Vintage Report

Vintage Report: The Year Ahead

The best word to sum up the year ahead is “uncertainty” as the wine world-- consumers, importers, wholesalers and retailers alike-- are definitely headed into uncharted waters. At the root of the issue is, of course, the current economic malaise and its world wide effects. The critically acclaimed 2005 vintage, released at record high prices, is now, for the most part, in the rear view mirror. France is currently faced with several vintages of mixed quality and it remains to be seen who will blink first, producers or consumers. Our best guess is that consumers will not venture into the water again without significant price reductions. Producers and importers, however, will not be as open to this thought as one might think. A retreat from an established price plateau is a strategy not readily embraced no matter how logical it may seem. This reluctance is based upon several factors: long term marketing, the prestige factor, increased globalism, currency issues and the “X factor” of critical press.
As was recently pointed out by Stephen Tanzer, a weakened Euro doesn’t necessarily translate to lower prices in that there’s a lot of inventory in the pipeline purchased at a point when the dollar was at an historic low. Importers often lock up an exchange rate through currency futures to avoid volatility so a strengthened dollar does not necessarily translate into lower prices in the short term. Nevertheless, something has to give as the current economic uncertainty has engendered a cautious consumer/collector who has decided either to stop purchasing altogether and live off what is owned or to scale back purchasing both in terms of number of bottles purchased and/or price per unit. The coming year will surely see any number of “deals” as wholesalers examine liquidity and space issues yet it’s impossible to predict exactly what will happen in an overall sense. Our best advice is to take a short term, item by item, region by region approach and watch for value where you can find it but don’t think too far ahead as 2009 will bring a rapidly changing landscape fraught with consumer uncertainty and price volatility.

• BORDEAUX •

Coming off the magnificent 2005 vintage, Bordeaux will be faced with several vintages of varied pedigree. The 2006 vintage, a mixed bag affair, will begin to trickle into the market place but at prices not much lower than 2005. This will be problematic in that the marketplace has not fully absorbed the late-arriving 2005s. 2006 did not do well as a “futures” vintage so there’s plenty of product but at what price? Does anyone really want to pay just about the same price for the “B” vintage when there’s still good supply of the “A” vintage? There may be some interest in some of the big name, blue chip estates but consumers, for the most part, will taste, watch and wait with regard to 2006 in the hope that someone in the supply line will push the panic button and start to dump. Once this starts, there tends to be a domino effect with numerous sources embracing the same strategy. The “X factor” will be China and the Asian markets. If the Far East remains committed to purchasing Bordeaux no matter what the cost, then Americans can expect little or no price relief as inventories will simply be sold back the Bordelais and diverted to the Far East. 2007 is, by all accounts, a vintage to avoid with one of our suppliers remarking that many wines were basically undrinkable. This will, ironically, put pressure on the Bordelais to maintain margins on 2006 as a viable, above-average entity. If any vintage ends up being deeply discounted, 2007 will be the one! Early word on Bordeaux 2008 has not been entirely positive which amounts to additional pressure for maintaining prices on 2005/2006. At this point, it doesn’t look to be a vintage for which there will be much interest in terms of futures but it’s still early in the game. Pricing will be key!

• BURGUNDY •

The scenario in Burgundy is similar to that of Bordeaux in that the 2006 vintage, a serviceable, quality vintage, arrives on the heels of the “once-in-a-lifetime” 2005s. As with Bordeaux, pricing will be an issue in that, due to a weak dollar, the wines will arrive to our shores at prices quite close to the stellar 2005s. The same question applies, “why buy the “B” vintage when there are still supplies of the “A” vintage around?” Granted, collectors may still want to scoop up big name/high scoring Grand Cru but the Burgundy game being what it is, wholesalers and retailers will be reluctant to pick up unwanted, less desirable cases of “tie-ins” to procure the few cases of cherries at the tip of the iceberg. 2006 is the quintessential, early drinking restaurant vintage so a viable strategy may be to watch for these wines on the better lists knowing that quality, for the most part, is above-average and acceptable. Early word on 2007 has not been positive save for the white wines, in general, and Chablis and the Macon, in particular. Given the quantities produced here and the historically reasonable prices, one can hope for some exceptional values from such consumer “go-to” faves as Pouilly-Fuisse, Macon Villages, and St. Veran etc. The market for white Burgundy has become quite soft in recent years as consumers and collectors alike have been turned off by cork/early oxidation problems. This will, hopefully, keep prices at a reasonable niveau as producers and importers look to regain market share. Early word on 2008 is not wholly positive with the whites rumored to be better than the reds but certainly not at the same quality level as 2007 or 2005.

