How will Latour's bold decision to stop selling wines en primeur affect the industry?
Earlier this week, the wine industry was shaken by the news that Chateau Latour – one of Bordeaux's five celebrated reds with a premier cru or first growth status vineyard – had taken a bold and entirely unexpected decision. Latour declared that from its 2012 vintage onwards, it will stop selling wines en primeur – in other words, it will pull out of the futures market, in which wine traders (read speculators) buy the best wines just after it is put into barrels for ageing and resell it much later for higher prices determined by demand and quality. From now on, Latour will sell its wines in bottles when the chateau feels they are ready to drink and in quantities determined by it.
The decision was met with a predictable mix of delight and dismay. Intermediaries that make up the futures market felt it was disruptive and had the potential of harming both wine-producers and consumers. Critics like Jancis Robinson described the decision as “so sensible.”
With its intermediaries, price fluctuations, rampant speculation, the futures market – which is based on profiting from the anticipated quality of adolescent immature wine – has a distasteful side. But is Latour's decision, as the Daily Telegraph cheerfully concluded, “good news for wine buyers?” In so far as it takes the risk out of wine buying for wine collectors who purchase Latour in sizeable quantities, yes.
But it is doubtful, even highly improbable, that Chateau Latour will come any cheaper – its strategy to hold and sell wines in staggered amounts may well push up prices.
The truth is that if Latour if able to defy the market, it is because its billionaire owner has very deep pockets. Many chateaux in Bordeaux and elsewhere are dependent on selling their wines en primeur, mainly to finance the operations for the following year's vintage.
As a result, it is far from certain that Latour's new policy will, as some middlemen fear, have a domino effect. But it's hard to fault a strategy that weans the purchase decisions of consumers away from the opinion of the flock of critics that gather in Bordeaux in early Spring and taste barrel samples that are far from ready for drinking. As Latour has colourfully put it, it wants the commercial life of wine to harmonise better with its technical life.
If Latour's experiment is followed by others, then it will alter the entire manner in which wine in the world's premier wine-making region is sold and financed. But the jury is still out on whether this will happen or not.