Bordeaux Today

Scores, Futures, Fortunes: How Bordeaux Became a Financial Asset (1982–2010)

From Parker's 1982 call to the Lafite bubble: how en primeur, the 100-point scale and Asian demand turned Bordeaux wine into a global financial asset.

In the spring of 1983 Robert Parker, a lawyer from Maryland, tasted the 1982 Bordeaux vintage from the barrel and told his newsletter subscribers it was superb. Better-established critics were more cautious. Within thirty years a bottle of top Bordeaux was being scored on a 100-point scale, quoted on a London exchange and bought by collectors from Baltimore to Hong Kong. No medieval burgess or Chartrons merchant would have recognized the trade. For eight centuries the region had sold wine, hard and well, to whoever held the sea lanes. After 1982 it also sold a score, a market position and a financial asset.

Wine sold before it exists

Buying Bordeaux before it is finished is old. For centuries merchants paid for wine before bottling, and got access and a lower price in return; advancing money against a harvest is part of how the négociants of the Chartrons built their houses.

The modern en primeur system, in which each spring's new vintage is sold while still in barrel, dates from after the Second World War. Bordeaux came out of the war short of capital, and many estates needed cash long before their wine could ship. Selling in barrel suited both sides. The châteaux were paid up to two years early. The négociants secured volume at a discount and kept control of distribution. Through the 1950s and 1960s, as bottling at the château spread, the practice settled into a system with a fixed calendar.

Private buyers joined in earnest only in the 1970s and 1980s, paying for "futures" on wine they would not receive for two years. Cult Wines, in its short history of the system, describes this as the point where en primeur became a market event and stopped being only a way to finance the harvest.

In 1978 Robert M. Parker Jr., then practising law in Baltimore, started a direct-mail newsletter, The Baltimore-Washington Wine Advocate. Six hundred charter subscribers paid for the second issue. Parker graded wines from 50 to 100 points, a scale borrowed from American school marking. The established wine press wrote hedged, allusive prose; Parker gave a number. He presented himself as a consumer advocate: the newsletter took no advertising, he bought the wines he tasted, and the score was meant to be something a reader could act on.

1982: the vintage that made his name

The 1982 vintage was hot and ripe, and it divided the critics. Parker, tasting from barrel, called it superb and said so emphatically. Much of the established press hesitated, and some critics said the opposite. Robert Finigan of San Francisco, then among the most influential wine writers in the United States, judged the wines too ripe and too low in acid to age.

Parker was right. 1982 became one of the great post-war vintages, and nothing in the rest of the decade matched it until 1989 and 1990. Subscriptions rose sharply, and in March 1984 he left the law to write about wine full-time.

The 1982 campaign was also where en primeur and consumer criticism met. American buyers, reading Parker, bought 1982 futures in large quantities, and those who did profited as prices climbed. After that, the spring barrel tastings ran in a fixed order: the wines were made, the critics scored them, and the prices followed the scores.

What a score is worth

One Bordeaux merchant put the difference between a Parker score of 85 and one of 95, for a single wine, at six to seven million euros, and a 100-point score could multiply a wine's price by four. Econometric estimates later attributed roughly a third of the variance in release prices for Médoc classed growths and Saint-Émilion grands crus to Parker's scores alone. The Médoc hierarchy had been fixed since the 1855 classification, and reputations had taken decades to build in brokers' ledgers. One taster could now do the same in an afternoon.

Opponents called the effect Parkerization. Their charge was that riper, darker, more extracted and more heavily oaked wines tended to score well, so producers around the world were moving towards that style to win the points. Jonathan Nossiter's documentary Mondovino was selected in competition at Cannes in 2004, one of only four documentaries ever nominated for the Palme d'Or. It built its case around Parker and the consulting oenologist Michel Rolland, whom estates everywhere seemed to hire, and presented the two men as agents of a single global taste. Parker rejected the charge. In his view winemaking standards worldwide had risen during his career, not narrowed. The argument is a version of an older Bordeaux one, over whether a wine should express a place or a market, which also runs through the terroir debate.

