Bordeaux's Négoce and other peculiarities

The Bordeaux Primeur week has just ended. A lot of wines have been tasted, a lot of articles have been written. It is not always easy to discern the potential of wines in such young samples. To go beyond these immediate impressions, and try to outlast them, I decided to deal with a broader subject: the négoce system.

La vie de château

In Bordeaux , image and fame are carried by the château's name, not the shipper's – not a single customer can name a shipper.

In theory, the Château has the power: shippers have no contractual exclusivity on the selling of a Château (except when they own one) wine. The system works as follows: a château allots a fraction of its production to some shippers, when the wine is still in Primeur (Forward contract). Usually, this allotment is re-conducted each year, unless the shipper defaults in which case, its allotment is redistributed.

But in practice, Châteaux have become dependent on their shippers, who are their commercial arms. Rarely have the owners developed a commercial capacity. Some are thinking about it, though, because they are increasingly aware that owners not only have the best knowledge of their wines, but also that they often know the markets better than the shippers.

The new style of Bordeaux estate owners, like Count Neippberg, at Canon La Gaffelière, or Daniel Cathiard, at Smith Haut Laffite, travel a lot, and have a good feel of the demand. One often wonders why they still entrust the selling of the products they care so much about, and defend so well, to people who sometimes do not seem particularly interested, nor particularly efficient.

Some famous producers in the new generation, like Michel Rolland or Jean-Luc Thunevin, have recently decided to bypass the Négoce.

Primeur gamble

Even though some other regions in the world have now developed similar systems; Tuscany is an example, Primeur sales remains a Bordeaux peculiarity.

The basic idea was simple and quite sound : to sell in advance to generate cash for the estate owner, and allow him or her to reserve a part of the production for the best clients. Unfortunately, the system has evolved to be more a marketing stunt and in some cases, even mockery.

From March to September, wines of the latest vintage (still in the barrel) are sampled at tastings. Journalists, magazines and potential buyers evaluate them and part of the production is sold. Of course, there is a danger in such tastings : as the evolution of the wine is far from final; one may make mistakes. Delicious fruity flavour at six months is no indication of the quality of a Grand Cru which is supposed to mature in 20 years at the earliest.

The real problem is that buyers feel that they are entitled to a bargain price, as they take a bigger risk. But sometimes, the risk does not pay back : because of « not so exceptional vintages » (remember that in Bordeaux 's official communication, all vintages are at least classic, but most are exceptional), or because of economic hardship in certain markets, the prices have been seen to go down.

One understands that one cannot always win at such gambles. But then, why gamble at all ? And what is so peculiar in Bordeaux that normally cautious buyers should be ready to take such uneasy positions, and risk their or the clients' money.

Shippers or journalists who swore with hand on heart that a vintage would be a very good investment three years ago, rarely confess their mistakes – the show must go on, there are new vintages to sell or write about. But the loser does not forget.

For the demonstration, we took the example of a professional buyer. But now, consumers can be concerned too. For the Primeur sales are not reserved anymore to professional buyers, or even enlightened millionaires with special entry cards : even the small wine-lover can enter, now that on-line sites offer Primeur on the internet. It remains to be seen if these clients show more understanding on finding that their liquid investment was not smart,especially if they have to drink the liquid themselves.

In Bordeaux , some voices are being heard that want to change the system, or at least counterbalance its worst speculative effects.

Thierry Gardinier, President of the Alliance des Crus Bourgeois du Médoc regrets that 'the Primeur tastings, important though they may be for the Bordeaux economy, take all the visibility and even cast a shadow on any other possible commercial venues.'

This is why, with his colleague Alain Raynaud, of the Cercle Rive Droite, he launched two years ago "Les Livrables",  ready-to-be bought wines.

The first edition, in 2005, was ignored by a lot of producers. It was even openly scorned at by shippers. But most seem to be changing their tune. The 2006 edition was a success, and the concept could even be transposed on foreign ground next year.

Who takes the blame ?

Bordeaux means 120,000 hectares of vineyards, 14,000 estates, 57 AOC and one VP. The average production is 7 million hectolitres – but the sales do not exceed 5 million. Shippers are definitely not responsible for this gap. Other elements play, like a decrease in wine consumption in France , and the emergence of new competitors on other markets, not to forget too many plantings in the 80s and 90s.

But their position of market watchmen – since most producers prefer not to mingle with these « petty commercial matters » gave them another responsibility of finding new outlets and new concepts. Bordeaux 's reaction to the world markets' challenge seems quite late. And shippers' rhetoric is often lacking substance; recently, the syndicat des négociants en vins de Bordeaux issued a communiqué. It stated that« accusing the Négoce of not being dynamic enough commercially was a simplistic and pointless attack. More than ever, our commercial teams are mobilised in a very difficult context, owing to the globalisation".

In short, don't blame us, blame the market.

New directions

Not convinced ? I am not either. Fortunately, there are efforts made to re-conquer lost consumers.

Abroad : some négoce-houses have opened commercial offices in London , New York or Singapore , or at least set up networks with good importers there. Some even make studies about the foreign customers, mostly for their own brands though.

There was a time when the export markets were considered as« exhaust pipes » for wines not sold on the domestic markets. Now that the French market is so apathic, foreign buyers are wooed and their customers considered as smart enough to be able to determine the quality of future Bordeaux wines. – the problem is, of course, that they are not unanimous and the different tastes make the issue more complex.

Some efforts are being made at home, too. Curiously enough, till now, Bordeaux has never been a very welcoming region for wine tourists. The accommodation is generally quite poor, on the whole – not on the level of the wines' image, anyway.

Things are beginning to change, though. And a shipper is showing the way.

Philippe Raoux, the owner of Marjolaine/Chamvermeil (a négoce house that sells mostly by mail order), "The Winery", the biggest wine-tourism project in France , in Arsac on March 14.: The site will include tasting facilities, an art gallery, a park, a conference hall, a 100 seats-restaurant, with a chef from Relais de Margaux and a wine bar serving wine per glass.

The Winery Raoux will list 1,200 wines, including old vintages.

How the Bordeaux shippers are being bypassed

Are Bordeaux shippers in danger of being bypassed by château-owners willing to sell their wines themselves? Even if the phenomenon is not generalised yet, there are examples:

Jean-Luc Thunevin, for one: on his blog, "Bad boy" (the name Robert Parker has given to the famous garage-winemaker) announces he has just bought back 50 crates of Château La Dominique 2004 from shippers, so as to sell them directly to restaurants owners.

On the same day, Thunevin decided to stop offering his wine " Virginie de Valandraud" to the négoce, so as to distribute it through exclusive channels, starting with the vintage 2006.

Add Michel Rolland to the story (he has just started his own distribution company), and the rosy stories told by the négoce ("we're the best system ever invented, and we're here to last") do not ring quite true anymore.

Hervé Lalau
Secrétaire Général
Fédération Internationale des Journalistes et Ecrivains du Vin (FIJEV)

Hervé Lalau is also the Correspondent from Belgium for Wine Business International, Germany

 

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