2006/2005: Should We Buy? Part 2

by Chuck Hayward

by Mike Supple

Here is an update on '05 - so far the prices we are seeing ex-chateau are at best the same as their original offering, but in most cases, they are higher. We have not come across any wines from the 2005 vintage where the Chateau has decided the prices are too high and have decided to drop them. The blame for this rise in prices is often put on the weakening US dollar vs. the Euro. This is in fact, not true. While the US dollar is not very strong compared to the Euro, the exchange rate is practically the same right now as it was when the 2005 futures were initially released ($1.00 US buys approximately 0.75 Euros today vs. $1.00 US bought 0.78 Euros in July 2006). A reality of the situation is that wholesalers across the country have raised their prices on average about 10% since the initial release, except for the first growths (and a few other top names) where the average increase has been more in the neighborhood of 20-30%. Retailers in return have been forced to raise their prices accordingly.

If you are looking for a specific area to focus on in 2005, our general impression from the wines we tasted last April was that the focus should be on St-Emilion and Margaux. While I have yet to taste any of these wines again to confirm this, other critics have recently confirmed that the 2005s are still showing the best in these two regions.

On to the more pertinent issue of should you buy. Is a 2005 Bordeaux worth paying for? If you like to drink outstanding wines of the highest quality, then my answer is an emphatic 'yes'. For the 2005 vintage, many of the top Chateaux have produced wines that are being scored in the 95+ range from all of the major critics. To see if these wines are really worth the prices being asked, this all must be looked at from a relative value standpoint.

I still buy (after choking at the price) my Harlan and Colgin, so the question I'm forced to ask myself is, "If I'm willing to pay $200-$1400 (or more) for an American 'first growth', why shouldn't I pay the same (or less!) for wines from a world famous Chateau? Yes, the California Cults may have a production that is a fraction of the size, but the French wines also have a much larger worldwide demand. And let us not forget that these French wines being produced at the 10,000+ case level at quality that is at the very least equal to that of the top California wines (I will leave the debate of Bordeaux vs. Napa for another time). It can be argued that since the Napa wineries are much smaller the wine makers are able to pay much more attention to detail, but the wine makers in France have been doing this for hundreds of years, and have probably picked up a trick or two in their time.

As I mentioned in a previous post, among the top 150 or so Chateaux in France the quality of wine has risen dramatically in the last few years, especially in vintages that in the past would have been quite a bit worse. While many contributing factors go in to this, it is undeniable that at least some of it can be attributed to the same breakthroughs in winemaking technology and ideas that the American cult wineries are using. And on the more encouraging side, due to the production levels, if you want to buy a Bordeaux first growth, chances are you can. How long do you have to be on a waiting list to buy a bottle of Screaming Eagle?

We move through a lot of Bordeaux of many vintages every week, and try to maintain as wide an inventory as possible, but the reality is that we rarely have stock on the first growths. They invariably come in and go out almost immediately: right now Bordeaux is a hot market. People everywhere are in to drinking and collecting great wines, and this stands true for top Bordeaux. Yes prices may be high, but if it is wine of world class quality with worldwide recognition that you seek, the quality you get for your dollar from Bordeaux is incomparable.

So should you still be considering buying '05 futures right now? Buy what you want to buy, but for my money, the relative value still cannot be beat.