Bordeaux en primeur

Hi Everyone,

I'm pretty much new to the world of wine. So I'm sorry if I get any of the terms wrong ;)

I've heard a lot about Bordeaux 2015 and how you can get it cheap if you buy it before hand? I find this slightly confusingo_O

A little guidance would be nice ! Is it really a good investment?

Best,
 
Hi Michelle,

Welcome to the forum!

Back when I started buying Bordeaux, en primeur did indeed mean that you could source wines cheaper than they would later end up retailing for. The wines were bought around 18 months before they were released and shipped, and could be a relative bargain.

However, after the 2005 campaign, Chateaux began to release their wines en primeur at increasingly higher prices, meaning the opportunity to snag a real bargain has largely gone. Now that is not to say you shouldn't buy en primeur - if you want a case of a particular wine, especially if it is in a different format (halves, mags, double mags etc) then you will not necessarily lose money, it does guarantee the wine and it allows you to pay in a couple of instalments (as VAT and duty are paid when it is actually shipped), but I would forget all about investments and making/saving £££. It just doesn't happen anymore.

Hope that helps.
 
Welcome Michelle
Beware however of people spinning the line that it represents 'easy money' and 'an investment opportunity that outperforms the market'. Jim Budd (investdrinks) has a wonderful site devoted to the criminal end of that scale, and there have been far too many criminals over the years. Do go for an established & reputable company but even these could go bankrupt and leave you with a weak claim on the wine you thought was yours.

That said, a number of people here do by en-primeur. Sometimes they do get lucky and get the wine at a price quite a bit cheaper than when it hits retail (even taking into account duty + tax + delivery costs). Some like keeping the wines 'in-bond' (basically a controlled warehouse where the wine is kept before releasing it many years later, only then when tax & duty is paid). This is good if you think you may want to sell, rather than drink the wine, as it is considered a reliable proof that the wine is what it's meant to be (no forgeries) and has been stored appropriately, plus it can be traded for many years before duty and tax are paid when someone decides to release it from bonded storage. This whole setup is also useful for those who have limited suitable storage at home, but want to lay wine down for a decade or two. Do factor in storage fees though.

Another reason for en-primeur, is that it's a good opportunity to order specific bottle sizes e.g halves, magnums or larger bottles. As the wine is not yet bottled, it's easier for this 'bespoke' service. However you'll generally have to buy in case, or at least half (6 bottle) case size (or equivalent e.g 24 halves, 6 magnums etc.)

Personally I don't do it, partly because I don't like Bordeaux wines 'that much', and certainly wouldn't want to be forced into a case purchase. I also avoid off-site storage as a way of avoiding buying too much wine!

regards
Ian
 
A very good piece from Jancis Robinson on investment here http://www.jancisrobinson.com/articles/are-wine-funds-the-right-way-to-invest-in-wine.

FWIW my view is that it's a high risk and uncertainty route to making money. If you're sitting on a spare 500k then maybe it makes sense but if you've got a modest pot then there are many more sensible options. I spent much of the last 8 years providing a shoulder to cry on for people whose 'investments' had lost them thousands.
 
Michelle, welcome!
As mentioned above buy from a well established, reputable merchant. And pay by credit card.
I wait for decent vintages & then buy our 'house' wine - Ch. Beaumont, a minor claret. Usually, a decent discount to retail release price, until it's bin-ended.
Now view claret as poor VFM; there are plenty of alternatives, IMO.
 
Hi Michelle,

Welcome to the forum!

Back when I started buying Bordeaux, en primeur did indeed mean that you could source wines cheaper than they would later end up retailing for. The wines were bought around 18 months before they were released and shipped, and could be a relative bargain.

