En Primeur – Wine futures market
En Primeur is the fine wine’s market equivalent of selling stock futures. Every summer, usually between June and July, negociants offer the last year’s vintage onto the market. This is known as the primary market as the wines still undergo 18 -24 months in new oak barrels before bottling and physical release when they enter the secondary market.
Is the system today stepped in welcome tradition or outdated and antiquated?
Traditionally, negociants release in tranches, or slices, testing the market demand. Depending on the markets reaction they will go on to release a second and third tranche at higher, or lower prices. En primeur allows chateaux to receive large incomes on wines that need anywhere between 5 – 20 years before they enter their drinking window.
En primeur has been a tradition within the wine trade for many years and became popular with consumers in the 80s as a succession of great vintages coincided perfectly with economic growth. It is noteworthy that in the 1970’s some wine was sold Sur Souche, or on the vine, even before the grapes were picked.
En Primeur Today
Today En Primeur is big business and regular news on the weather conditions of the next vintage are widely publicised. This is due to Bordeaux having a marginal climate and relying heavily on the weather to determine the potential quality of each vintage, although improvements in wine making have increased vintage consistency.
Throughout the growing season, which lasts up until late September or the beginning of October, the market will follow the progression of the harvest and the winemaker’s opinions post Assemblage (final blending). All this leads up to the first week of April the following year when the world’s leading experts taste the new vintage. It is the job of experienced tasters to get past this mouthful of youthful tannins and evaluate fruit ripeness, balance, concentration and ageing potential. The critics’ scores will have a huge effect on the release price and their recommendations are awaited with baited breath and investment fervour. Robert Parkers scores, in particular, are said to make or break a vintage. The market thereafter uses these reactions to classify the vintage as poor, good or excellent. Some poorer vintages will need to be consumed within 8 years, while great vintages benefit from 30 years of bottle ageing.
In the past, en primeur investors could buy top chateaux at opening price with the belief that in a good, or better vintage it would continue to increase in price for the 2 years before bottling. This provided direct access to exclusive wines, guaranteed provenance and made a very good investment. In recent years, increased speculation and demand has led to consistently higher prices in the wine futures market. The 2009 average release price increased 57% from the previous price-breaking vintage of 2005. However, the 2009 has been eclipsed by 2010 with the later releasing approximately 11% higher than the former.
Whether buying to invest or with the intention of eventually drinking it the question all en primeur buyers should ask is: will the wines offer equal or more reasonable value at a later stage in the secondary market and if so, why buy now?