Wine traders expect strong demand for Bordeaux futures
Monday 11 April 2011
Wine merchants warned Friday demand could be high for another excellent Bordeaux vintage after buyers from around the world descended on southwest France for the annual market.
China and Hong Kong have become the biggest customers for the world renowned Bordeaux wines but some traders are warning against neglecting the more traditional markets in Europe and the United States.
Most expect sales and prices to match last year's or to increase through the three month sales period, leading up to June's annual Vinexpo sales fair.
The sales drive kicked off in buoyant mood.
"I am mostly optimistic and confident about this campaign," said Bordeaux merchant Philippe Tapie, noting the exceptional quality of the vintage due to the weather and "colossal investments" to improve technical quality.
But it is one thing to have a great vintage and another to sell it. This past week, barrel tastings tested interest in the vintage before prices are set and the wines are sold as commodities futures - or "en primeur."
"The number of people who attended was down slightly compared to last year but with more real professionals and a greater number of nationalities," said Philippe Dambrine, director of Chateau Cantemerle.
Overall there were 19,000 visits to the seven chateaux hosting barrel tastings, with visitors from 68 countries, according to Jean-Marc Guiraud, director of the trade body the Union des Grands Crus de Bordeaux.
"If you consider the fact that more than 80 percent of our business is with fewer than 20 countries, that figure shows a high level of interest in all the markets," Guiraud wrote in an email to AFP.
"The main distributors from these small markets were there and this is a very encouraging point, as many people think that China now absorbs a growing part of our production."
While China and Hong Kong have quickly become Bordeaux's biggest export market, the question is whether they will put cash into a product that will not actually arrive in their warehouses for another two years?
"I definitely think so," said Philippe Laqueche, general manager of Yvon Mau, one of Bordeaux's largest wine merchants.
"The key players in Hong Kong and Mainland China are confident of the quality and the future ratings and they want to follow what they did in '09."
But Chinese importers new to the trade may find it hard to get allocated the most coveted brands of such an exceptional vintage.
"We get allocations because of our longstanding relationships," said Bandy Choi, an importer-retailer trading in Macau, Hong Kong and China. "The new importers won't get allocations - just a case or two to say 'hello'."
Bordeaux tends to prefer long-term market builders.
"Unless they have a clear and significant project, it will be difficult for them to get an allocation," confirmed Laqueche.
Chinese demand is expected to remain limited to established labels.
"We expect Asia to still only want the top 10 or 20 names and can't see that changing," said Gary Boom, managing director of Bordeaux Index, which has offices in Hong Kong and London.
"They won't buy unknown brands," confirmed Hong Kong trader Dennis Lok. "These will be sold to mature markets."
Mature markets in Europe and America have become a concern for chateaux as they see their wine flow to China, leaving shelf space open to rivals.
"The attraction of the Asian and Chinese markets is a terrific engine, unique. Nevertheless, one must not neglect and get cut off from traditional and historical markets," said Bordeaux merchant Tapie.
The US market has not yet fully recovered but currency fluctuations mean the price will increase for American buyers.
"Our currency has slipped - so even flat pricing will mean an increase in the USA," noted Chris Adams, CEO of Manhattan retailer Sherry Lehmann.
"Then we have avid worldwide interest, which I understand may translate to Asian buying in this campaign.
Bordeaux loyalists also have reason to beware demand from new investors.
Choi, who provides wine investment training for Bank of China employees and their wealthy private banking customers, says the Chinese are quickly grasping the profits to be made in wine speculation.
"But chateau owners don't want to hear about wine investment and speculators because it makes the prices crazy," said Choi.
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