buying en primeur reviewed

Is buying en primeur actually a good deal? It certainly can be, but much depends on the vintage, your allocations and on available alternative wine investment strategies.

With what appears set to be another high-priced – high-quality vintage in the ensuing Bordeaux 2010 en primeur campaign, we take a look at the evolving wine investment market. In particular, in the light of the low-priced but high-performing 2008 vintage becoming physical and record release prices for the slower-moving, still at chateaux Bordeaux 2009.

En primeur is the French term for wine sold as a futures offering prior to it being bottled. This advance sale, while long available to the trade, only became popular with wine investors and collectors in the late C20th amid the scramble for a succession of good vintages, a broadly prosperous economic environment and the emergence of vintage reports and ratings from 3rd parties, such as wine writers and (one) wine critics. It has become a – relatively recent – specialty of Bordeaux classed growth chateaux.

The theory is that by buying wine early, the public not only secures sought-after wines, he or she also pays less. This early-release frees up much needed cash-flow for the chateaux, funds they can use to fund the next crop.

However, financial benefit to the wine collector, drinker or investor is by no means invariably the case. We look at some of the phenomena becoming apparent in a string of high-performing recent vintages against the backdrop of a significantly changing China-demand led wine investment market.

So, is buying en primeur actually a good deal?

It all depends. Bordeaux 2009 currently languishes at an average -2% off its record London release price one year ago. However, some of the other vintages – notably the 2008 – have posted much better returns (albeit over a longer time period):



Yet, has anyone ever lost money on a stellar Bordeaux vintage? In the long-term probably not. For the collector/investor holding wine rather than trading it matters. Bordeaux 2005, the last pre-2009 top vintage currently trades at a premium of 59% off its 2007 London release price. Moreover, anyone holding the underrated 2002 would now be looking at a whopping 800% return since release!

In his seminal work, ‘Wine Investment for Portfolio Diversification’ (the Wine Appreciation Guild 2006), finance academic, Mahesh Kumar, concludes there are 3 stages at which wine typically returns a profit; the first 6-18 months after its purchase en primeur; when the wine has matured is more valuable and there is less of it; or, after an event that triggers sudden price appreciation such as the re-rating of a vintage or an increase in scarcity (a favoured strategy among wine funds). For 2009, the first opportunity seems to be lost. 

Timing is of the essence

With buying en primeur, when you buy matters. See below for the evolution of 2009 release prices by tranche as compared to the respective 2008 release prices:

Prior to 14/06

This is extremely important. The above quoted return for 2009 up to now of -2% compares the London release price with the current market price. The London release price is the price at which a wine was first traded on the secondary market. This is not necessarily the price you can get it at if you have a relationship with your merchant.

For example, Lafite 2009 was first sold by the Negociants at €550 per bottle, which at the time equated to roughly £5,500 per case. London release price was £13,500….. Hardly anybody had any at this first price though. The second tranche was around £7,500 and there was some volume of that, but still not nearly enough to even satisfy loyal customers, let alone offer it on the secondary market. 

So, you can vastly improve your return if you can secure an allocation early on. For those who can’t, money invested in 2009 so far might have been put to better use.

Then what to buy if not en primeur?

We are not saying buying en primeur doesn’t make sense. What we are suggesting is that top quality vintages that are highly priced en primeur leave the door open to alternative, potentially more profitable strategies.

One could argue that very high prices for stellar vintages (2005, 2009) will be the new price ceiling against which previous vintages are measured. Should the brand-led/value vintage buying continue apace among a new wine public (China, but possibly also India, Brazil, Russia, Indonesia), then we can expect to see the appreciation of lesser scoring, physically available recent back-vintages and lesser scoring chateaux towards this new ceiling.

Next time we will look at this strategy in more detail.

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About Us

Ditton Wine & Spirits buy and sell fine wine.

The finest wine, at the very lowest prices. For drinking & investment; for both Private and Trade customers.

Ditton Wine & Spirits are exactly that, wine traders. Since 2004, we have bought & sold fine wine on a daily basis, at fair and competitive prices.

The prices you see on the website are the prices you pay – with no hidden extras. The advice is free here too. We do everything possible to make sure we keep our costs down. There is no shop – we use the phone and email. We don’t employ a lot of staff and we don’t have a swanky London office.

As a result, we are able to operate on a much lower margin than many of our competitors. Our ever increasing network of negociants, distributors, wholesalers, retailers and private stock-holders means we will frequently bring you ‘impossible to match’ deals. We specialize in the best wine from Bordeaux, as well as a fast growing list of the most sought after wines from Burgundy, Champagne and Italy.