2007 Bordeaux Futures Are Bleak
Written By: Kasey Carpenter on Mon, Jul 14th 2008
Call it the perfect storm. Pockets emptied by the hyped and rightly-so 2005 vintage of Bordeaux, a US Dollar that is getting beaten like a fool by the Euro, oh and lets not forget a poor vintage altogether in Bordeaux (both banks) and you have what hasn't happened in a decade. Mix in your other financial hermit crab reason of choice: fuel prices, unstable economy, housing market, upcoming elections, kid wants a car, whatever.
People aren't auctioning off their firstborn for these futures.
The exceptions to the rule, however, are the whites. Sauternes and Bordeaux Blanc such as the Graves region, are showing that they had a better year then the reds, but white sales in Bordeaux do not a successful year make for the French. Sauternes, after all, are pretty scare even on a good day, and make up just a fraction of the acreage and bottled juice for the region.
Bordeaux negociants are scrambling to find alternate buyers, and Asia seems to be the landing pad for their jumps. It seems that they have (recently) had a rather hefty importation tax on wine dropped, add to that unprecedented wealth and development of high end restaurants and hotels, and you have a favorable market. Add further still to that the fact that Asia has been overlooked in the grand scheme of all things wine up until about ten years ago. In short, even in a bad vintage such as 2007, they are hungry for the brands that speak to them, the names, the scores, the big houses. Bordeaux. Some see Hong Kong as the cheapest place in the world to buy wine. So keep that in mind if you do some business that takes you to Hong Kong on a regular basis, I don't know about export laws from China, let alone importing to the US, but if you can get your wine over there for 10-20% less than the rock bottom prices over here...
Many in the trade are cautioning their clients not to buy the 2007's until they are released, citing the 1997 vintage as an example. In that year, a vintage similar in scope and style to 2007, the prices upon release were actually cheaper than the initial offering in the form of futures. So if you bought early, you lost - a rare thing in the futures market. Even if you have to pay an extra 5% per bottle, it will be worth the wait.
I would pass on the vintage for now. It seems that while some chateaux are dropping their prices anywhere from 40 to 60 percent from what they asked for the 2005's, you may still be paying more for them now then when they are released. Besides, unless you are bent on maintaining a vertical of certain chateaux (and if so, just wait, there will be plenty of 2007's for sale) what really is the reason for investing in mediocre wine? Besides, over the next two years there are probably more pressing things, and at the very least, better wines, to invest in.
