En Primeur, or ‘wine futures,’ is a longstanding tradition. Originating in France, the system has been in place for over 60 years, intertwining wine romanticism and market rationale.
After the Second World War, France’s wine business was badly shaken; its producers underfinanced and recovering from several years of conflicts. In Bordeaux, the most influential wine merchants of the day—the négociants—initiated buying en primeur. They agreed to buy wine from top châteaux while it was still in barrel, and sometimes even before the harvest, hoping for quality and quantity.
The system allowed the négociants to exercise control over pricing and also to obtain their desired volume of wine at reduced rates. At the same time, it provided upfront cashflow to the châteaux helping to alleviate their financial difficulties.
The picture has changed since. The growing demand—and market—for fine wine, and Bordeaux in particular, from the 80s and 90s meant that the power balance shifted back to the châteaux. Since then, the producers have been able to take on an increasingly large share of the profits from the supply chain.
In the En Primeur system, ownership of top Bordeaux wine moves from the châteaux to négociants, on to merchants, and finally to the end-collector, over a period of 18 months to two years. It is hoped that the price will rise over this time giving the collector a reason to buy.
Between 1994 and 2005, the price charged by the châteaux represented 50% the wine’s value by the time it was physically released. This left plenty on the table for négociants, merchants and collectors to profit.
Since 2006, however, the châteaux’s share has increased to 70% on average. The result has been to increase the risk for the rest of the chain, reducing the incentive to buy. If stock remains in the supply chain, collectors can often find wines with considerable bottle age at the original release prices or lower. The 2006 and 2011 vintages are clear examples of this.
Many believe that sentiment around En Primeur has started to wane, yet the trade and critics meet each vintage with visible excitement. While the enthusiasm surrounding tasting at the primeurs differs from the actual buying appetite, keenly priced “exceptional” vintages tend to be in high demand, as the numbers suggest.
Top producers from other regions have followed in the footsteps of the Bordelaise, adopting the early release model. This includes Burgundy, the Rhône, Port, Italian, Spanish and New World producers. Region-specific factors, however, often inform the success of the campaigns. The scarcity and exclusivity of the top Burgundy wines, for instance, makes allocations (the opportunity to buy them on release) keenly sought-after.
Still, Bordeaux En Primeur remains relatively unique by setting the scene and showing the system in its purest and most celebrated form. The region commands the attention of the industry newswires for over two months every spring. The volume and value of wine (up to a billion dollars) released at Bordeaux En Primeur is incomparable to anywhere else in the world. The five First Growths alone generate between $400-600 million of sales.
When purchasing En Primeur, the wine will be released and shipped at a later date. Upon arrival, merchants in the U.K. will typically store the wine in a bonded warehouse; duty is payable upon delivery. Many of the wines will often have a recommended drinking window of five to 50 years or more, dependent on quality.
The En Primeur system offers a sneak peek into the future of the vintage. There is a charm in approaching something early, seeing it develop, coexisting with it. En Primeur is a collector’s departure on what could be a long wine journey.
Readers should take note that the views of this author represent those of a company with an interest in the wine trade. Liv-ex operates the global marketplace for fine wine. It offers trading, data and settlement services to professional buyers and sellers of fine wine. Private collectors can view Liv-ex prices and value their portfolios using Cellar Watch and find regular market analysis on the blog. The opinions of Liv-ex are their own and do not represent those of Robert Parker Wine Advocate or Wine Journal. Liv-ex contributes articles to Wine Journal that we feel are of market relevance to readers, but we do not specifically endorse this company.
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