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What Bordeaux 2017 means for investors

16th November 2017


The Bordeaux 2017 harvest is looking like a truly mixed bag – ‘très hétérogène’ in Bordelais terms.

One one hand, the Southern French wineries have had a collection of disastrous setbacks including spring frost, a hot summer provoking an early harvest, and grape theft.

On the other, all the extra effort that has gone into producing this vintage is set to result in a “hard-to-find, ultra-concentrated” wine, which, according to writer Gavin Quinney, will serve as “proof that modern Bordeaux can prevail” even in the toughest growing conditions.

But what does all this mean for the investor?

 

A FROSTY YEAR FOR FINE BORDEAUX WINE

The million-dollar wine-making region hasn’t experienced this level of frost damage since 1991, and volumes are expected to be 45% down on last year, which was generally considered a great year.

Some producers lost their entire vineyards; others around half; and the rest enjoyed a narrow but lucky escape. In bottle terms, the market is heading for a staggering shortfall of 340 million compared with 2016.

Aside from the frost, global warming meant an unusually hot summer, which led to an early harvest for the wisest of producers. Those who failed to predict the premature sweetening of the grapes, and therefore stuck to the routine late harvest schedule, will have lost out – their wines are likely to be unbalanced and too concentrated.

As if these challenges were not enough – four estates were attacked by grape vandals in a robbery that has likely left a very sour taste in many winemaker’s mouths. Most notably, vineyards near Petrus lost around 1,500 pounds of grapes, and neighbouring Pomerol regions including Lalande-de-Pomerol and Montagne-Saint-Emilion had hundreds of vines ripped from the roots.

And as true as the saying “all troubles come in threes” proves to be, there might also be a nice thick platinum-plated lining to this dismal and dreary cloud.

 

THE UPSIDE FOR FINE WINE INVESTMENT

This is the smallest harvest Bordeaux has experienced since 1945 but, like the legendary 1945, the 2017 vintage is likely to be high in quality despite the low yield.

Gavin Quinney in his Bordeaux 2017 report explains how the top estates have managed to produce highly concentrated, well balanced grapes with excellent acidity levels. Winemakers are saying the quality is likely to match 2016, and some are even mentioning the 2015s.

With the high quality and concentration, you can also expect longer storage times – at least two decades for these wines. And beyond their drinking potential, the extreme rarity of the vintage alone will increase demand and drive up the price dramatically over time.

As for En Primeur pricing, prices are likely to increase marginally across the board as usual – but Premier Cru and Grand Cru estates like Lafite-Rothschild, Lafleur and Latour may not hike up the price at first, since they fared better than the smaller, family-run estates.

 

BUY 2016 WINE NOW?

All this may also have an effect on investor’s buying habits this year. When yields are low, demand for the previous year’s vintage goes up, so we could see collectors investing in 2016 wines instead.

This may in turn provoke estates to hold onto reserves of 2016 stocks to get them through the tough year ahead, further driving down supply and increasing demand.

In that case, investing in 2016 futures now, while the price is still low, may be a good strategy indeed. And of course, buying the 2017s as soon as they become available will ensure you get the best price on the secondary market.

For more investment advice and information about upcoming En Primeur opportunities, give our representatives a call on 0207 378 3500.

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