Weather Conditions Impact Wine Quality

Bordeaux’s iconic en primeur system, a futures market for wine, is struggling due to worsening weather and declining demand. The 2024 vintage is expected to be another disappointment, as mildew and cool weather have significantly reduced both quality and yield.

• Producers can apply for up to €280,000 in EU subsidies to remove unproductive vines.
• The 2023 vintage suffered similar setbacks, with quality and supply under pressure.

Declining Demand for Bordeaux Wines

Global trends, including a dip in red wine consumption, have diminished demand for Bordeaux wines.

• Bordeaux produces 88% red wine, but global red wine consumption dropped to 112mn hectolitres in 2021, a 15% decline since 2007.
• White wine consumption, in contrast, has grown to 100mn hectolitres in the same period.

Falling Prices Reflect Market Struggles

The en primeur pricing system is under scrutiny as collectors demand better value for early investments.

• Prices for the 2023 vintage fell 22% compared to 2022.
• Château Figeac reduced prices by 41%, while Château Lafite Rothschild cut prices below its decade-long average.
• Liv-ex’s Fine Wine 50 Index for Bordeaux First Growths has dropped 24% in two years and is down 9.2% over five years.

Challenges with En Primeur

The structure of Bordeaux’s en primeur system, which uses intermediaries like courtiers and négociants, is seen as outdated. Critics argue it lacks transparency and alienates modern consumers.

• Inventory levels at négociants have risen, creating financial strain.
• Collectors face long waits for delivery — often two years or more — with limited discounts to justify the risk.
• Some experts suggest direct-to-consumer sales or subscription models could be the future, as seen with Château Latour and Petrus.

Calls for Change

Industry insiders believe Bordeaux needs to modernise its image and marketing strategy to regain its global appeal.

• Price cuts alone won’t solve the problem. Fiona Morrison, a Bordeaux producer, argues for reinventing Bordeaux’s “fusty, corporate image.”
• Merchants and négociants are under pressure to reduce the number of middlemen and spread out price releases for smoother transactions.

Financial Highlights

• Bordeaux’s wine production has fallen from 604mn litres (2000-2005) to an average of 390mn litres (2021-2023).
• En primeur prices for Château Margaux 2012 rose from £2,800 per 12-bottle case to £5,100 by 2021.

The Future of Bordeaux’s En Primeur System

Despite its challenges, the en primeur system remains deeply embedded in Bordeaux’s culture. Many producers still see its value as a marketing tool and a unique way to engage collectors.

However, as weather issues persist and market conditions evolve, the region may need to balance tradition with innovation to secure its future.

Source: (FT.com)