Liv-ex on Bordeaux 2019: ‘a missed opportunity’

The analyst’s annual report on the en primeur campaign applauds châteaux pricing but bemoans the growing tendency to hold back stock

Words by Guy Woodward

Chateau Figeac Vineyard Barrels
Château Figeac cut the volume of its initial 2019 release by an estimated 30%

Global wine marketplace and analyst Liv-ex has delivered its verdict on the 2019 Bordeaux en primeur campaign.

With the dust having settled on a condensed campaign that played out at breakneck pace, Liv-ex says the wines – and prices – were largely well received by both trade and consumers. In posting a generally positive response, it expressed, however, one major concern – the growing trend for châteaux to hold back a large, and undeclared, proportion of its stock.

Critical opinion, said Liv-ex, “placed 2019 as the best vintage of the decade, and the global trade reported higher sales by volume than for the 2018 release, itself regarded as a strong campaign”. Its analysis put this down to welcome price cuts, which it calculated at an average of 21% on last year.

Because of the cancellation of the usual tastings in Bordeaux, and the delay in critics posting reviews, “most wines were priced and offered before general critical opinion had emerged”. And while quality was judged by many Bordelais to be higher than the 2018s, the macro-economic climate exerted pressure on producers to release the 2019s at a price the market couldn’t refuse. “Most, but not all, managed this,” says Liv-ex in its annual report.

According to its analysis, recent en-primeur returns for ‘great vintages’ have not been sufficiently attractive for collectors. In 2019, however, benchmark critics’ scores place the vintage at the top of the last decade’s, with an average of 94.9 for the wines released. By comparison, the average score for the same group of wines in 2016 was 94.5, and 94.7 in 2009.

Chateau Lynch Bages Wine Casks
Liv-ex identified Lynch Bages as a particularly strong seller

And with the 2019s largely released at a price much lower than other ‘great’ vintages, Liv-ex highlighted its relative value for money. On average,  the 2019 wines were priced 21.3 per cent lower than the current 2018 market price, down 17.6 per cent on the 2016 and 15.2 per cent on the 2015. The new vintage comes at 35.6 per cent and 35.3 per cent discount to the 2010 and 2009 respectively.

Liv-ex points out, though, that the headline critical scores are not entirely reflective of the verdict on the vintage as a whole. Given that most critics, in their reports, rate 2019 below the overall quality of 2010 and 2016, claims of ‘score inflation’ on the part of some critics appear to have some validity.

The major gripe in the Liv-ex report, however, concerns volumes. “Most châteaux were not prepared to release full volumes at [these] discounted prices,” it said, noting that producers chose instead to hold stock for a later date. “Might this strategy come back to haunt them?”

Liv-ex’s argument is that by holding back stock, producers missed an opportunity. “Despite the uptick in demand this year, many châteaux chose to ignore the opportunity to sell greater volumes by releasing decent amounts of their production onto a market with ‘hungry buyers,’” it said. “It seems that there is a continued belief that by squeezing supply, prices will rise. The problem here becomes one of market perception. If the market knows (or simply feels) that the supply exists, but is not being offered, it views it as an overhang. Prices struggle to rise under such conditions.”

To back up its case, it quoted Neal Martin’s vintage report for Vinous, in which the British critic said: “Châteaux rarely, if ever, disclose the percentage of production released onto the market. It is designed to create an illusion of scarcity when Bordeaux is anything but. Some properties are sitting on half their production, which they are perfectly entitled to do. I just wish they would be open about it.”

The Liv-ex report bemoaned that, while most merchants saw some first-time buyers emerge, “a lack of volumes in the desired wines made this more challenging than it might have been. Many felt that it was a missed opportunity.” Liv-ex estimated that the reduction in the volume released in the first tranche was as high as 50 per cent at Château Lafite-Rothschild, 35 per cent at Leoville-Las-Cases and 30 per cent at Cheval Blanc and Figeac.

Lafite-Rothschild is estimated to have cut its initial release of 2019 by 50%

Despite such figures, merchants reported a narrow campaign with around 30 leading wines seeing strong demand. Liv-ex picked out Châteaux Pontet-Canet and Clinet as the best value releases from the Left and Right banks, respectively, and identified Lynch Bages, Mouton Rothschild, La Mission Haut-Brion and Pichon Lalande as other strong sellers, but lamented the focus on the big names.

“The compressed nature of the campaign allowed far too little time for many of the lesser names to reach the market,” it said. “Most of those wines remain unsold.” It also noted that the big names’ grands vins, “which have greater margins to play with, were often more fairly priced than the second and third tier wines”. Mouton Rothschild’s grand vin, for instance, came out 30.8 per cent down on last year, while its second wine, Petit Mouton 2019, was down only 16.9 per cent. White wines were also offered at smaller discounts than the reds. As a result, “The 2019 campaign became a campaign largely for the big brands (and their grands vins), with cuts of up to a third grabbing the headlines. Most others were left in the dust.”

In conclusion, Liv-ex said that: “The success of the campaign was squarely down to its attractive pricing. The market showed the châteaux that it can absorb their stock if they allow them to. However, the reduction of volumes released was a source of continued frustration and narrowed the opportunity for merchants to develop a new generation of buyers.

“The question is, did the campaign match the potential bestowed upon it by mother nature and the hard work done on the ground? Not enough people think so.”

For more details, see https://www.liv-ex.com/.