This is a longer version of an article also published in the Financial Times.
The wine world is currently every bit as riddled with uncertainty as any other.
Perhaps the greatest certainty might be said to be that vines will bring forth a crop each autumn and the Bordelais will do their best to sell it the following spring. But even the Bordeaux 2008 en primeur campaign just about to kick off seems desperately uncertain. It has become traditional each February or so for the British fine wine traders to issue a warning to the Bordeaux wine trade that they must reduce their prices by x% to have any chance of selling their wine – a warning that the Bordelais perennially ignore.
This year, however, the biggest traders in fine wine Farr Vintners have delivered the ultimate snub. For the first time ever in the company’s current form, they are not even going to Bordeaux to taste the embryonic 2008s, so little appetite do they believe there is for futures in unbottled bordeaux that costs more than most mature vintages.
For the record, I shall go to Bordeaux to taste the 2008s, because I believe that there will be a thirst for information about the wines. But this year I am rinsing my teeth in tannin as a purely academic exercise for I am deeply sceptical about the market for these wines. Those who watched the weather maps last summer, or the recent BBC4 television documentary about Château Margaux filmed during the 2008 growing season, will know that for the third year in a row, the weather in Bordeaux was less than auspicious. And then there is the small matter of global economic malaise. On the face of it, it looks as though the number of potential buyers of 2008 bordeaux is a small fraction of what it has been in previous years, and the campaign could be a very damp squib indeed.
On the other hand, the overheated market for the 2000s and 2005s provided some investors with such profits that there has been a rash of specialist funds based on wine investment opportunities. Fine wine prices, especially those of the 2005 bordeaux, plummeted along with the stock market in the last third of last year, and now there is real uncertainty as to whether the market has bottomed out or not. The fine wine index published monthly by Liv-ex, an electronic fine wine trading platform, showed slight increases in January and February, bringing the index back to the level of May 2007 (about 50% higher than a year earlier when Bordeaux 2005s were offered en primeur). But, as many a trader will point out, Liv-ex’s trades so far account for only a small fraction of all trading activity. Some suspect that there are real deals for cash buyers. Is this the time to buy fine wine (in bottle)? The market indicators offer frustratingly little certainty.
More modest buyers who have simply bought a few cases for their own use and have stored them with the merchant who sold them also feel uncertain. I know from our members' forum that, in the current economic climate, some of them are already concerned about what would happen to their wine if the wine merchant they bought through were to fail. And, as if to add to the ferment of ownership uncertainty, one recent casualty was the bonded warehouse Anglo Overseas, which stored wine for the trade – including Oddbins, apparently resulting in another episode of empty shelves in this UK retailer’s stores. The Bunch group of six wine merchants – Adnams, Berry Bros, Corney &Barrow, Lay & Wheeler, Tanners and Yapp – long ago evolved a code of practice designed to offer their customers maximum protection, mainly by insisting, as any good merchant should, that all stocks of wine held in storage for customers are in some way uniquely identified with their owner.
But, as James Tanner of Tanners, answering questions about title and ownership on behalf of The Bunch on our forum, pointed out recently, ‘The main area of risk is the period between the customer paying and the merchant paying the négociant or producer. This period is longer for Bordeaux, so you are safer when buying Burgundy and Rhône wines, where lead times are shorter! The way to protect yourself during this period is to pay by credit card, so at least you can go for the credit card company in the event of a collapse.’
Berry Bros, another star of the recent BBC4 television series about wine, took over Armit’s place as a member of The Bunch when Armit decided to leave. The fact that in the last six months, two of the original members of this group of some of the most respected wine merchants in Britain, Armit and Lay & Wheeler, have been sold to bigger but more downmarket companies, the Dutch wholesale group Baarsma and the British chain of Majestic wine warehouses respectively, must add to general uncertainty in the UK wine market – even though neither of these was a distress sale. Last week Paragon Vintners, UK importer of Trimbach, Quinta do Noval and Ch d’Esclans, the world’s most glamorous rosé, announced it would cease trading.
One would normally look to nature to offer some degree of certainty in contrast to the quicksands of commercial activity, but even the effects of the seasons seem to be less and less predictable, resulting in the increasing incidence of drought, bushfires, floods, frost and dramatic storms. These in turn have led to wine gluts and shortages, in Australia particularly, with concomitant effects on prices.
These have been exacerbated by the current giddy gavotte of the world’s currencies, with particularly gloomy and inflationary effects on the price of wine in the UK. Britons are bracing themselves for the full effects on the shelves of the slide of the pound, and it is hardly surprising that the wine trade is lobbying hard against any increase in UK excise duty. Already, pathetically few pence go to pay for the wine in any bottle retailing at £4.99.
And then there is the general uncertainty now for any UK supermarket customer as to whether and when individual wines will be discounted. The pervasive discounting culture has lulled them into being afraid to buy any full price wine for fear of seeing it on promotion the following week.
The fine wine consumer’s worries now include not just fear of cork taint (and angst over the social acceptability of screwcaps) but fear of another scourge, the random oxidation that seems to have been affecting a sizeable proportion of white wines, especially but not exclusively white burgundies. Theories as to its origins abound. Solutions do not.
Perhaps, in wine anyway, it is not that we are more uncertain, just much better informed than we used to be.
CERTAIN VALUE
In uncertain times, how about Ch Chasse Spleen, a wine whose very name means ‘dispel melancholy’ and whose wines can, in the vintages specified, offer some of the best value in red bordeaux?
2005 £23.80 Four Walls Wine Co, Chilgrove, Sussex
2004 £21.99 Christopher Piper, Devon
2003 £22 WoodWinters Wines & Whiskies, Edinburgh and Bridge of Allan
2000 £320.85 a dozen Bibendum Wine, London NW1
Prices current at the time of writing. More prices and stockists around the world from www.winesearcher.com