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April 20, 2018

Bordeaux 2017 En Primeur Report

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The 2017 vintage in Bordeaux is a fascinating one, a heterogenous one and can now be confirmed as good and in several villages a very good one. Soon after the wine trade returned from the en primeur 2016 tastings last year, jack frost paid Bordeaux a whistle-stop visit. Suddenly we were faced with 2016, one of the finest vintages ever, being followed by reports that 2017 would be a disastrous one. As it turned out, the frost, which descended on Bordeaux on the 27th and 28th of April, was the most destructive since 1991. It wiped out more than 30% of the harvest; overall volumes were reduced by 40% on 2016, which is 35% lower than the average over the last ten vintages. This reduced some chateaux to a one or two-barrel production, whilst some saw 100% destruction. This was generally seen in low-lying areas, in less prestigious appellations. However, 2017 really emphasises the natural pedigree of the Grand Vin vineyards, where the original Grand Cru plots were reportedly largely unaffected, their natural aspect protecting them, having been rigorously selected through trial and error over centuries for the very attributes that stave of nature’s attacks. As such, the Grand Vin wines came through this early battle largely unscathed and the weather that followed allowed the 2017 vintage to blossom. While production is down, quality is certainly not – in fact we heard from several estates that it was the rain in early September that stopped it from becoming another truly great vintage. The 2017 vintage therefore is book-ended by frost initially and rain at its conclusion, the weather in between was almost perfect.

In 2017 winter began dry and cold, before turning mild. In January and February necessary precipitation kept water tables balanced for the summer. The average temperature was up nearly two degrees and this, combined with lower rainfall, suggested vines would awake from their dormancy early. In late March and the first half of April the buds began to open, this happened at Lafite Rothschild on the 1st of April and L’Evangile on the 29th March; amidst ideal growing conditions. Only 150mm of rain fell between January and March on the left bank, compared to 400mm in 2016. Then April’s brutal wave of frost hit in earnest across Bordeaux, with temperatures at a low of -6 degrees. It is worth pausing here to reconsider, Bordeaux terroir, even among the most illustrious vineyards is not uniform. It is broadly reported that the village of Margaux was one of the worst hit, which is true, with the excellent vineyards of Chateau Angludet decimated. Yet, the village of Margaux is a patchwork of vineyards, with most Grand Cru chateaux having their primary vineyards surrounding the chateau and others spread through the tapestry of the village. The old adage goes, ‘that vines like to overlook water, at a safe distance, optimally from a mound’ and it is the shielding power of the Gironde Estuary that acted as a barrier. It is a veritable buffer, protecting the vineyards, ensuring temperatures cannot drop too low. As such, vineyards that are situated near or on the first or second gravel banks of the Gironde in Margaux benefitted, the cool breeze from the river and its moderating nature ensuring frost could not damage the prime location plots. Chateau Margaux reported only 10% of its red varietals affected and only two of Chateau Palmer’s lesser plots, sited in the west, were damaged. 

This natural protection extends perennially throughout the leading left bank properties that hug the Gironde as it climbs its illustrious gravel corridor toward the entrance of the tributary with the Atlantic, sited at the Northern most tip of the Medoc. Resultantly, St. Julien and the southern part of Pauillac benefited more than Margaux, while the northern segment of Pauillac and especially St. Estephe saw very little damage. The latter real-estate benefited from immediacy to the Gironde, but also from greater proximity to the Atlantic, creating two fronts of protection. Unsurprisingly, St. Estephe therefore again lays claim to the village of the vintage, with Pauillac, offering another excellent stable. On the right bank, there is another rule which can be used to offer help in mapping damage. Following historic norms, it was the estates which are on or close to the Pomerol Plateau, both in St. Emilion and Pomerol that benefitted from its natural protection. The frost, which threatened such destruction, was barred by the natural defences the best terroir provides. It is noteworthy that as we end the discussion of frost, we consider that aside from destruction, frost and its effects slow down vine development, something that will later define the vintage! 

Flowering generally occurred in idyllic sunshine, in quick and regular fashion, aside from a few rainy spells in May. The second half of June saw the highest temperatures, from 34-38 degrees, between 18th and 22nd of June. This lead to even veraison (colour change, when many very important berry developments occur) which happened in late July and the beginning of August, the earliest for 20 years in the most favourable conditions for efficient homogeneous pollination. This period saw excellent conditions punctuated by a few light showers which help with favourable expansion and prevent hydric stress. The summer period was drier than the 30-year average and drier than the great 2005, 2009 and 2010 vintages. In St. Julien and Pauillac the average temperature in 2017 was higher than 2009, 2005, 2015 and 2016, with almost the same rainfall as 2009. In fact, without the frost, the climatic metrics of 2017 most closely reflect 2009 in terms of average temperature and rain in the northern Medoc. This story varies in an around the Pomerol Plateau and St. Emilion, where rainfall was in line with 2012, with less than 2016 and considerably more than 2005, 2010 and 2015, while temperatures were most similar to 2015. 

