Bordeaux 2022 En Primeur and the current wine investment market
18.08.23 – Fine Wine Investment –
Amidst evolving market conditions, the Bordeaux 2022 en primeur campaign is firmly in the rear-view mirror, prompting a careful examination of pricing strategies and buyer sentiment. The campaign has garnered mixed reactions from the fine wine trade, with many expressing disappointments over the high release prices and their impact on buyer interest. The campaign, which traditionally offers wine enthusiasts and investors an opportunity to purchase Bordeaux wines before they are bottled and released, has raised concerns about affordability and the sustainability of the en primeur system. Even some of the larger merchants didn’t deploy their enormous buying powers, in fact, some bought such small amounts that they would rather not discuss it. Investment wise, this year’s release has presented very little to get enthused about and far better value can be found in the older (and physical) vintages.
The campaign did however highlight the disjunction between the exceptional quality of the 2022 vintage and the high prices set by châteaux. Critics and experts alike lauded the vintage for producing wines that could rival iconic years like 2009 and 2010. However, the release prices surpassed market expectations, with the average price of en primeur wines increasing by around 20% compared to the year before. Liv-Ex asked the trade back in May what they thought the price increase would be (note the assumed “increase,” no option for decrease) the results received were around 7%. Yes, the production costs have gone up this year, but that argument didn’t hold up and buyers kept their wallets firmly closed.
The fine wine market having enjoyed a robust bull run from mid-2020 to the beginning of 2023, is now experiencing a pause for breath. The main indices such as The Liv-Ex 100 seeing a decline of about 9% since the start of the year. It’s important to note, however, that this correction is not indicative of a market turn, but rather a momentary recalibration after a period of substantial growth. As the trade cautiously navigates these shifting dynamics, certain observations come to light.
The current reluctance among wine traders to make significant purchases is multifaceted. Many merchants have built healthy stock levels, which has led to a temporary hesitation in adding more wines to their inventories. This strategic approach is in line with their anticipation of a return to more normal market conditions after the summer months, August is traditionally a quieter period for the wine trade anyway.
This quiet moment in time is further compounded by the end of a disjointed en primeur campaign. Right now, the investment conclusion is that the expensive new vintage is less enticing in comparison to established mature vintages, meaning buyers are likely to direct their funds towards these physical options.
For those considering selling wine, the present environment presents certain challenges. Achieving optimal prices for wine sales requires careful negotiation, as buyers exercise caution amidst the ongoing market adjustment. While the current scenario might appear daunting, there’s a silver lining for discerning investors.
Amidst these nuanced market dynamics, there are exciting opportunities for wine enthusiasts and investors. Notably, the big names from Bordeaux from exceptional years present attractive propositions for adding to wine investment portfolios and drinking cellars. These renowned names and vintages from Bordeaux, are appearing as promising value propositions. The confluence of reduced demand and momentarily restrained pricing makes this juncture an opportune moment to consider acquiring wines with strong potential for future appreciation.