March 29: Meeting with Negociants

by Chuck Hayward

by Mike Supple

Using this method, the Chateaux hope to attain maximum global exposure for their wines while only having to work with a few select individuals. Very few Chateaux - especially among the classified growths - do business outside of this negociant structure. Thus in order to get a maximum allocation of any particular wine (for example Chateau Latour), it is in the best interest of an importer/retailer to do business with several negociants. The entire process is much more complicated and convoluted, but that is the 60 second version.

Today we met with a few major negociants in Bordeaux to discuss business opportunities as well as their thoughts on the 2006 vintage. Due to confidentiality agreements between various negociants, I will not be listing the names of the actual firms, nor the individuals with whom we met. Instead I will use pseudonyms while recapping any particular stories from negociant meetings.

Early this morning we met with 'Gilles' of the largest negociant house in Bordeaux. Gilles made an interesting point that I had never considered: when the wines are being transported from the various Chateaux to the warehouse of the negociant, (particularly in famous vintages and from top Chateaux) the negociant has to hire couriers whom they trust not to disappear with their wines. When it comes time to move the 2005 vintage, the cost is going to be higher because more security measures will be taken. For this vintage, Gilles is going to use the same courier service he has used in the past, but he is paying to install GPS tracking systems on the trucks so alarms will go off if the truck leaves a specific pre-determined route. This is not due to lack of faith in the driver, but rather as a method of recovering the truck as quickly as possible in the event that one is hijacked.

We did ask Gilles his thoughts on where pricing would sit for the 2006 vintage, as well as when the en primeur (futures) prices were likely to be announced making the wines available for purchase to the public. While it is up the the individual Chateau to decide when to release their pricing, many of them do discuss timing with each other, and base their pricing off of their neighbors' decisions. This year, it is unlikely that the prices will be released before the end of April, as everyone is anxiously awaiting the release of Robert Parker's notes and ratings.

Following the release of Parker's scores, the French will be holding an election for President, and there are some days of government holiday. For these reasons, it is unlikely that en primeur pricing will be released before May 8. Once it begins, Gilles feels the prices for the 2006 vintage will be released slowly, and this will help set the standards for a successful vintage (from a negociant and Chateau standpoint). In his opinion, it would be best layed out as follows. The first Chateaux to release pricing will be known wineries who sell good wines at reasonable prices (20-50 Euros). These wines will be good values from a relative standpoint, so they will sell and the 2006 market will begin. Then the cheaper (yet still known) Chateaux in the 10 Euro price range will release en primeur and the bargain seekers will join the race, increasing the demand for the 2006 vintage and helping build a strong reputation for it. This could lead to a problem though, because this early perceived success of the 2006 vintage could cause the "super second" growths to come out at artificially high prices, and the rest would go from there.

The better scenario for the retailers and end consumers would be for the en primeur pricing to be released very quickly, within about a one week timespan. In the negociant viewpoint, this is very dangerous. If everybody releases at once, then the Chateaux and negociants have no market activity to base the pricing on. Hence the end consumers often get a much better deal before prices can react to demand and go up. In a slower trickle release, neighbors and Chateaux of equal quality and fame can release one after the other, adjusting their pricing to the market response, thus making for a more successful (read "lucrative" for the negociants and Chateaux) en primeur campaign.

The next negociant, 'Laurent', first took us to taste at Chateau Beychevelle. Notes and photos from that visit will follow. During the meeting after Beychevelle, Laurent offered us glasses of Champagne. I am always intrigued by the choices the French make when it comes to Champagne, because I assume (and usually rightly so) that they drink more champagne than I do and have a broader range from which to choose. This afternoon's selection was the Louis Roederer NV Brut Premier; a classic wine with great acidity and mouthfeel, as well as a nice balance between fruit and toast.

Laurent has already had the opportunity to taste through most of the 2006 vintage, and his thoughts are as follows: "2006 is nothing like the 2004. [Which is a comparison some critics had hinted at before tasting the wines.] 2006 does not have the exuberance or exoticism of '00, '03 or '05, but it is arguably the best classical vintage of Bordeaux in 15 years." He further mentioned that while the wines will not receive the same critical acclaim as the '05 vintage, the '06 vintage as a whole had many similar characteristics as the '05 going in to September, and these are balanced, incredibly well made wines.

When it comes to pricing, Laurent thinks the '06 first growths will be 50% of the '05 pricing. The rest of the wines will be between '04 and '05 pricing, but closer to '05.

We will be bringing our opinion on the vintage to you as we taste more and are able to get a more comprehensive feel.