By now, everybody who sells Bordeaux en primeur – the newly released vintage that is always tasted from barrel the first week of April – will have descended on Bordeaux. As I have commented in my blogpost of the 23rd of March, this year is slightly different. Different in that Farr Vintners will not be attending this year. For those who didn't know: Farr is the biggest en primeur buyer in the UK.

If you were the number 2 buyer of Bordeaux en primeur (my estimate), what would you do in reaction to such a bold move by your main competitor? Would you follow suit? Would you join forces in an attempt to bring the release prices down? Berry Brothers & Rudd have decided differently: they will go. Moreover, referring to their main rival not going, they state that "We have always felt that our role is to be the link between the people who make the wine and the people who drink the wine, so we would be doing our customers a disservice if we were to take that stance". For the full Berry's article click here. 

It turns out to be a more and more interesting en primeur campaign. Yes, pricing is an obvious and hotly debated issue. With the current economic climate, weak sterling and the overpriced 2007 and to a lesser extend 2006, it is right to ask for a significant lower release price. But, let's forget about pricing for the moment. Let's focus on the quality of the 2008 vintage.

The initial media coverage on Bordeaux 2008 was clear: it was not going to be a good vintage. In their defence, the Bordelais said that, once again September saved the vintage. Everybody else wasn't buying it, seeing that this has been the story for a number of recent vintages now. However, there are more and more voices saying it will indeed be a good to very good vintage. The weather seems to have favoured the right bank, so particularly Merlot seems to have done well. Sylvie Cazes, president of the Union de Grand Crus Classes, has even been quoted that 2008 is definately superior to 2006 and 2007 and is in fact close in quality to 2005....

We will know soon. Robert Parker will have finished his tastings by now, along with other well known wine reviewers. 

But, to come back to pricing, seeing that the whole point of buying en primeur is to either profit from prices going up once the wine is physically available, or to get an allocation in the first place, release prices are crucial. So, is the whole tasting circus relevant – will it matter?

Farr seems to think that, this year, it doesn't: if prices are too high, nobody will buy and therefore there's no point in buying en primeur or indeed going to taste (apart from  the political motives). Berry's makes a point to the contrary: if you offer en primeur B'x, you go and taste it because you don't let your customers down.

Are Ditton Wine Traders going to Bordeaux? No we are not. Until now, we never have. We don't need to. We do buy into allocations of wine that we think are good value, but not by tasting and spending, in our view, unnecessary money. After all, does it matter to you if Ditton Wine Traders (or indeed Farr or Berry's) taste the wine? Does that add any value to tasting notes of Parker, Jancis Robinson, the Wine Spectator etc? Through some close partners, we secure allocations of the best selling wines and because we work on such low margins, we are able to offer these wines at lower prices than most other merchants.

The bottom line? If 2008 turns out to be a vintage worth buying en primeur, we will offer a small list of the most "tradeable" wine and we will offer them at prices that are below Farr and Berry's. Keep an eye on our list:www.dittonwinetraders.co.uk/wines.asp.

The Bordeaux En Primeur campaign is not far away now. Or is it?

Most wine professionals are about to head to Bordeaux for the barrel tasting of the new vintage.In this blog, I have commented on the campaign before, on the 21st of February and the 17th of March. It has always been clear that 2008 is going to be a very difficult vintage to sell. This weekend, some more reports were published. FT.com published an article titled "UK loses thirst for Bordeaux wines". Several sources are quoted saying that UK traders are selling stock back to Bordeaux and are now heavily dependent on export to Asia as domestic demand falters. Simon Staples from Berry's says 20% of their Bordeaux are going back to Bordeaux, the reason being that sterling is so weak.

Jancis Robinson, the acclaimed UK wine critic, also wrote an article, in the Financial Times again. Titled "Wine's age of uncertainty", Robinson paints a rather gloomy picture of the Fine Wine market in general and of the Bordeaux En Primeur campaign in particular. We already knew that – although likely to be better than 2007 – 2008 is not a good vintage. The fact that the economic climate is not very helpful and sterling being weak making a decent campaign in the UK unlikely (unless prices drop dramatically) is no news either.