• RHONE •

The southern Rhone will be one of the hottest items in 2009 as consumers begin to chase the 2007 Chateauneuf du Pape described by Robert Parker as “the vintage of my lifetime!” Thanks, Bob! Words like these usually amount to an additional 20%-50% premium depending upon the score issued. The big question will be whether the market can absorb yet another exceptional southern Rhone vintage which looks to be priced accordingly. The answer is probably, “yes” as Parker’s words still carry a lot of weight in this world. However, coming on the heels of the superb 2005s and the above-average 2006 vintage, it wouldn’t surprise us if consumers take a less than enthusiastic, more surgical approach and go the “tip of the iceberg” route which will put even more pressure on the top 25 wines getting the highest Parker scores. This will be particularly true if producers/importers fail to hold the line on pricing. The strong suit for southern Rhone wines used to be their incomparable price/value quotients. However, when pricing starts to approach or, in many cases, even exceed, that of Burgundy and Bordeaux, than you might as well buy Burgundy or Bordeaux. Southern Rhone producers need to examine very closely their pricing strategies as we’ve noticed a significant decrease in interest for southern Rhone wines as prices escalate to those of classified Bordeaux and top 1er Cru Burgundy. All in all, 2007 will deliver across the board quality with numerous bargain wines from Gigondas, Vacqueyras and Cotes du Rhone. Stay tuned! By the way, for what it’s worth, the early word on the northern Rhone in 2007 isn’t nearly as positive as it is for the southern Rhone and 2008 appears to be the poorest Rhone vintage since 2002.

• LOIRE VALLEY •

After an incredible run of successful vintages (2002,2003,2004,2005), it looks as if the Loire has run out of luck with three serviceable, yet hardly stellar vintages (2006, 2007, 2008). To be sure, the good producers will still make good wine, but the across the board success we have witnessed, particularly with regard to the Cabernet Franc based red wines, seems to have come to a close. All the more reason to scoop up remaining 2005s that linger on retail shelves.

• ALSACE •

France’s easternmost wine producing region has produced stellar wines in 2007! Tanzer’s recent reviews were glowing and hold the promise of some great wines that will begin to arrive to the market place in 2009. While Alsace, for sure, remains a niche affair, those who prize and collect these wines will rejoice at the treasure trove of bounteous glory that awaits them. Early word on 2008 is also cautiously optimistic!

• CHAMPAGNE •

Early word on the 2005 vintage is that the quality is exceptionally high! Unfortunately, it will be a while before these see the shelves. In the meantime, we have the stellar 2002s! This is a serious, high quality vintage, easily the best since 1996! Consumers will enjoy these, for sure, while waiting for the 2005s. The recoltant/manipulant trend continues to grow as consumers are increasingly discovering the diversity and favorable price/quality ratios of these unheralded, petit marque gems. Pricing remains an issue with Champagne as importers and wholesalers, loathe to carry any inventory, are forced to re-purchase at exchange rates unfavorable to consumers. The recent upward trend of the US dollar may help a bit here! Nevertheless, Champagne still remains a bargain when compared to prices for top name/high scoring Burgundy and Bordeaux. The fact that few critics take the genre seriously actually helps consumers in that pricing is not overly manipulated by media hype. Early word on 2008 is a mixed affair with uncertainty regarding a declared vintage status. At minimum, the vintage will provide a flow of above-average juice for non-vintage/multi-vintage cuvees.