Bordeaux - Trade Structures Flashcards
How many cheateux in Bordeaux and what is the trend?
7000 chateaux and dwindling. Lots of consolidation to acquire economies of scale and make economically viable wine
Average size of estates in Bordeaux region is?
17 hectares but growing
With vintage variation, how does this effect the number of bottles made from year to year
Number of bottles made varies annually
What is the average number of bottles of wine made in the Bordeaux region in a year?
800 million bottles made
What proportion of bottles produced in the Bordeaux region are red?
90% of the wines made are red
What proportion of wine is made by Coperatives in Bordeaux?
25% of wine is made by them
What % of producers give grapes to the Cooperatives in Bordeaux?
40% give grapes to the Cooperatives
What factors drive up the price of the classed growths I Bordeaux?
- denser vine plantings need more materials
- high harvesting costs (expertise and workload and standby crew awaiting optimum weather)
- grape selection (many grapes thrown out)
- new barriques
- longer maturation time
What is the basic cost of producing a bottle of classed growth wine (not incl interest on loan, land taxes etc)?
$9.80 as opposed to 57c for a basic Bordeaux or Eu2.35 for a Me
What are two factor influencing the marketing of Bordeaux wines?
Robert Parkers Scale and Classifications
What is the Place De Bordeaux?
the unique commercial system of Bordeaux
To whom does a grower sell their grapes in Bordeaux if they are producing and bottling their own wines?
to a winery or co operative
Estate grown and vinified wines sell their wines to?
merchant/négociant via a courtier/broker
To whom do Cooperatives sell their wine?
merchants via a broker
What percentage of the sale price that the chateau receives does the broker and the merchant take
2% and 15% respectively
What does the merchant do?
Merchants buy wine and market, sell and distribute to wholesalers, importers and retailers
Why might a winery sell wine to as many as 40 merchants?
To assure their wines are distributed in the maximum number of markets
What is the allocation system?
Merchants are allowed a certain % of the wineries production each year and so different merchants are alloted different amounts
In which country is most of inexpensive Bordeaux sold?
France
Why is inexpensive Bordeaux in decline?
- Drop in French wine consumption
- Increased competition from elsewhere (eg. Chile and Australia)
Name an important wine cooperative
Castel
What is the En Primeur System?
wine is sold as futures 12-18 months before bottles are released. En primeur prices are lower than after bottles are released
What quality of wines sell through the En Premeur system?
Cru Classe growths and other high end wines
When are the wines sold in the En Primeur system?
The spring after harvest
When and why was the system developed?
After WW2, producers needed money in advance to mitigate financial uncertainty.
Became very popular worldwide after the outstanding 1982 vintage
Name an example of a chateau that has opted out and why
2012- Ch. Latour opted out of the system because
a) releasing optimally stored wine of impeccable provenance when ready to drink would show their wines at their best
b) market differential between en primeur and secondary pricing meant they were losing a significant amount of money per bottle in the en primeur system
What is a hybrid approach to En Primeur and who is exhibiting it?
Ch. Palmer releases a % of its wines en primeur and a tranche is released in September 10 years after the vintage date
What happens in April and then May/June in the en primeur calendar?
- April over 5000 journalists an tradespeople are invited to Bordeaux for barrel tastings.
- May/June - prices are fixed by the producers influenced by feedback from the April tastings
What is the first tranche and who sells it to retailers, distributers etc?
The small number of initial wines sold via négociants to the market to gauge what price the market will bear.
Subsequent tranches may change price depending on the results of the first tranche sales
Give a reason why more chateau have not opted out
Bottle ageing wine until ready to drink by the producers needs space and temperature/humidity controls etc. It costs money
Having participated in the en primeur system, why would retailers and négociant be left with unsold wine?
- pricing was too high
- average or poor vintage after a run of successful ones
How long does one wait for delivery of wine to a retailer’s storage after buying en primeur?
12-18 months after buying en primeur
What caused a bubble in en primeur pricing in the 2000s?
Increased interest from the Chinese drove prices up year on year (even in poor vintages like 2011). When the Chinese lost interest in the wine, Bordeaux prices began to drop meaning many who had bought En Primeur were left with bottles worth less than they paid for them.
What is the critics influence on Bordeaux en primeur pricing?
Great! In the Spring following harvest they taste barrel samples of wine which is an approximation of what it would taste like after the blend and the wine is immature.
What are the advantages of the en primeur system to the customer?
-potential to secure rare wine for a discount (theoretically)
What are the disadvantages of the en primeur system to the customer?
- intermediaries may go out of business before the wine arrives and one may lose the investment
- economic conditions may mean wine price falls before wine arrives
- wines bought on opinions of professionals who don’t actually taste the final wine so it mightn’t be representative
What are the advantages of the en primeur system to the producer?
-early return on investment allowing them to reinvest in the next vintage
What are the disadvantages of the en primeur system to the producer?
- potential for losses in the differential between en primeur and secondary pricing
- mismanagement by négociant driving themselves out of business might reflect badly on the chateau
What is the Cité de Vin?
A large wine culture museum in Bordeaux
