France - Bordeaux

Question 1

How many châteaux are there in Bordeaux? What trend is this figure going in and why?

Answer 1

7000.
That number is shrinking as small properties are taken over by large neighbours to create commercially viable volumes of wine.

Question 2

What can a château be?

Answer 2

A palatial country mansion or dilapidated farmhouse.

Question 3

What is the average size of the estates, and what direction has this been going in?

Answer 3

19ha and rising.

Question 4

What is the average annual production from the region?

Answer 4

Over 800 million bottles, although fluctuates.

Question 5

How much of production are cooperatives responsible for?

Answer 5

25% of production from 40% of grape growers.

Question 6

What is the most common level of price in Bordeaux?

Answer 6

Inexpensive to mid, reflected in the areas of vineyards planted in the appellations.

Question 7

What are the percentages planted by types of wine of:
-Bordeaux
-Médoc and Graves
-Côtes de Bordeaux
-St-Émilion, Pomerol and Fronsac
-Dry whites
-Rosé
-Sweet whites
-Crémant

Answer 7

-Bordeaux, 44%
-Médoc and Graves, 18%
-Côtes de Bordeaux, 12%
-St-Émilion, Pomerol and Fronsac, 11%
-Dry whites, 9%
-Rosé, 4%
-Sweet whites, 1%
-Crémant, 1%

Question 8

What are the production costs for Bordeaux AOC, a Médoc estate and a classed growth? What do these figures not include.

Answer 8

€0.57, €2.35 and €16 per bottle.
They do not include interest on bank loans or land costs, which increase the cost considerably.

Question 9

What are the main additional production costs for a classed growth?

Answer 9

Increased vine density, harvest costs, hugely higher viticultural costs, lower yields, rigorous grape selection and barrel ageing (higher proprtion of new and longer duration within)

Question 10

What other system has proven a vital tool for seeling wine? Where has this become prevalent, and what has it achieved?

Answer 10

The 100- point rating system made famous by Robert Parker and adopted by many critics.
Initially in the USA, now globally as an easy to understand way of communicating with potential buyers.

Question 11

What is the total value of Bordeaux wine sales in 2018? How is this divided between exports and domestic?

Answer 11

More than €4 billion, more or less evenly split.

Question 12

What is the division of sales by volume between domestic and exports?

Answer 12

56% domestic, 44% exports (although 52% by value).

Question 13

What percentage of domestic sales was sold in supermarkets? And what was the average price of this?

Answer 13

48%, €5.80 in 2018.

Question 14

Where are the top export markets by value?

Answer 14

Hong Kong, China, USA and UK.

Question 15

What is Bordeaux’s unique commercial system? How does it operate?

Answer 15

La place de Bordeaux.
The producers (estates, co-operatives and large winery businesses) sell their wines to a merchant (négociant, collectively known as la négoce), who in turn sell it on to wholesalers and retailers. The relationship between these two businesses is handled by a broker, or courtier.
Each party charges a percentage for their services, the broker/courtier takes 2%, the Merchant/Negociant 15%.
It is the Merchant that will sell and ship the wine to distributors throughout the world.

Question 16

What is the rarest form of sales for Chateaux in Bordeaux?

Answer 16

Direct sales.

Question 17

How many countries is wine from Bordeaux distributed to? How to château ensure they are in the key markets?

Answer 17

170.
They will sell to a number of négociants, often as many as 40.

Question 18

What determines the number of cases each négociant can purchase?

Answer 18

Determined by an allocation system, eaxh négociant is allotted a percentage of production each vintage.

Question 19

Why has the great majority of wine (Bordeaux and Bordeaux Superieur) struggled to raise it’s prices in recent years? What price is it stuck at, and where is it most often made and sold?

Answer 19

These wines have lower demand in France and have huge competition from wines from other countries such as Chile and Argentina on export markets.
Its struggled to rise above €1 per litre in bulk.
Most often made in co-operatives and by small producers or the grapes are sold directly to large wine companies (e.g. Castel).
Most often sold in French supermarkets.

Question 20

How are classed growths and other high quality wines usually sold? How does this system work?

Answer 20

The en primeur system.
They are sold as futures, i.e. a paper transaction where the wine is sold a year to 18 months before bottling.
The wines are sold the spring after harvest, while wines are still in barrel.

Question 21

When was the en primeur system started, but when did it gain popularity?

Answer 21

The period after the second world war when estates were struggling financially.
It wasn’t until the late 1970’s that consumers began to take an interest, and it was the great 1982 vintage that really kicked it off.

Question 22

What is the first step on the en primeur campaign, from the tasting in April to the final allocation of en primeur wines? How do prices change within this period?

