En primeur 2015 – best since ’08? Register for first offers
It’s that time of year again when the trade waits with baited breath for the en primeur 2015 release prices, and investors ruminate over the potential extravagant returns up for grabs (for those of you have never heard of, let alone invested in, en primeur, there is a handy quick guide below).
Here at Amphora, we’re more interested in this year’s offerings than we have been since the ’08 campaign, but cautiously so. Quality is there, but everything depends on the prices. We are watching like hawks, and expect early releases to be painfully limited in quantity. So if you’re interested in investing once we know prices, it would be a very good idea to register your interest here. We will contact registered individuals with our offers first- be warned, the window of opportunity will be brief.
En primeur – a quick guide for investors
What is en primeur?
It’s the equivalent of wine futures. The top chateaux of Bordeaux offer you the chance to buy your case(s) of their most recent vintage two years before its bottled. During that time, your wine will remain sloshing around with everyone else’s in wooden barrels in the estate’s cellars.
So this year you have the opportunity to buy vintage 2015, which will be bottled in the Spring of 2018.
Why might you invest in en primeur?
The release price tends (though recent vintages have bucked the trend – read on) to be the cheapest price you’ll ever see the wine offered at in the open market. This is because the chateaux traditionally release their latest vintage at a decent discount to back bottled vintages. Fair enough, really, seeing as you’re in effect lending them your money for two years!
What are the returns like?
Historical returns, even in very recent memory, have often been stunning. 2008 Chateau Lafite is a case in point. You could have bought a case en primeur in 2009 for about £3,000. By the time the wine went to bottle in 2011, the price had rocketed to over £13,000!
HOWEVER….2008 was the last vintage to enjoy such stellar returns. In fact, it was the last vintage to enjoy any return at all for many chateaux. The reason for this is that the chateaux, having cottoned onto exponentially increasing prices due to demand in China at that time, hiked their release prices disproportionately in 2009.
To put this into perspective, 2009 Lafite came to the market at a whopping £13,000. This was admittedly a fabulous vintage, but there was no discount and with the market in Asia faltering, prices dropped by the time the wine was bottled to £7,000. Painful.
Since 2010 we have had four fair to middling vintages, but the chateaux simply didn’t lower prices sufficiently to find a market. Much of the wine produced in these vintages is sitting unsold to this day in Bordeaux.
Are there any other risks?
The main risk, outside of general market conditions, is that the vintage doesn’t turn out to be as good as initially expected when it reaches the bottle.
Secondly, you have no security of tenure – the wine is not yet yours; you simply have a forward contract with the merchant you bought it from. And indeed, if he bought it from another merchant, so the chain extends. So if he or any of the other merchants in the chain goes bust in the interim, you have no recourse. You lose the lot.
Lastly, there’s precious little in the way of a secondary market for en primeur (principally due to the above – each re-sale extends the chain) so unless you can sell it back to the merchant you bought it from, you’ll almost certainly be tied in for the two years.
Sounds quite risky – is it?
Not necessarily. It’s very unusual that critics dramatically change their minds en masse these days, and as long as you buy from a reputable supplier such as Amphora with a proven pedigree in delivering up past campaigns you can be very confident of safe delivery. But do check out any company you’re considering doing business with carefully!
So what about this year’s offering of vintage 2015?
Looks promising, and there are a handful of estates we are very interested in indeed. But it’s now ALL DOWN TO THE PRICE. The strength of the euro is unhelpful, and so to make things genuinely attractive on a relative basis, the price will be the key.
But there’s hope. For example, Lafleur – one of the stars of the vintage in terms of quality, but not necessary one we’d invest in – came to market a couple of days ago at £4,500. With a potential grade (they’re never firm till they’re bottled) of 100 points from James Suckling, this price compares very favourably to the 100 point 2005 at £10,000+
But Lafleur is currently in standalone territory, with other early starters trading at near parity to back vintages. We would recommend registering here if you want to be the first to hear whether it’s all systems go on the handful of chateaux we’re interested in as we get the prices…..