Thursday, 11 March 2010

Bordeaux 2009 (Part 2) - Prices

Following on from my previous Bordeaux 2009 post, I want to look at the potential pricing of the 2009 Bordeaux vintage.

Firstly, let's play the game of the Bordelais this time and ignore all the people that say you must wait until you've tried the wine before you judge it (a call that generally applies to journalists and merchants, not necessarily to the end consumer)...

OK, not being one to make sweeping generalisations, I think Robert Parker will like it - if not love it. I am slightly miffed by many people attacking his palate for being predictable because he does champion some beautiful wines (ref. 2001 Yquem), but I do think this vintage ticks all his boxes.

It was late, very ripe; has high alcohol levels, and high tannins [see below]. Again, one mustn't generalise but Parker will definitely like it.

So what of the prices?

Well, the first option is to price them low, to make them a bargain in order to stimulate more interest in Bordeaux. But how low? The problem is that if you price it at 2006, 2007 or even 2008 levels, you risk making all the customers of those vintages very angry indeed. You're essentially saying they paid too much for their wines (which they probably did, but that's another debate) and you're also highlighting the fact that in another superb vintage (2005) you took everyone for all the money they had. So no, I don't think it will be priced low.

On the other hand, the price tag could be set higher than 2005. Assuming that everyone reckons this is the vintage of the decade, that makes sense: it's the best wine of the last 10 years, so it should be the most expensive of the lot. But I don't think this will happen either.

Firstly, no matter how much Bordeaux everyone says they've sold in the past few years, I simply don't believe it. Secondly, with a poor economy, I think this would be a silly move, not least for the message it sends the rest of the world.

Another, albeit slightly tagential, part of the problem here is that, with all the hyperbole heaped on 2005, if 2009 is considered even better, where do the parameters of greatness fall? If 2009 is greater than the great 2005, could 2010 be greater than 2009? Of course it could.

My reckoning is that the Bordelais will market the 2009 vintage at around the same price as 2005 and incite the notion that this is a great, bargain vintage. This seems to be the only thing they can really do while (a) not devaluing any previous wines and (b) appearing to offer a good deal.

And all it will prove is that, for all those concerned with buying and drinking the stuff, 2001 and 2004 were the best Bordeaux vintages of the last decade...

  • You can download Bill Blatch's highly-detailed Bordeaux 2009 vintage report here - simply right-click on the link and left-click 'save target as' or 'save link as' and you can read it yourself! And please take the time to check out Bill Blatch - he is the Bordeaux insider's insider....

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  • Monday, 22 February 2010

    Reclaiming wine's middle ground

    I have a friend whose uncle is a pig-farmer in Normandy. The animals live in a big warehouse, where they are penned-in; they walk on grills so the excrement falls through and is easier to clean; and they never see the daylight, or a field.

    Most people who visit ask him why he raises the pigs in such a way - does he not feel sad, as a farmer, to see animals like that?

    His response: 'Of course I feel bad. I would love my pigs to be able to go out in the open and have a better life. But as long as you insist on paying €2 for your bacon, I have no choice.'

    But of course we have a choice, don't we? We don't have to insist on buying supermarket own-brand streaky bacon, we could get a few slices of certified Danish bacon if we felt a little guilty, or take it up to an organic bacon produced by the Prince of Wales if, maybe, friends were coming over for breakfast. We have a choice, don't we?

    Or do we? If, on the back of the Red Bicyclette scandal, where 18 million bottles of Syrah and Merlot were labelled as Pinot Noir and nobody noticed the difference, we can extrapolate that the majority of consumers don't care what their wine is as long is it tastes good, then the only choices they are going to make will be to chose the cheapest wine on offer*.

    And the only people that can provide large volumes at low prices are very very big companies via supermarkets - it's economies of scale (and will lead to much bigger wine corporations - in itself reducing your choice). Not only will this put the screw on small producers, it will likely cause a drop in prices in the mid-range wines because there will be too much of a price gap between the supermarket wine and the €10+ bottle of wine. Either that or they'll be swallowed by the giants, or fall through the grill in the floor.

    Let's also look at the trend at the other end: top wines are becoming a luxury market, out of the reach of most consumers and more readily associated with celebrities (Champagne) and investors (Bordeaux) - more so than in the past. I've written enough about this in previous articles so I won't force the point.

    So what of the middle ground? With French vineyards told to embrace the Jacob's Creek model, while Australia tries to tackle 'oversupply and low commodity prices', and we all go looking for the 'broad appeal' of wine - all while European MPs guzzle endless Champagne on expenses, perhaps we should wonder if the pull at both ends of the wine world will be enough for the bottom to drop out of our beloved middle ground.

    Sometimes, the massive choice of wines, all at different prices, isn't all it's cracked up to be.

    * Incidentally, it's interesting to understand how supermarkets view the concept of choice. I once (a long time ago) complained to a Waitrose manager that the supermarket was selling green beans from Zimbabwe. 'But the consumer can still chose, can't they?' he said. 'What choice do they have?' I replied. 'They don't have to buy it.'

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    Thursday, 28 January 2010

    Why wine prices must be capped at both ends

    To begin with, I was appalled by this interview. Firstly, it tells a readership of students that a great way to do business is to make the world's priciest Champagne (it costs nearly £1,000 a bottle) and flog it with the help of a superstar. Secondly, don't bother getting an expert to taste it guys (Anthony Rose writes for the Indie, at the very least he could have stepped in) or ask if its value-for-money, because that's not interesting is it? Why let the quality of the product get in the way when you can slap a whopping price tag on it and find a celebrity as an ambassador? I've written similar here.