Up until September, disaster had not only been averted, but Mother Nature had adorned gifts on the child it had once forgone. However, there was a legacy of the frost, for vines that were affected but had survived degrees of frost saw their development stunted. When rainfall began in September, which many chateaux claim was the only factor preventing a third great vintage following 2015 and 2016, winemakers had to quickly decide, ‘to harvest or not to harvest’. Despite the frost, the grapes were ahead of schedule, their progression ahead of the 30-year average. The rain and early fruit development meant harvest was in many cases a long one, in the case of Cheval Blanc from 6th of September to 11th of October. Rain fell in the Medoc in early to mid-September, from 60mm in Pomerol to 80mm on the left bank disturbing climatic calm. The risk of waiting to pick until this had dissipated was the threat of botrytis, with the grapes not having met full polyphenolic ripeness. Those that had the luxury of little or no-frost effected vines and who rallied against the rain, harvested after 15th of September in exceptionally fine conditions. Broadly speaking harvest on the left bank was one of the earliest in the last ten years and just earlier than average on the right bank. In short, excellent summer conditions had achieved phenolic ripeness which could largely overcome the early September rains. 

 

A Word on Style

There is a game in the trade called, ‘let’s compare the newest vintage to that which is most similar’. It is a good game and it helps us form broad opinions on what is one of the most subjective commodities in the world. In terms of structure, the vintage reflects medium alcohol, compared to recent vintages, with the left bank hovering around 13%, Rauzan Segla 13.2%, Leoville Las Cases 13.26%, Lynch Bages 13.06% and Latour 13%: the right bank tells a similar story, Chateau Figeac is 13.5%, while Vieux Chateau Certan 14.2%. The alcohol is representative of the vintage’s climatic conditions yet also a change in style which began in 2014: this is a very important paradigm shift. Anthocyanins are higher than normal, it was noticeable that the wines are very deep in colour, making them aesthetically the most appealing in a decade, this brings added health benefits, anthocyanins are delightful vacuolar pigments and advantageous antioxidants. Phenolic indexes are good with the major estates around the 75 mark, with Ducru Beaucaillou 75 exactly and Vieux Chateau Certan 73. In Bordeaux, the index scores normally average between 65 and 80 and while not an exact science, determines the amount of tannin in a wine, necessary in great wines that will age: it is noteworthy this has increased on average 20% over the last 20 years. There are plenty of tannins in 2017 and most importantly tannin with ripeness which add to the finesse. The acidity in this vintage is higher than recent averages, with Ducru Beaucaillou 3.46 and Vieux Chateau Certan 3.4. This acidity, taken with the deep colour and fine tannin, means that most of the top chateaux made wines have superb structure. Finesse and tension are the major themes of the vintage, with both left and right bank wines, balancing harmony between tannin and acidity which promises they will age well. There is also plenty of fruit purity and complexity, with an abundance of sweet spice, coffee bean, minerality and notes of graphite coming through on the finish. Blends vary more than the norm, as did co-fermentation of varieties – so expect an exciting vintage in terms of blend differentials. This was due to frost creating a reduction of some grape yields and production necessitating manoeuvrability.   

 

A Note on Appellation

In such a heterogenous vintage, appellation matters; each sub microclimate of each village saw varying differences, which when taken with different terroir and winemaking leads to very different results. As such, we put ourselves through the ringer tasting, with intense monk-like discipline. Graves had a tumultuous time slammed by heavy frost and then by hail. Despite winemakers’ brilliant work, overall, there are far more unripe wines here – the whites produced are a different story. Pessac-Léognan could be the most divisive village, we heard varying appraisals of the leading wines, however, it must be noted that comme d’habitude (the vineyard’s proximity to the city) meant the buildings offered natural protection against frost and one can imagine warm smoke emanating from the local boulangerie heating the cold vines. To my mind, the wines here are good, Pape Clement continued its run of form, yet adding even further finesse. Smith Haut Laffite produced an elegant proposition and Haut Brion was a different animal altogether from 2015 and 2016. Haut Brion is an elegant canter along the beach, rather than a feverish sprint; in 2017 it presents its normal tobacco leaf, chocolate and cassis, yet with a remarkable structure, tension and finesse, it edges La Mission Haut Brion in 2017, but not by much. Rather as a spoiler for the whites, Haut Brion Blanc is a thing of beauty, cantaloupe melon, guava, kiwi, tangerines, even rhubarb; wrapped up in brioche and stunning minerality, the balance and harmony is outstanding. La Mission Blanc follows suit. 

