A Big Difference: What’s the Price?
A few years back, I mused about the lingering question that Clyde would often ask of châteaux representatives, sometimes up front, sometimes after a sip—“so…what’s the price?” It is a good question, something that is perhaps more apropos than ever. But it feels more poignant now for a much different reason. My last trip with Clyde would have been back in 2019, when it looked like “up” was the only direction for a 2018 vintage that provided a lot of upside, but existed in a world that seems so far away from today. Now inflation, a pandemic, and supply chain issues put an immense amount of pressure on every part of the equation, and no one knows where prices will go.
As I talked about in my previous blog, 2021 looks like a vintage with a multitude of challenges, but one capable of producing some classic wines in style. In a few instances, estates have produced very memorable renditions that can provide a truly beautiful and transparent expression of top terroir. As we’ve left the Right Bank and headed Left, the challenges inherent with the Merlot of Pomerol and St-Emilion seem a lot more manageable in Margaux, where examples like Rauzan Ségla and d’Issan have brilliant concentration and depth. Marquis d’Alesme and Labegorce once again transcended their modest standing in the famed region, something that is not particularly a surprise if you’ve been plugged into their triumphant efforts in the past half-decade. Whispers are that the Cabernet-dominated Left Bank is full of gems, something that we’ll fully explore on our tour tomorrow.
But while we had an inkling of where the pricing would land for the 2018 vintage, it is a complete mystery now in 2022 for the 2021 vintage. Some have said that release pricing of the 2019 vintage, which is largely considered a better vintage, should be the new benchmark for 2021. Others are looking at 2020-ish levels, which might make sense to the wineries but would be a disaster for the campaign (even if the U.S. market gets a slight discount for the dropping Euro). The space between those two is enormous when considered alongside of the scope of the campaign in entirety. It also is further amplified by the economies of scale that pressure properties at different price points in a disproportionate way.
Take the aforementioned team at Marquis d’Alesme and Labegorce. Labels are hard to get, and expensive. Capsules are hard to get, and expensive. The pallets that the wine is shipped on are hard to get, and expensive. Bottles…well, you get the idea at this point, but it is much easier to make the wine you want without capsules and labels than it is without bottles. But when those expenses are a material part of the price of your wine, for properties that are relatively affordable, the need to increase prices in 2021 feels all that more dramatic. One the other side, inflation does not just affect the current vintage—many producers pulled up prices behind them when raising the 2020s, meaning the value of the libraries became more expensive. While many wineries rely much more heavily on selling the current vintage than holding it, the appreciation of each vintage over time is undoubtedly a part of any long-term upside for many châteaux.
And then there’s the consumer side of things. We’re at a very interesting inflection point. Two questions we get every day are “Whom do you trust for reviewers?” (We say us, but that’s not what they’re asking…) and “Are young people buying Bordeaux?” The answer to the former is an ever-evolving conversation. One could easily argue that the diversity of voices in the market is a lot more dynamic than anything we’ve ever seen before, while others see a disconnect with the voices and publications they once followed. The latter, however, is a confusing question for me. If I relayed the buy-early rewards of 2019 vintage to any casual customer, they would probably think “I should invest in futures.” If I detailed the often-frustrating pattern of many other vintages, it would be a futile exercise to convince anybody to participate. Therefore, given the roadmap to engage a new client mix with less disposable income than their parents’ generation, it seems like a low-price approach is the only way to get people in the door for this kind of collecting.
Everything is more expensive these days, to an extreme where most people have to make significant choices in what they want to participate in. Putting money down up front for a vintage that doesn’t have the acclaim of its predecessors, when most of those are relatively available on the market? There’s no reason to do that without any meaningful upside. But should the weight of this burden be on the producers, whose costs have gone up dramatically? The négociants, who have no choice but to follow suit? Certainly not the consumer—there’s too much good wine out there to buy without doubling down on futures at this very moment. Unless, of course, the upside is dramatic and transparent. But someone in the supply chain, once again, will have to sacrifice. This is the specific reason why pricing 2021s has become such a game of chicken, perhaps more than ever before.
Something is going to have to give, and we will see in just a few weeks how much properties want to garner immediate attention for the 2021s with discounted prices, or if they need to hold steady to keep their head above water in these difficult times and bet more on the future itself. Either way, this en primeur campaign will echo how many are describing the vintage itself—it is a challenge. But, like some of the best examples of the vintage that we’ve seen so far, hopefully many can also navigate this challenge and not only have success with the wine itself, but with the market as well.
- Ryan Moses, Bordeaux Specialist/Marketing and Retail Analytics Manager