    And then a wave of apathy slopped over the bows of HMS Indignant. I admit I have a lot of sympathy with the make-money-from-the-dumb-rich school of thought. If someone somewhere thinks that a Mariah Carey endorsement and a price tag the size of a charity cheque makes a good bottle of bubbly, fair enough. Go for it. Empty your wallet. You certainly won't hear much protest about the pricing coming from Champagne because, let's be honest, our reply is likely to contain the words 'pot', 'kettle' and 'black'. Remember who's Moet & Chandon's 'brand ambassador'?

    But then I steadied the tiller, rang the ship's bell, and set a different course.

    Now, imagine you're that gifted of breeds: a winemaker. You've made your wine, it's all labelled and ready to go but you can't decide on the price. Filled with a sense of socialist values, you want to make great wine accessible to the masses, so you consider pricing it at about £6 a bottle. But you're also proud of your wine and it becomes clear that at £6 a bottle, no one is going to take you seriously. Sure, someone might give it the 'good value' or 'good QPR' moniker, but you'll never make a name for yourself. You'll never achieve greatness or cult status, even if your production is tiny.

    So you price it at £25 a bottle and people will start to take note.

    Now I'm prepared to accept that there are some holes in that scenario: it's always possible that a wine critic might see you as a £6 genius, or that your £25 bottle will be forced down by the market. But, be honest, it holds true.

    A perceptive comment on my last blog inferred that there are two different markets - the lower echelon (Jacob's Creek, Yellow Tail, etc) and the more serious wines at a more serious price for more serious people. I might make a case for the middle ground (a third way, perhaps) in wine but I'll let it stand.

    Both come in for attack. One is the embodiment of wealth, colossal fortunes and wine collection. This is lambasted by many, especially Robert Parker, because wines are not meant to be collected, they're meant to be drunk.

    The other is the exceptionally low-priced wines found in supermarkets. So low that they are the focus of attacks by health groups saying this increases binge drinking. Personally, I never got wasted on cheap wine, but that's another blog.

    So my conclusion is thus: wine prices should be capped at both ends. Make a bottle of wine a minimum £10 ($15) spend and make the highest £100 a bottle (perhaps with allowances for experimentation so that if the winemaker can prove he spent, say, £150 per bottle on overheads, he is allowed a decent, but not excessive, profit margin).

    Not only do you start to tackle the problem of wine abuse, you tackle the problem of price abuse.

    And once you take the motivation of money out of the winemaking equation and out of the satisfaction equation, everyone can get on and enjoy wine for what it is, rather than be concerned about who endorsed it or how many thousands of pounds, dollars or yen it cost.

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    Thursday, 20 August 2009

    Cheap wine for everyone

    You're all cynics. Oscar Wilde said cynics 'know the price of everything and the value of nothing'. A lot of wine collectors seem to fall into this category.

    So it's a little bit refreshing when Fred Franzia says there's no wine worth $50.

    He's right really, isn't he? Even La Revue de Vin de France estimated that the actual cost of production of a bottle of Château Latour was about €24. So where does all this 'added value' come from?

    I don't mind people adding a bit of profit to their wines - that's fine, and normal. And you can't stop people adding value at auctions, and so on. But if a cap was put on prices at the start, estates would have to find out different ways to deal with the demand - reward loyalty, or visitors.

    Because aside from the prestige of having a £1,000 price tag, the only other aspect influencing price is demand.

    So lets go skiing. Back in the '90s when skiing was all the rage, top resorts found the influx was too much to handle. They needed to reduce numbers. What was the best way? Increase the price of the lift pass. A lot.

    And it worked. Less people came because they were priced out, but people with more money came. Win-win right? Well what about all those kids that could be enjoying the experience but couldn't because families couldn't afford to go? They'll never learn to love skiing because they're a drain on resources. And I'll tell you another thing for free: the skiing experience is not enhanced by having a greater propensity of rich people on the slopes. Not one bit.

    And if good wine (and I'll admit Two Buck Chuck isn't my idea of good wine) is such a wonderful, cultural product that is best enjoyed in the company of those we love, why is this enjoyment only for the rich?

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    Wednesday, 29 July 2009

    Spare a thought for the CRAV

    Of late, we have been quick to denounce any of form violent action. Although I agree with Orwell that dictatorships (and democracies for that matter) can stand peaceful protest until the cows come home, people can get hurt. Although in most cases nowadays (ref. G8), it’s the police that do the hurting.

    So we are quick to condemn the CRAV, or protesting French winemakers, for acting with violence in reaction to what they see as unfair prices. They want better prices for their wines so as not to be driven out of business. Even in Bordeaux, we have little sympathy with the Bordeaux and Bordeaux Superieur producers who complain that barrel prices of €750 are barely enough for them to break even. They say they're not getting enough help.

    It’s the law of the market, of the free market, we say, deal with it.

    Read this (published today in New Zealand's National Business Review):

    Some wine companies are exporting Marlborough sauvignon blanc in bulk to clear large wine stocks, the Ministry of Agriculture and Forestry says.

    "Continuing down this path may affect the longterm future of the industry," said MAF economists.

    "This risks damaging the value of the premium Marlborough sauvignon blanc brand," said MAF director-general Murray Sherwin.’

    Essentially, New Zealand is telling its own producers not to go for lower prices, trying to shore up value against the market trend.

    Now, the NZ government can say what it likes – it doesn’t change the overall economic picture – but you have to wonder if the French government would be so active in trying to help the industry. Would it step in to stop supermarkets trying to cut prices? I have to be honest here, and say it wouldn’t do toss.

    So why do we accept the NZ government’s attempt to try to keep value in its wines, why do we accept that so much 1st growth wine is dumped into their second wines, why do we accept that most of the world’s diamonds are dumped at sea, and at the same time insist in the face of the CRAV that they must accept the vagaries of the financial market?

    (Picture from the Associated Press)

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