The village of Margaux as documented had many difficulties, yet many wines are very good, Palmer and Razaun-Segla impress, as do a handful of others, there will be good value too with wines like Malescot-St. Exupery. Chateau Margaux itself has made a lovely wine, although it does not hit the heights of 2015 or 2016, Pavillon Blanc however, surpasses both vintages. As we progress through the corridor, St. Julien is a leap forward, Leoville Las Cases stands out, Poyferre is very fine and there are bargains to be had too such as Talbot. As we enter Pauillac we arrive at the epicentre of quality. Pichon Baron and Lalande are true to form, the former pure torque and black fruit energy, the latter power and elegance, both very respectable in 2017, as is Pontet Canet, showing superb tannin and finesse with lilac and meaty flavours. Grand Puy Lacoste is on to a winner, while Lynch Bages is a heavyweight, with real power. It is worth noting that under the new ownership of the Cazes family of Lynch Bages, Haut Batailley has changed gear, this could be a bargain in 2017. We challenged Mouton and Lafite Rothchild in back to back tastings and they both standout in the vintage, endowed with gorgeous sweet spice, Mouton cautious and dense, yet with stunning complexity. Lafite is a geometrician of fruit, cutting varying shapes, with structure and a powerful graphite finish. Latour is the workhorse as always, with an umami-esque finish. To conclude the left bank, St. Estephe continues where it left off in 2016, arguably the trump card. Montrose is as good as it gets in 2017, which is fine indeed, while Calon Segur continues its hot streak and the rather more opulent Cos d’Estournel is gifted. This once again could be the region for great price vs quality propositions.

The right bank is fascinating, St. Emilion is a mixed bag, Ausone is polished, elegant and velvety, Cheval Blanc has lots of elegant fruit and spice with milk chocolate. St. Emilion seemingly is moving towards more purity and less alcohol in 2017, Angelus offers very similar structure to 2014 with even more freshness. Stylistically, perhaps 2014 was a trigger of change, which has taken a leap forward in 2017, the wines have far less extraction and more elegance with the obvious exception of Pavie, which is all about fruit power and enormous tannins. Canon continues its remarkable form, it is focused with delightful minerality, even better than 2014, while Figeac is dense, with excellent ripeness and much less Cabernet Franc in the blend, which was lost due to frost. There are other very noteworthy wines, with lots to enjoy, such as Troplong Mondot, which could offer excellent value. Pomerol overall is a delight to taste in 2017. Vieux Chateau Certan is a marvel, with such intensity and energy, Le Pin, elegant, powerful, with Burgundy like sous bois (we did not taste the final blend). L’Eglise Clinet is splendid, Clinet driven and Gazin will offer an excellent entry point. 

The whites in 2017 are excellent, on par with 2015 and 2016 and in a few cases surpassing them, although perhaps not as homogenous. Notably, outside of Pavillon Blanc and Haut Brion Blanc which have rapier-like power and incredible finesse and tension, Pape Clement Blanc is stunning with more finesse every year and Smith Haut Lafitte Blanc also excellent. There are many whites to pick from in 2017, most have excellent fruit purity, but what makes the whites special in 2017, is their minerality, structure and tension. This is a superb year for white wines and it’s worth stocking the cellar. Sauternes in 2017 are probably most like 2011, there is some good botrytis and more acidity than 2015, which I like, but the vintage does not possess the purity of fruit and tropical power of 2014. 

 

Market Conditions and Price

In many ways the en primeur marquee releases resemble an Initial Public Offering (IPO) listing. Like an IPO the price is set based on qualitative elements, in this case, how good is the wine? – We can confirm that we have plenty of quality wine to release en primeur, akin to 2014!  Supply is another factor; we can be sure we will hear that supply is down, this lily has been gilded heavily since last year. While there is a reduction in production amongst Grand Crus, this will be driven by the continuing model of holding more and more stock back, so it is rather self-fulfilling. As noted in our last five en primeur reports, this is part of a greater strategy to empower chateaux – who by financing the ageing of their wine – can control later releases. It also means there is more wine in the supply chain. However, we can expect a continuance of this, with around 30-35% less wine released in 2017 than in 2005-2012 for the First Growths, creating a material en primeur shortage for Bordeaux’s finest. Another price mechanism is the market sentiment: following 2015 and 2016, buyers may want to rest a little, to buy more selectively: I think the Bordelaise acknowledge this, but they are also cognisant that collectors have made money over the least three years, which sways them toward overegging. 