The garagistes

Scores combined with scarcity produced the garagistes. Their forerunner was Le Pin in Pomerol. In March 1979 Jacques Thienpont bought the one-hectare plot from the Laubie family for one million francs; its winery was little more than a shed. The first vintage under the Le Pin name was the 1979. The vineyard has since grown slightly, to 2.7 hectares, and output has never gone above a few hundred cases, which makes Le Pin rarer than Pétrus. Its prices came to match those of Pétrus and at times exceeded them. Parker gave 100 points to the 1982, and later to the 2009 and the 2010.

In 1991 Jean-Luc Thunevin, a former bank employee in Saint-Émilion, made the first vintage of Valandraud in the workshop next to his house: about 100 cases, from very low yields, worked by hand and aged in new oak. The French critic Michel Bettane called such wines vins de garage, wines you could make in a garage. The producers took up the insult as their name. "By talking about me, they made me exist," Thunevin said later.

From 1994 imitators appeared across the Right Bank. For about ten years, micro-cuvées with no château building, no park and no history sold at prices above those of many classified growths. By the late 2000s even well-known garagistes were using less new oak and picking earlier. The episode had shown that a Bordeaux reputation could now be built in one small cellar, within ten years, on the strength of one critic's scores.

Hong Kong, Lafite and the number eight

In 2007 Hong Kong halved its 80% import duty on wine, and in early 2008 it abolished the duty altogether. The city became the auction and trading centre for fine wine in Asia within months. Buyers from mainland China bought through it, and their demand concentrated heavily on one name, Lafite. In October 2010 Château Lafite Rothschild announced that bottles of its 2008 vintage would carry the Chinese character for eight, a number associated with prosperity, engraved on the glass. The wine's market price rose by about 20% almost immediately.

A way to measure these moves already existed. In 2000 James Miles and Justin Gibbs, two London stockbrokers, had founded Liv-ex, the London International Vintners Exchange, with ten founding member firms. It ran as a stock exchange for fine wine, with indices, bid-offer spreads and market reports. Bordeaux now had a ticker.

2009–2011: the price escalation

A strong vintage, Asian demand and investment buying together produced the steepest price rise in Bordeaux's history. The top 2009s were released in 2010 at roughly 71% above the 2008s; Lafite 2009 came out at €550 a bottle ex-négociant. In the 2010 campaign the first growths were released at an average of €736 a bottle ex-Bordeaux. The 2005s had been released at €404 and the 2000s, a decade earlier, at €141.

The Liv-ex 100 index peaked in June 2011. Then the market turned. By late 2012 the index was about 29% below its peak, Chinese demand for Lafite had fallen away as quickly as it had risen, and buyers from the two most expensive campaigns ever held were sitting on losses. The sellers admitted the mistake. The managing director of Domaines Barons de Rothschild, which owns Lafite, said the 2010 campaign had "come across as arrogance, in terms of both timing and prices, for many châteaux".

Latour leaves the system

The strongest response came from a first growth. In a letter to the Bordeaux trade dated April 2012, Frédéric Engerer, president of Château Latour, announced that from the 2012 vintage Latour would stop selling en primeur. It would release its wines only when it judged them ready to drink. It was the most significant break with Bordeaux commercial practice in living memory. Engerer's reasoning went to the system's premise: a wine that needs fifteen or twenty years in bottle should not be priced from barrel samples eighteen months old.

The market data supported him. A Liv-ex analysis published in May 2014 found that en primeur buyers had, on average, lost money on every vintage since 2008 except the 2012, and that buyers of the 2010s were down 17%. Through the 2010s, campaign after campaign, many wines could be bought more cheaply as bottles several years after release than they had cost as futures. Merchants reduced their allocations, collectors who had lost money bought less, and the trade press began asking each spring whether en primeur still had a future. The doubt was aimed at the same mechanism that had turned Bordeaux into a global asset. The system survived it, as Bordeaux's selling arrangements usually have.