News that Château Latour is withdrawing from the futures market where wine is sold "en primeur" to wine merchants before it has been bottled is creating much discussion between wine experts, wine scorers, journalists and wine writers. The "en primeur" market is mainly focused on Bordeaux in France. The top estates sell the the wine whilst it is still maturing in the barrel. The wine is usually bottled and sold on the open market around two years after the vintage. In each spring after the vintage the top estates organise tasting parties where wine connoisseurs, writers, journalists, merchants and pundits taste and assess the wines. Some famous pundits even score the wines at this time and some of them are even given marks out of a hundred.
This assemblage of wine experts helps to dictate the price of the wine before it is released. The wine futures market is of course similar to the futures market in any other commodity and it is subject to speculation. Large profits can be generated for wine merchants who can profit from speculation against movements both up and down in the price. The amateur wine investor would do well to keep away from this market as speculation is a zero sum game and for every winner there is a loser and you could be one of them - a loser that is.
It is not only wine merchants and speculators that profit from this market but the producers themselves who benefit from the inflated prices that speculation generates.
Château Latour are now only interested in releasing and selling their wine when it is ready for drinking which is usually at a minimum of ten years after bottling. Their reason from withdrawing from the futures market is to help consumers buy their wine when it is ready for drinking. Wine that has an assured provenance because it has been stored in the Château's own cellars. Château Latour can afford to do this as their owner is a billionaire. It is a moot point whether the other Châteaux involved in the "en primeur" market will follow suit. Naturally, wine merchants and wine speculators are unhappy about the prospect of the futures market dying out.
What difference will this make to the less wealthy lovers of wine? None whatsoever: Château Latour will remain a brand name that will be in very high demand and instead of wine investors keeping the prices high the nouveau riche will perform the same function. The prices will remain stratospheric. And a new set of people will make the profits and losses. The less wealthy will still not be able to appreciate how good top flight investment wine can taste after it has matured in a cellar for much more than ten years.
There is one saving grace, as shown in my previous blog there are very many good wines which are of almost the same quality as the top flight investment wines and in some cases even better. Château Larose Perganson is one of them and you can cellar it for a decade or more. There are still many delights in the wine world and finding them is part of that delight. We, the less wealthy, are at least not excluded by price from this market.
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