The big news in Jancis' article for me was that Farr Vintners will not be going to Bordeaux to taste the new vintage. London based Farr, voted best en primeur merchants 3 times running and traditionally one if not the biggest UK En Primeur buyer is quoted as saying that they won't even bother going becauce there's zero demand for unbottled Bordeaux that costs more than most mature vintages.

I found that quite astonishing. I know there's always big pressure from the UK on Bordeaux to keep their prices reasonable but this is a huge step up. So much so that I called Stephen Browett of Farr Vintners to verify the story. He confirmed that – as long as there are no sign of prices being drastically reduced – they indeed will not go. Please allow me to predict a few possible scenario's:

1) Bordeaux chateaux do drop their prices to a level that there would be a decent campaign. Not likely to be to such an extent that the UK would be able to offer decent prices to its customers, again courtosy of sterling. Now, the UK is the biggest export market, but not the only one. Other markets don't have the same currency issue as the UK. But which markets are these? Asia is not used to buying futures. Although this scenario I think would be the best outcome, it would mean that both negociants and traders will have a massive problem on their hands with their 2007 stock, 2007 being less of a vintage than 2008 and in this scenario higher priced.

2) Some chateaux will and others won't reduce prices enough. We will have a lacklustre campaign, unlikely to make anybody much money.

3) The campaign will be postponed until September, as advocated by Jean Guillaume Prats of Cos d'Estournel. This might be a smart move as it buys time, but is not very likely to do much good, unless you believe we will be in a much better position, financially speaking, than we are at the moment.

4) There will not be an En Primeur campaign...

So, the plot thickens. Whatever the outcome, for us consumers it will be good news as it is very likely that prices will come down, either of 2008 or 2007 or both. If you want a good benchmark on prices, do visit our "wine & champagne" page. Don't hesitate to ask us for a quote on wines not listed!

You might have noticed we have now included RSS feeds to the blog page. RSS feeds enable you - once you have subscribed to it - to automatically receive any new entries on the blog. You will be notified by email and you can see the title and the first paragraph of the article. It will contain a link to the website, where you can view the rest of the article.

You will find above logo under each blog entry, for your convenience. You only need to click on it once – this will enable the feed for all future entries. Do subscribe to them – it's an easy way to keep posted and it helps build traffic to our website!

Shortly we will add some other useful features, like links to some social networking sites. These will allow you to easily get in touch with other people involved in wine or the wine industry. If you would like to see me add some other features, do let me know on info@dittonwinetraders.co.uk .

Finally, did you know you can register on the site for stock updates and spot offers?

Jean Guillaume Prats -  the Director of Bordeaux Chateau Cos d'Estournel – tells Sudouest that it might be best to postpone the 2008 En Primeur Campaign until September. Excuse me? If this would have come from Anthony Barton, owner of Leoville Barton and well known for his realistic view on pricing, you would think that he was true to form. But coming from arguably the most commercial minded manager in the Bordeaux, always pushing for the highest prices, this is remarkable news. He might well be right that, come September, the financial climate will be more favourable but all the same, it's a bit of a shocker.

“It’s an ingenious system” says Jean-Guillaume Prats, who is the general manager of Cos d’Estournel, a classified growth of 91 hectares in Saint-Estèphe. “However, if the futures campaign is held in the Spring, as is the custom, we will run into a blind wall. If a donkey isn’t thirsty, you can’t make it drink! The economic situation is too drastic,” says this professional who spends a hundred days per year abroad promoting his wines.
“Let’s leave President Obama time to settle in and the plans to revive the world economy take effect. Bordeaux should postpone the 2008 future sales campaign until September but keep the 2008 tastings in April. At worst, properties will sell their wines at the same price as they would have in the Spring. Our 200 important world buyers (importers, distributors,..) must be informed immediately and it’s up to the first growths (Margaux, Latour, Lafite, Mouton and Haut-Brion) to propose this change of schedule.”

