My Article: Bordeaux Remains the Center of VinExpo Despite Being in Asia

It’s the second day of VinExpo Asia-Pacific 2012 in Hong Kong, and the French-based wine trade fair is full of people with more than 1,050 exhibitors and about 14,500 visitors. Granted, this is a fraction of the size of the semi-annual event in Bordeaux, but I find it more premium quality with better wine producers with an international presence than the massive event in France.

Nonetheless, a lot of the conversation among the attendees, particularly wine merchants and distributors, is Bordeaux. Specifically, it is Bordeaux 2011 and how they can’t sell it. France’s premium wine region overpriced its latest offering of futures, or en primeur, despite some wineries’ substantial price drops. And wine merchants are not sure what to do with it.

Most of the top wine merchants I spoke to from Asia say they are selling about 10 percent of what they sold in 2010 or 2009. This is a huge hole in their turnover for 2012. And they are not sure what to do.

I wrote more than a month ago that the Bordelais needed to drop their prices on their 2011s to much less than the current price for the least expensive vintage in bottle or on the market – most notably 2004. But very few chateaux did this.

The market just isn’t interested in 2011 Bordeaux at current prices. It didn’t help that most of the top name chateaux released their prices at the same time. Wine merchants around the world could not properly sell en primeur 2011 on an individual chateau basis. Many just preferred to not sell them at all.

“The 2011 en primeur campaign has been a complete disaster,” said one wine merchant last night at the Grand Hyatt Hotel during the gala dinner of Commanderie du Bontemps de Médoc, des Graves, de Sauternes et de Barsac, an association of some of the top chateaux in Bordeaux that promotes its wines around the world.

Emmanuel Cruse, the head of the association, used the word “crisis” in his speech a number of times last night, noting how difficult the economy was and perhaps underlying how sales of 2011 Bordeaux futures had gone badly for many chateaux and wine merchants.

I spoke to a friend at Liv-ex, the London fine wine trading platform that’s similar to the stock exchange, and he said prices for back vintages had dropped since the 2011 en primeur prices were released. “This is the first time I have seen this,” he said. “You would think that merchants would go back into the market and buy back vintages if their clients don’t want to buy en primeurs.”

Trading in general on Liv-ex has slowed down, and the wine merchants I spoke to said their customers were slow to pick up wine offers in general. It makes me wonder how much poor sales of Bordeaux 2011 is due to uninteresting prices or a general disinterest in high priced wines?

“Maybe it’s a little bit of both,” said a major Bordeaux negociant I spoke to last night when I posed the question. “These downturns come in cycles. We have seen this all before.”

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