Liv-ex director James Miles believes there is a desperate need for a complete overhaul of the en primeur system to give it greater transparency as well as provide buyers with greater protection.
His three main proposals are:
Establishing a central registrar to record the transfer of title
As of now, the end buyer of en primeur Bordeaux wines has no legal title until they are physically delivered. This is a totally unnecessary risk for both the buyer and the seller. What happens if a supplier in the chain goes bust?
In the current economic scenario, asking both groups to pay in advance merely on a promise of delivery two years later is unacceptable. It would be better for all concerned if a central registrar is established so that the title for each case of wine could be transferred prior to actual physical delivery. Such a registrar could be located anywhere, even in Bordeaux. The registrar would remove the risk of loss to the buyer if the supplier does go out of business. At the same time, it would increase the depth and scope of the market for the producer/supplier.
Greater transparency with regard to the production figures and volumes that are offered for sale at the en primeur stage.
Today, a customer has no assurance as to the accuracy of a chateau’s information regarding its latest harvest and the breakdown between the first and second wines. There is also the question of how much of the total production is being offered to the market in the en primeur stage. It is not uncommon for chateaux to hold back a large portion of their production, thereby creating an artificial market for their wines. These figures should be published and be available for independent auditing so that the customer could make a truly informed decision about the relative merits (or otherwise) of each chateau’s offerings.
The tasting samples should be independently verified
The difference between 90 and 95 points or 95 and 100 may be a mere 5 points but in monetary terms it could be worth millions of pounds! So it makes sense to have an independent verification of the tasting samples offered by the chateaux. This will assure the consumers that the samples offered at the en primeur stage are genuinely representative of the overall production. In fact, such a system has been advocated by the Bordeaux chateaux themselves.
In conclusion
There are many arguments that suggest that the current system is working quite well and that the proposed changes are both complicated as well as expensive to implement. Considering that this year’s en primeur campaign was a lot more successful than was expected, there is naturally a reluctance to change. Nevertheless, in their own interests, the Bordeaux chateaux should push for reforms. The current worldwide economic crisis tells us that the impossible does happen and, in the worst-case scenario, the cost of doing nothing could be very, very high. The failure of just one major player in the supply chain could cause unimaginable damage to Bordeaux’s money spinner. There is absolutely no doubt that the benefits of the suggested reforms would reach everyone, whether producer or buyer.
Tags: Bordeaux, En primeur, Liv-ex