Answer 22

For this tasting barrel samples are provided by estates to be tasted by wine buyers and journalists. 5-6000 wine professionals taste and assess the wine.
The châteaux then release their prices throughout May and June.
After the tasting, the châteaux -usually through negociants- put a small proportion of wine up for sale, known as the “first tranche” which is intended to gauge what the market is prepared to pay.
For the first tranche the price is mostly set based on the châteaux’s reputation and critics scores, then the following tranches will have the price adjusted depending on how the first one sells, although usually the price goes up.
During this time trade buyers make decisions about the wines they’ll buy and in what quantities and journalists publish their reviews and scores to guide consumers.
The final customer of en primeur wine can put in orders through their fine wine merchants.

Question 23

How are the rarest and most sought after wines sold? How do buyers maintain this?

Answer 23

On allocation.
Because of this, négociants and trade buyers may very well have to buy wines in a less good vintage to maintain their allocation in the top vintages.

Question 24

What happens to wines that are in less demand?

Answer 24

There’s a chance they remain on the books of a négociant for some years before being sold, which might happen in a year when there’s little wine to sell or because the prices of the current vintage are too high.

Question 25

What does the success of the en primeur campaign depend on? (3) How?

Answer 25

1) The quality of the wines (top vintages attract highest demand)

2) The price being asked: if prices are set too high the estates, négociants and retailers will end up with stocks of wine that may have to be stored for many years before they can be sold, compromising profitability.

3) The state of the market: if an averagely good vintage follows a series of great vintages, the estate may need to reduce their prices to attract buyers. If reluctant to do so this can lead to unsold wine.

Question 26

What is included in the en primeur price?

Answer 26

Ex-cellar cost (it does not include any taxes that will be due in the final buyer’s home market) and includes the bottled wine being delivered to the storage of a retailer a year later.

Question 27

How are wines stored for en primeur? What options does the consumer have for after storage?

Answer 27

Held in a secure storage unit at the correct temperature and humidity for long-term storage of fine wine.
The final buyer can then decide to have the wine delivered, stored until it’s ready to drink (which can be up to a decade) or to sell on the wine, with the idea that prices will rise as it matures and no longer becomes readily available.

Question 28

Which wines account for the largest proportion of wine traded on the secondary market?

Answer 28

Bordeaux, especially First Growths and other top wines.

Question 29

What did 2011 see in that has raised questions over whether the en primeur system still works?

Answer 29

In the boom period of the 2000s, largely due to increased demand from China, en primeur prices rose considerably. As a result châteaux became accustomes to offering their wines at even higher prices even in the poor 2011 vintage, leading to prices starting to fall and some of those investing in en primeur losing money.

Question 30

What is a key criticism for how the prices are determined on en primeur?

Answer 30

Key critics themselves express concern at how much their reviews influence price, especially given that the wines they taste are not the final wine, only a representation of what the producer expects it to taste like after blending.

Question 31

In 2012, which châteaux announced they would no longer sell their wines en primeur? Did others follow suit?

Answer 31

Latour.
Several chateaux have reduced the amount of wine they sell en primeur.

Question 32

How does the size/prestige of a châteaux affect how they sell en primeur?

Answer 32

The most prestigious can afford to keep their wine and sell it only when bottles, whereas the smaller or less prestigious châteaux cannot and need the money generated by en primeur.

Question 33

What are advantages for the estate of the en primeur system?

Answer 33

1) Have the ability to test the market by releasing early lower-priced tranches.
2) Early payment and return on investment, allowimg estates to finance the next vintage.

Question 34

What are the disadvantages for the estate of the en primeur system?

Answer 34

1) Potentially selling at a lower price than might be obtained for the bottled wine.
2) Potential for financial mismanagement or losses by négociants (that could lead them to go put of business) and could adversely affect an estates reputation.

Question 35

What are the advantages for the final consumer of the en primeur system?

Answer 35

1) Ability to secure sought-after wines at theoretically the lowest prices.
2) Option to keep or trade sought after wines.

Question 36

What are the disadvantages for the final consumer of the en primeur system?

Answer 36

1) Wines are bought on the basis of the opinions of trade buyers and journalists tasting unfinished barrel samples that may not truly reflect the final wine.
2) The intermediaries (négociants/shippers) may go out of business before the wine arrives.
3) Prices may fall before the wine arrives due to economic conditions or the quality of following vintages.

Question 37

How has wine tourism been promoted within Bordeaux? How has this changed recently?

Answer 37

It historically has not been a major way Bordeaux has promoted itself.
The city itself now has become an important tourist destination as it includes La Cité du Vin, Bordeaux’s wine visitor centre.