For the full article, see the Sudouest blog .

Le Comite Interprofessionel du Vin de Champagne (CIVC) have recently released figures for worldwide Champagne Exports. According to Wine Industry Report, sales in pretty much all developed Champagne markets fell. As expected, Russia (+28%) and China (+36%) grew. Although these are impressive increases, it is an increase on a relatively low baseline figure and not nearly enough to come close to offsetting the declines in the 2 biggest markets: the UK – the biggest export market with nearly 36m bottles – declined by nearly 8% whereas the USA – the worldwide number 2 with 17m bottles saw sales decline by an impressive 20%. Here's an extract of the report Champagne exports in 2008 (compared to 2007):

France: 181,209,546 bottles -3.59%
Export: 141,244,306 bottles: -6.37%
Total: 322,453,852: -4.82%

Rank | Country | Jan-Dec 2008 | % change

1 | UK | 35,984,574 bottles | -7,86%
2 | USA | 17,193,526 bottles | -20,85%
3 | Germany | 11,573,597 bottles | -10,38%
4 | Belgium | 9,910,581 bottles | -0,40%
5 | ItalyE | 9,438,811 bottles | -8,78%
6 | Japan | 8,332,233 bottles | -9,14%
7 | Switzerland | 5,439,009 bottles | -10,36%
8 | Spain | 4,090,505 bottles | -10,54%
9 | Australia | 3,648,022 bottles | 10,25%
10 | Netherlands | 3,511,889 bottles | -13,97%

14 | Russia | 1,326,316 bottles | 28.34%
16 | Austria | 1,210,260 bottles | 13.47%
17 | Hong Kong | 1,036,901 bottles | 13.83%
18 | China | 896,896 bottles | 36.68%
36 | India | 246,698 bottles | -6,77%

Source : Comité interprofessionnel du vin de Champagne

Or a dead cat bounce? Ft.com had sone new information on the current Fine Wine Market climate. They see quite a few new investment funds putting money in the market, hoping to step in at a price level close to or at the bottom of the cycle.

"Anthony Gahan, an investment banker, is in the advanced stages of raising £100m capital for the Red2Gold fund (www.red2- gold.com), which will be one of the largest in the world.“Prices have fallen, but we see that as a real window of opportunity which won’t last for too much longer,” says Gahan. “We also believe the fundamentals of wine investment remain very strong. Extremely wealthy people haven’t stopped drinking great wine.”

Red2Gold will be a 10-year capital growth fund with an initial three-year lock-in and fees of 2 per cent on assets and 20 per cent on performance – although it will not take any performnce fee for the first three years. It will be heavily weighted to blue-chip Bordeaux chateaux.

Elsewhere, First Growth Bordeaux Ltd (www.firstgrowthbordeaux.co.uk) is about to launch an investment vehicle that will be Jersey registered and regulated. Called FWT-30 (Fine Wine Top 30), it aims to raise £10m with a view to launching by the end of June.“The main opportunity for the fund is to buy up significant wine stocks from a narrow group of chateaux that are keenly priced at the very bottom of the next growth curve,” says Charlie Martin, managing director. “Our main focus will begin with the 2005s, which is the investment vintage to grab, particularly at current values.”

Some investors clearly agree. Earlier this week, Richmond Partners, the merchant bank, announced that it had purchased a 29 per cent stake in Peter Lunzer’s wine investment house (www.lunzerwineinvestments.com) to start another new fund. The Lunzer Wine Investments Institutional Fund will open this month with £15m-£20m in assets. Investors will need a minimum of £500,000.

Meanwhile, Lunzer’s erstwhile colleagues at Anpero Capital (www.wineinvestmentfund.com) have launched two segregated wine funds requiring a minimum investment of £10,000. “Since the beginning of this year, we have received a huge amount of interest,” says Anpero’s Andrew Della Casa. “One of the reasons for this is that prices are beginning to stabilise and in some cases harden,” adds Della Casa. This was reflected in small gains by the Liv-ex Index 100 Fine Wine Index of 1.2 per cent in January and 1.3 per cent in February. This followed a 14.6 per cent fall in the index in 2008, its first annual fall since 2004.

