Jeff’s figures fit with my findings. The chateaux are mainly in the business of making wine and most are poorly equipped to either market it or play the investment game. Ever since 1982, however, they have been acutely aware of the potential for others to make money out of their product and have been very careful not to underprice their products in the very best vintages. Do not expect any favours for the 2010s. There are also some properties attempting to reposition themselves as premium luxury products and playing the long game. These few are possibly holding back more than 30% in some years when their price increases have not been sympathetically received on the Place.
Jeff - that is precisely why I stated it was a ‘general internet search’. If you have data that suggests otherwise, please feel free to post it as my point was to make the case that there is a tremendous amount of wine ‘in production’ from the top producing Chateaux and thus a ‘market’ could be made.
Again, feel free to provide actual data if you have it.
As for the % of wine held back each vintage, I am not one in position to prove what that number is but I would certainly question it just as RP did with his statements which started this thread.
Add three zeros to those bottle numbers and you get an idea of the retail dollar value in the marketplace for '09 and '10 for many of these Chateaux. Even with Jeff’s “25% less” factor, this is a huge sum of money to be spent on these wines. At these dollar volumes, there is no way the sell-thru can be very high (China included). OPEC, De Beers, (top) Bordeaux? All controllers of commodities and kings of their kingdoms. Only if the Chateaux run into cash flow problems will we ever see a need to drop prices, and I am sure there are many banks/private investment firms that will gladly grant loans that are tied to their inventory. So, I do not see a dramatic bubble burst on top vintages from key producers anytime soon. But, we can all dream.
I wonder about Jeff’s numbers for how much the chateaux hold back. Holding back wine is both perfectly legal and clearly the profit maximizing strategy. If Bordeaux producers are in the business of maximizing profits and if they’re at all sophisticated from a business standpoint, then they should hold back supply to ensure the highest price. (Of course, if we are approaching the peak of a bubble then they should be cashing in their stored supplies…e.g. Lafite’s library sale in China recently).
Marcus
There is no way to know for sure how much wine is held back. But the numbers I quoted are what people tell me. As for the right Bank, I’ve been in most of the cellars and you will not find large stocks of wine remaining anywhere. In fact, I have more 1990 Troplong Mondot in my cellar than they do and I only have 2 cases! I think La Conseillante has very little remaining stock of 89/90, neither does Clinet etc.
As for pricing, it’s a balancing act. Being in business, they need and deserve to make as much money as possible. To ensure futures has a future, they need to strike a delicate balance between maximizing profit and maintaining a market. They need to allow a margin for customers to profit as well. Once the financial benefit for buying futures ceases to exist, the futures market will die. That is not in their better interest.
Bordeaux works on opening new markets all the time. Currently, they are working hard to help get taxes on wine removed from the Brazilian market. There is a lot of money in that market and they enjoy a wine and food culture. They are working in other markets as well. If anyone wants a good idea of how much they work new markets, next time you have the chance to speak with an owner of a known estate, ask them about their travel schedule.
It’s a big wealthy world. Think about how much money people pay for good seats to Basketball games, the Superbowl, concerts from established acts, high end watches, expensive cars etc. When you add all that up, there are ample willing buyers for the wines. Just because we, and that includes me, are not willing to pay high prices, does not mean others are not.
We all saw prices fall in 2008 due to low demand. Prices are back up due to high demand. It’s up to the market. If enough people refuse to pay, it’s a business, prices will fall. If demand remains constant, prices will rise.
As for knowing where the wines are, or how many bottles are available, to me personally, it does not matter. I am not going to buy a First Growth for $1,000, even if it’s the last bottle on the planet. I am only going to pay what the wine is worth to me to drink it.
Jeff, it’s funny you mention ball games, concerts, etc… After I wrote my earlier post, I thought a loose analogy could be drawn between bottles of top Bordeaux and tickets to a game at Yankee Stadium (after my recent attempts to source both). I would think that the marketers/execs of each business would know how to get top dollar for their product. However, while the Bordelais can hold back inventory to sell at their discretion, the Yankees need to sell each ticket to a specific game or that income opportunity is gone for good. Yet, somehow the Yankees seem to be doing just fine with all those empty $1000+ box seats around home plate that I see when watching a game. I am sure the Bordelais are doing just fine as well. Better to sell one bottle (or seat) at $1000+ than two at $500.
And even better when in the future, you can sell that other seat to that specific game for $1000 or even more!
Jeff - I think your last statement resonates the most. Some of these statics really don’t matter in the end. As long as you aren’t trying to profit off the endeavor at least.
I’m not sure I understand the relevance of citing these examples from 21 years ago regarding the volume of wine that the domains may or may not be holding back in more recent vintages.