As prices are announced for the vintage 2013 Bordeaux en primeur campaign, the merchants and market commentators often feed back their view on release prices. Certainly the early release of 5me Cru Pontet Canet prompted the question: why not buy the 2008, which has the same Liv-ex mid-price, comes with 96 Parker points and 17.5 points from Jancis Robinson?
Let’s be clear, Pontet Canet is exceptionally good value for money; both 2009 and ’10 can claim the coveted 100 Parker points and still trade below €160 (SFr195) per bottle whereas, across the road at Mouton Rothschild, the 99+ point 2009 has a mid-price above €500 (SFr610) per bottle. Of course these point scores aren’t the be all and end all, but these are clearly both great wines spanning prices that are miles apart.
With a more developed secondary market and increased price transparency through data providers such as Liv-ex, the chateaux are more informed than ever regarding the price that the end consumer pays, and therefore can more efficiently reduce the consumer surplus that has previously existed.
Above are the Liv-ex mid-prices for Mouton Rothschild 2005, ’06 and ’09. These wines scored 96, 98+ and 99+ respectively and are therefore good comparators for the 2010 that was given an original range of 97-100. The vertical green line marks the end of June 2011, when the release price for 2010 was announced: the 2005 & ’06 were trading at just under €550 and the 2009 was in the €670’s.
Where would you price the 2010? Certainly above the 96 point 2005, but perhaps the ex-négociant price should not be as high as the mid-price of the 99+ point 2009: remember that some margin should be left for the merchants. Ok, €600 per bottle.
This caricature of the partial market analysis indeed results in the release price for 2010, but it does rely on having both data and market confidence that demand is sufficient to absorb the injection of more fine wine. It is clear that, when compared to the current trading prices within the market, the en primeur release prices can and should be consistent with the contemporary market performance rather than based directly on the previous vintage price.
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As an aside, the 2006 Mouton does seem undervalued in the current market: trading €150 lower than the 2009 & ’10 and edging closer to its drinking window. |
Commentary often compares to back vintages, for example, Decanter said that the 2010 was “9% up on 2009” release prices, but these direct comparisons are meaningless when the mid-prices have made some ground from their initial release.
The real comparisons to be made as the 2013 prices and ratings are announced are:
- What are previous vintages of comparable quality trading at?
- Are these back vintages still sufficiently liquid to acquire? (e.g. the 1986 Mouton scored 100 points, but there is significantly less in the market as it is now within its drinking window)
- How does this compare to other chateaux?
Overall, it is possible to demonstrate the logic behind the producer release pricing however, as the consumer surplus is eroded, there will be an increasing number of buyers for which the prices are too high: there is a discount rate that must be recognised in this futures market to account for the uncertainty of the wine still developing in the barrel, and for it not being physically in one’s cellar and able to trade on the secondary market.
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