Chateau Latour Stops Selling En Primeur
Chateau Latour will no longer be offering their wine “En Primeur” as of 2012. The decade old system of selling wine En Primeur (wine futures) is now being abolished by the top-rated Chateau Latour in a move that is sure to cause waves throughout the fine wine industry.
What is En Primeur?
What is the En Primeur wine system? In its simplest form, En Primeur is the process of buying wine long before it is bottled and mature enough to drink; it enables the procurement of wine while it is still in the barrel.
The reasons for the En Primeur system are manifold. For the Chateaux it means a hefty cash infusion in spring, which can subsidize the rest of the wine production process, or even finance expansion and growth in other areas of their Chateau (this may not be as pertinent for first growths and other major Chateaux, as for the smaller ones).
Additionally, En Primeur tastings have become a highly-publicized event, creating a lot of hype and attention about the wines in question, and is a tradition very highly valued by a significant fraction of the fine wine industry.
Moreover, the En Primeur system also boosts the sale of less desirable wines, as the Chateaux may oblige buyers to take an entire series of Bordeaux wines as part of a package deal. Due to the fact that the En Primeur system has evolved to incorporate a consistent allocation quota for wine merchants and buyers, this essentially secures long-lasting demand for the Chateaux.
From an investor’s standpoint, the buying of wine futures can be a highly profitable venture; the wine can be procured long before it is bottled and then sold at much higher prices if the wine is (expected to be) of exceptional quality.
Why Chateau Latour is Exiting the En Primeur System
The reasons for Chateau Latour’s withdrawal from the En Primeur system is a hot topic of debate. This is the first time since the 1960’s that a first growth Chateau has broken tradition in the very successful method of promoting and selling new Bordeaux wines – the En Primeur System. While many in the industry argue the benefits and disadvantages of this bold move, there is no doubt that the repercussions will be felt throughout the entire distribution chain; from the Chateau to the negociants, to the wine merchants and traders, to the investors and collectors all the way down to the consumer.
There are several official reasons behind Chateau Latour’s decision to step away from En Primeur.
The increasing demand from the emerging markets such as China seems to justify the break. As the concept of wine futures is relatively young in the East, yet the demand for bottled luxury wines that are ready to drink is consistently growing, it would seem Chateau Latour would have no problem selling their stock, even without the advantages of the En Primeur stage.
Moreover, Chateau Latour has stated their goal is to provide top-quality wine of the best possible provenance. Since they oversee and control the wine throughout the entire production and maturing process, this will enable them to release the wine at the optimal time. Therefore, future Chateau Latour vintages will hit the shelves once it has matured to perfection in already bottled format. A Chateau Latour source said “Our team will taste the wine often and decide when it is ready. That’s the goal. We wanted to kill the speculation side of the market.”
Furthermore, the En Primeur withdrawal is geared to abolish the speculative aspect of dealing with wine futures. In the past, negociants, wine traders and merchants have been able to procure Chateau Latour wines while still in the barrel, selling them at inflated prices if the vintage is highly rated. Consequently, many have reacted adversely to the news, as it seems the withdrawal was designed to cut out the traders and investors profiteering from the En Primeur system.
The Repercussions for the Fine Wine Industry
Whatever the long and short term reasons may be for Chateau Latour’s bypassing of En Primeur, the move will surely be closely analyzed.
One major issue speaking against the move is the insight and transparency that En Primeur used to provide. Previously, wine enthusiasts could monitor the development of luxury wines, and base their buying and selling decisions using such data. In future, buyers will naturally be more concerned about procurement, with limited knowledge of the product.
Furthermore, there are concerns that this move is geared towards Chateau Latour taking full control of the supply chain. By cutting out the En Primeur stage, the middlemen between the producer and consumer are taken out of the equation, as the Chateau will control their entire stock upon release in bottled format.
If it does prove successful the main question will be whether all major Chateaux adopt this new model. This may lead to a readjustment of the fine wine industry, as this break in tradition would alter the business practices performed throughout the market on a daily basis.
What this daring move means for the entire fine wine industry – the Chateaux and the negociants, the wine merchants and traders, the collectors and consumers – only time will tell.
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