of holding it. For a property to step in and essentially take away any profit earned on this investment is another way in which the system is becoming broken.”

Fisch: “Pre-2000, committing capital to futures two years in advance of delivery made economic sense for the retailer. Pricing, and to a lesser extent availability, were highly advantageous if you bought early. The retailer assumed much of the risk of currency fluctuation and economic instability in exchange for better pricing. Now, en primeur pricing isn’t significantly lower than the pricing offered two years later on delivery. Given the value of money, it’s questionable whether buying early saves any money. If buyers are still expected to assume the economic risk but are given no financial incentive for doing so, buying en primeur will cease to be a viable business model.”

Sands: “Pricing should be consistent with quality, and producers must be more aware of the entire wine market. They have a great deal of competition today.”

Overstreet: “Producers need to do more personal visits with tastings and dinners to create enthusiasm, embellish the history and romance, and build allegiances.”

For the latest updates on prices, see Wine Spectator’s Bordeaux 2012 futures Pricing Chart.

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