En Primeur or Wine Futures

En Primeur or Wine Futures
Every year in April wine buyers and critics head to Bordeaux in France to taste and bid for wine that has not been made and will not be in bottle for another 18 – 24 months.

Such is the fame of Bordeaux, and the international demand for its top wines that over many years a system the French call en primeur and American know as wine futures has grown up.

The centuries old Bordeaux wine trade is unusual. The top wineries do not sell their wine to wholesalers, merchants or individuals. Instead their output goes to middlemen, known as négociants -- a word based on negotiate. The négociants then sell on parcels of wine to customers, taking a commission for themselves.

The wine being bought and sold is still in barrels. It is the vintage from the previous year and the eventual customer will not be receiving delivery for another two years. The wine has to mature in barrel, be blended to the desired style and bottled.

The advantage for wineries is that they get early payment and the purchasers the benefit is to ensure a supply.

The April tasting is the first move in a delicate ritual where critics announce their opinion of the young wine and the wineries decide how much they should charge. The wine is offered in tranches so prices can rise and fall for later tranches.

Many wineries will base their price on those charged by the top wineries; historically the wineries of the region have lived in a ranking system. And no self-respecting winery will want to charge less for their wines than a competitor who they think is not at their level.

But in the past decade a new factor has arrived – a critic whose judgement and taste affects the market. So many people follow his judgements that if Maryland based writer Robert Parker gives a high score to a wine then it sells out. The large number of Americans buying expensive Bordeaux has pushed up prices and now Chinese buyers are sending prices up to dazzling levels.

It is a matter of supply and demand. A Bordeaux wineries, known as a Chateau, can make wine only from its own vineyards and they are limited in size. Production cannot be expanded and yet there are more people every year who want to buy the wine. The names of the Chateaux are world famous and their wines are bought for investment.

Ten years ago we said prices had reached a peak and couldn’t get any higher. They’ve doubled since then and the current vintage is supposed to be another ‘wine of the century’.

Would you or do you buy wine before it is bottles? Tell us on our forum.

Peter F May is the author of Marilyn Merlot and the Naked Grape: Odd Wines from Around the World which features more than 100 wine labels and the stories behind them, and PINOTAGE: Behind the Legends of South Africa’s Own Wine which tells the story behind the Pinotage wine and grape, also available for the KIndle.

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