Macro events and perceived demand are perhaps greater influencers. Various macro events over recent years have caused fluctuation in the GBP/EUR rate. The UK’s decision to leave the European Union in June 2016 was responsible for a sharp depreciation of GBP. This can be observed in the disparity between the EUR/GBP rates in the 2016 and 2017 en primeur campaigns (2015 and 2016 vintages) where the Euro rose 7.06% against the pound. When comparing the EUR/GBP price over the two-year term between the 2015 and 2017 campaigns, the differential is doubled, at 14.12%. Although the spot rate has improved in recent months, the Euro release prices from Bordeaux need to be reasonable to compensate for the unfavourable FX rates. Another consideration when speculating about possible future fluctuations in currency, is the 2017 vintage will be the final en primeur campaign before the United Kingdom’s official departure from the European Union and although little is known about the terms of the relationship between the UK and the EU in the future, the time around the UK’s departure, is almost certain to bring about further uncertainty and turbulence in FX terms

With the 2016 vintage still in barrel, we will focus on 2014 and 2015 as our yardsticks, which are both in bottle. Since the release of the 2014 vintage, the four First Growth participating in the en primeur system, have seen an average increase of 26.37% on their respective release prices. Having spoken at length to chateaux owners and negociants, the best indicator of price will be the 2015 release price, adjusting for Euro/Pound changes as most released pre-referendum. First Growths from the 2015 vintage had an average release price of £4,255. Today this has increased to an average market price of £7,312.50. This equates to an average increase of 41.81%. If we remove Chateau Margaux which has massively outperformed the others, 21.48% can still be observed. There is a similar story with the Super Seconds, the 2014s have increased 37.4% since release, while the 2015s have risen 24.36%. In St. Emilion; Cheval Blanc, Angelus, Pavie, Canon and Figeac 2014 have increased 46.78%. The 2015s have returned an average of 63.39% with Canon returning 193.33% and Figeac 80.87%. This performance is a double-edged sword, it shows en primeur has once again founds its footing, but one rather wonders if the Bordelaise resent leaving this much profit on the table. 

It is dangerous to speculate; however, it is instructive to use 2014 as a marker for quality and 2015 release prices a marker for price. If scores are above the former and below the latter, they will be good buys, the inverse, unappealing. We believe we will be trading between these lines throughout the campaign. If the 2015s released today at the current FX rate, the average First Growth Price would be £4,585.18, 8% higher than their actual 2015 ex-London price and we will need to contend with that fluctuation. Moreover, the average First Growth 2014 trading price today is £3,936.50, 14% lower than the 2015s if they released today. In 2015, the average First Growth Wine Advocate score was 98.25: the average 2014 in bottle score today is 95.25. We can surmise therefore that the First Growths may wish to lead the market by releasing at the Euro equivalent of £328.04, or €381.04 a bottle, if they do and the rest follow, a campaign we shall have. 

An actual IPO hinges on demand for the product and that demand will lead to a higher stock price. An IPO’s primary price is largely determined by established financial mechanisms, more importantly; a flexion between the underwriting syndicates and said company’s board of Directors. In contrast the value of a wine is dictated by the subjective tastes of a handful of critics, while the chateaux themselves set the price, with negociants and merchants at their mercy. 

In conclusion. It was the best of vintages, it was the worst of vintages. Climatically, 2017 reflects blurred lines, a tumultuous beginning, a beautiful middle and a mixed to strong end, depending on how the estate battled the beginning. Chateaux investment in winemaking is so prolific that now, when combined with the best terroir, they overcome frost to produce very good wines, while the vineyards might reflect spectral difference, the result among the best estates is good to very good. I wrote something very similar for the 2014 vintage, so I rest on conclusion that 2017 is rather like 2014, three years on, influenced by further progression following the wonderful paradigm shift in winemaking, back to grace and style, away from obvious fruit and extraction. If 2017 had occurred 10 years ago winemakers would have harvested 10 days earlier and extracted more in fermentation. Yet, today they are less interested in alcohol and instead drive for precision of fruit and tannin. It is good to know the quality is there and to hear the Bordelaise are aware a poor campaign could once again slaughter the goose which gold plated their chateaux. Bordelaise, your move!