It’s the most wonderful time of the year. No – we don’t mean Christmas, although we love that too, we actually mean En Primeur week. If you are unfamiliar with the concept of EP, or Futures as it is sometimes called, then let us fill you in. Every spring after the autumn harvest, the grand cru classé estates of Bordeaux open their barrels from the previous year’s harvest. This offers critics a chance to taste the very young wine – in some cases it has only been ageing for a few months, so it is only a shadow of what it will become. But, like you always knew that your child who loved drawing would eventually become an artist, you can tell even at this stage whether the wine shows promise.
En Primeur presents an opportunity for trade to quite literally try before they buy. The chateaux present the critics and negotiants with an allocation of x amount of cases. The negotiants agree to taste the wine that they have been allocated, and further to this will accept, reject or alter their agreed allocation. It’s a great opportunity to check the quality of the wines at an early stage and decide how much they want to purchase. However, it’s a double-edged sword – the negotiants may risk losing future allocations if they don’t buy the full amount of the current vintage. If the negotiants agree to buy the wine, it is then offered to consumers on the promise of delivery at a later date, once it has been bottled (usually around 18-24 months later). As ever at Vindome – the wine investing app, we have our fingers on the pulse, and will be able to give you all the release news as soon as it is released.
What Is En Primeur Week?
En Primeur Week this year will take place in Bordeaux on 25-28 April 2022. It’s a pivotal week for wine industry trade as it gives critics a first taste of things to come. But En Primeur week is also an incredibly important time for the investor too – traditionally wines are sold at around 30% cheaper at EP than when they are bottled, and present incredible opportunities for the patient investor. What’s more, this year promises to be even more exciting than usual – with the past two EPs weeks taking place virtually, we are looking forward to seeing each other again across the Bordeaux appellations.
What Are the Benefits of En Primeur?
Before getting our chequebooks out, we must remember one thing: wines bought at En Primeur stage are a gamble. Only Old Father Time can tell whether the magic that makes a great vintage will become a reality. But, with the proper tools and knowledge, almost risk-free educated guesses are possible.
This begs the question – why would a chateau not only risk its reputation by not being sure of its product and sell its product cheaper than necessary? The answer is simple. Money. Sales provide the châteaux with a ready source of cash, which they would otherwise not recoup until their wines are bottled and sold. You don’t need us to tell you that it costs a phenomenal amount of money to keep a wine estate going. The chateaux need that early injection of cash from the negotiants as much as the negotiants appreciate the lower price bracket.
As the system stands, the négociants are more or less obliged to buy whatever the châteaux sell. If the négociants don’t buy what they are offered (in a bad year), they risk forfeiting their allocation for next year. This allows the châteaux to spread the risk of bad vintages, which they might otherwise struggle to sell. Win-win.
Quick Overview of Bordeaux’s 2021 Vintage
With 2020s meteorological diversity, EP 2021 could be a challenging year. Bordeaux suffered terrible frosts in the spring, so tasting will be more important than ever. We understand that heavy rainfall in early summer led to some vineyards encountering mildew, which is never a good sign. Individual experiences will of course vary according to vineyard management and terroir irrigation but expect yields to be lower than average (some chateaux reporting losses of 50%, others just 10%). We anticipate second labels and smaller, younger producers to be strong this year and continue with their strong investment curve for 2020 and 2021. But as ever with EP, until the wine is in the bottle, all you can do is watch this space.
Why 2021 Had Been a Challenging Year for Bordeaux?
From a weather point of view, last year was not a good year for Bordeaux. Conditions were far from ideal: the first part of the year was cold and frosty and temperatures, although warm early on (April-May), dropped to lower than average from June. Additionally, rainfall was high, similar to levels of 2013 and 2014. Statistics show that over 20 cm of rain was recorded in the six weeks from mid-June to end-July, making it the highest rainfall since 2013. When the frosts arrived in Bordeaux in early April, initial reports suggested the entire 2021 vintage would be wiped out, sowing the seeds of panic in the industry. Happily, that wasn’t the case. Overall only about 30% of the 2021 crop was destroyed – a huge amount, but not as horrific as initial thoughts predicted. In parallel, estates had to deal with the post-pandemic challenges: from labour shortages to premises closures, logistical difficulties to wine surpluses, the pandemic posed several significant obstacles in the wine industry.
But don’t think this is all bad news. Initial reactions to 2021 are good. Not 2020 good, but investment worthy nevertheless. Cool weather is traditionally favourable for red wines – Cabernet in particular, and often give more acidic wines which can be lower in alcohol. None of this is bad news: some producers are already saying this vintage will be elegant and fresh, reminiscent of classic the Bordeaux wine from yesteryear. For whites, the jury is still out, but with increased sales in the field, we believe there will be a lot of opportunities for white lovers. Yields for both colours will be low, which is always good news for patient investors. As demand outstrips supply, prices naturally become higher.
Source: Saturnalia Harvest Report
Is 2021 Bordeaux Good for Wine Investors?
So, what does this mean for wine investors? Well, as producers had to work doubly hard this vintage in order to showcase their skills, we predict 2021 to be a year of unpredictability! While the grapes themselves suffered, can this be made up for with clever vinification? For sure, there will definitely be some hidden gems to be discovered, and we can’t wait to discover them. Additionally, exports of Bordeaux are at an all time high, fueled by high demand from the US and Asia. The figures speak for themselves: sales have risen 16% in volume, and 37% in value in the past 16 months. While this figure corresponds with the predicted sales curve for Asia, we believe the upswing in US exports is probably due to President Biden scrapping the 25% tax levy imposed on all imports of French wine by the Trump administration. Sales of older vintages (2018, 2019) have seen unprecedented demand Stateside as well.
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