But not everyone is convinced that the global fine wine market, worth around £2bn a year, is out of the woods. Gary Boom, managing director of Bordeaux Index (www.bordeauxindex.com), the wine merchants, still sees more money flowing out of wine than is coming in. “And I don’t see that changing in the immediate future,” he warns. “Demand is fairly steady, but not particularly strong and right now there is still a lot of stock on the market.”

There has been a lot of media coverage on this transaction, some of which suggested that Lay & Wheeler was forced into a fire sale because the company would not be doing well. This sparked a reaction from Richard Wheeler, which we think is only fair to publish on this blog. Although we didn't take the view it was a bad thing for L&W, this eloquent letter to Jancis Robinson, does give more insight:

"It is nonsense to suggest that Lay & Wheeler has disappeared. The decision to join forces with Majestic plc was not a ‘knee-jerk’ reaction to the current recessionary environment; nor was it driven by any financial pressures. Lay & Wheeler was profitable and well funded. Our discussions with Majestic and other potential partners started over two years ago. With the family’s unanimous support, the board has been seeking a strategic partner to enable the unique virtues of Lay & Wheeler’s fine wine consumer services to reach a broader UK and international audience. It would appear that the other top two or three British fine wine merchant brands also have long-term strategic backing.

We have long admired Majestic’s approach to retailing wines and their offering of mixed cases to the public at affordable prices. Their commitment to wine education, training and customer care in every one of their outlets has been similar to our own in Colchester. In our case that commitment has produced and developed many skilled wine advisors who now work for Lay & Wheeler or others and includes Simon Larkin, a young MW, who is head of our fine wine trading team.

Two years ago we shared our company values and vision with Tim How at Majestic and the discussions continued positively and constructively through a period of change in management at the top of Majestic. We were delighted that the new management under Steve Lewis’ leadership endorsed this vision and accelerated the plan into action.

Turning to your comments about Vinotheque, for the record Vinotheque was never part of the 150 year history of Lay & Wheeler. It was an independent privately owned bond which we employed to store reserve stocks for ourselves and our private customers. When its owners got into difficulty in 2001, I and my family without hesitation and at great cost to ourselves stepped in to rescue the bond and to protect our customers' wines and the several hundreds of customers who were utterly unconnected with L&W at the time. We founded Vinotheque, took the business under our own management, restored standards and stability and ensured that the security and care of our customers’ wines was maintained. This operation was conducted without inconvenience or loss to anyone except ourselves, until we could find a reliable and specialist custodian to take over the operation of a business that was never intended to be part of Lay & Wheeler. We retained ownership and control of the property whilst transferring the operating business to the leading specialist in the field – LCB. The arrangement has greatly enhanced both businesses. Why this series of commercially sound and well managed decisions, taken seven years ago, not months ago, and demonstrating very publicly our integrity to customers who trusted us with their wine should provoke such disparaging comment now is a great disappointment.

For me and all the family it has been an emotional step, but one we have taken resolutely and without remorse in the firm belief that it will significantly benefit the Lay & Wheeler brand, our loyal customers and suppliers, the dedicated and skilled staff who work for us, and importantly the thousands of Majestic customers who will now be introduced to Lay & Wheeler’s fine wine range, and the opportunity to build a cellar via our wine plans and portfolio services. This is very good news all round.

There have been various ill informed comments about the terms, these deals are never as simple as they may appear, my family thought Majestic should have paid a little more and I’m sure the Majestic’s Board thought they should have paid a little less. In my experience this is the essence of a fair deal!

Johnny will carry the family banner proudly into the Majestic group with our whole hearted support. It will give me enormous personal pride and pleasure to see L&W enhancing Majestic’s fine wine offering to their customers and increasing their shareholder value. Meanwhile our Colchester Cellars at Gosbecks Park, which you have kindly suggested is part of the social fabric of Colchester, will remain in the family’s independent ownership and I will look forward to continuing to welcome our many friends and supporters in the area to our extensive tastings and wine appreciation dinners as usual."

Bloomberg reports today that "Richmond Park Capital LLP, the U.K. merchant bank founded by former Dresdner Kleinwort Wasserstein executives, bought 29 percent of Lunzer Wine Investments and will start a fund aimed at wealthy clients to invest in Bordeaux"

Interesting. With the title "Is the Bordeaux Wine Boom coming to an end?", we posted an entry in this blog on the 21 of February, voicing the view of some people in the industry that the Belle Epoque of Fine Wine Investment could be over. Apparently, Richmond Park Capital do not agree with this outlook. Former Dresdner Kleinwort Chief Executive Officer Andrew Pisker, Steven Berger – head of global merchant banking at Lehman Brothers in the 1990s - and finally Pascal Maeter, former co-head of global leverage for Dresdner Kleinwort are the gentlemen behind Richmond Park Capital, all heavy weights in banking and investment judging by their careers. Peter Lunzer himself has 20 years of experience in Wine Investments.

They might have it spectacularly wrong – which I suppose wouldn't surprise a lot of us when the word "banker" is involved. Just looking at the facts though, it is encouraging that a new wine fund is started. More importantly, it means a fresh 15 to 20 million pounds buying fine wine. If my estimates are correct, that represents some 5-8% of the combined yearly turnover of the UK fine wine trade, so big enough to have some impact on prices.

Only on the 21st of February I predicted in this blog that a wine merchant or two might go under. Twenty days later and we're there. Although not folding, proudly family owned and highly specialized Fine Wine merchant Lay & Wheeler has been sold to Majestic.

Having been independent for 150 years, L&W had already sold their bonded warehouse Vinotheque to London City Bond. They now have taken the step to sell the remaining business to high street retailer Majestic. They are snapping up this great business for GBP 6m. With a net profit of GBP 0.5m,  they pay a hefty 10 times net profit, no doubt reflecting the excellent fit into their existing business of an odd 150 retail outlets. Talking about inflation though....

This follows the sale at the end of last year of the majority of shares of Armit – another resounding name of the UK wine establishment – to Dutch wine group Baarsma. Baarsma started off in the bulk wine business and, under new CEO Hans van Duin (ex Ahold and Heineken), is very ambitious and growing fast. To complement their range at the top end, Armit will be a very welcome addition, having the exclusive agencies for Lafleur, Sassicaia, Angelo Gaja, Bruno Giacosa and Tenuta dell’Ornellaia amongst others.

Time will tell who's got it right. Have Armit and L&W sold at the peak of the market, cashing in nicely? Or have the big fish gobbled up some highly priced, hardly ever available snacks that will turn out to be transforming their future?  Maybe both, but I tend towards the latter – it's not very often that a (although highly successful but in the end) mainstream business can acquire such gems. Having worked for a high street retailer myself, I know the Holy Grail of retailing is trading up your customers. As these acquisitions throw in a totally new, very high end customer base, I'd have done exactly the same (if I'd have had GBP 6m).

The Bordeaux 2006 vintage turns out to be unexpectedly exciting. Our friend Bob has just upgraded Lafite Rothschild to 97 points. Some first growths  – notably  Mouton Rothschild – promise to be even better than 2005, the Mouton with 98+ being the wine of the vintage. The "+" captures Parkers prediction that the 2006 might well outshine  the 1982 and 1986 – both 100 pointers.....It seems this fantastic wine puts the crown on the renaissance of Mouton. We managed to secure some cases at GBP 4,750. With the cheapest competitor at GBP 5,000, this seems an attractive deal. That is, if you don’t get spooked by the financial markets. But that’s a different story, on which we’ll keep you posted.

The label is pretty awful though... :