However, after the 2005 campaign, Chateaux began to release their wines en primeur at increasingly higher prices, meaning the opportunity to snag a real bargain has largely gone. Now that is not to say you shouldn't buy en primeur - if you want a case of a particular wine, especially if it is in a different format (halves, mags, double mags etc) then you will not necessarily lose money, it does guarantee the wine and it allows you to pay in a couple of instalments (as VAT and duty are paid when it is actually shipped), but I would forget all about investments and making/saving £££. It just doesn't happen anymore.

Hope that helps.

But it's still a good time to buy even if you are not trying to make money?
 
Only if you want a non-standard bottle format, or a particularly rare Chateau, as others have said. Otherwise, I wouldn't bother.

Ask yourself - what are you trying to achieve by buying En Primeur now? You won't physically receive the wine for a couple of years, and then it might not be 'ready to drink' for at least 5 after that (or a LOT longer, depending on your taste). Why lock-in your cash like that, when there are plenty of vintages readily available to you now.

If you want wine cheaper than you might be able to get it in 2-3 years, yes, EP might save you a little cash. But that might be true of wine you can physically purchase now as well.
 
Only if you want a non-standard bottle format, or a particularly rare Chateau, as others have said. Otherwise, I wouldn't bother.

Ask yourself - what are you trying to achieve by buying En Primeur now? You won't physically receive the wine for a couple of years, and then it might not be 'ready to drink' for at least 5 after that (or a LOT longer, depending on your taste). Why lock-in your cash like that, when there are plenty of vintages readily available to you now.

If you want wine cheaper than you might be able to get it in 2-3 years, yes, EP might save you a little cash. But that might be true of wine you can physically purchase now as well.

Quite. I am drinking my 2000 Clos Du Marquis now. I paid 179 upfront but crudely the real cost of a case being pulled out of bond now is 410 IB factoring in cost of storage and an assumed cost of capital of 2.5% - which is probably too low. It's not clear that's a bargain given what else I could buy for the same money now.
 
It's also important to recognise that your tastes change over the years. Well, mine have. Wines I bought in quantity 10 or more years ago are not really what I want to be drinking now.

The wine that Lionel mentions above seemed to cost him £15 a bottle at the time (seemed because the price did not include duty and VAT).
Today's market price duty paid is around £50. For me, that's well into special occasion territory and not something I want a dozen of.

If you do decide to take the plunge, I recommend The Wine Society, although as a new member, you may not get everything you want from wines in high demand. . Actually, even if you decide not to, I recommend TWS for their range and service in general.
 
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Michelle,

I fully agree with both Paul's points below, but a word of caution with this paragraph:

The wine that Lionel mentions above seemed to cost him £15 a bottle at the time (seemed because the price did not include duty and VAT).
Today's market price duty paid is around £50. For me, that's well into special occasion territory and not something I want a dozen of.

Whilst this sounds like a great return (and wine did indeed shoot up in value in the mid-noughties), you shouldn't forget that a case of wine also costs around £12 to store/year (slightly less is you use a merchant, slightly more if you use LCB / Octavian). That's £1/bottle, so something to think about if you're storing for 15 years. Best price I can find now on CdM is £39/bottle.
 
Michelle,

I fully agree with both Paul's points below, but a word of caution with this paragraph:



Whilst this sounds like a great return (and wine did indeed shoot up in value in the mid-noughties), you shouldn't forget that a case of wine also costs around £12 to store/year (slightly less is you use a merchant, slightly more if you use LCB / Octavian). That's £1/bottle, so something to think about if you're storing for 15 years. Best price I can find now on CdM is £39/bottle.

410 (my cost inc storage) /12 = 34 quid a bottle. So 60 of margin. Realistically most of that will disappear in transaction costs. Plus CdM is likely to be released at 360+ these days.
 
Michelle - Be cautious in comparing IB (in-bond) pricing with what you actually need to pay to drink it. When buying en primeur, the price excludes duty and VAT. Most EP wine is stored in bond; to get it released you will need to pay duty at the rate applicable when you get it released and vAT on the total amount. You can, though sell in bond which passes those costs to the buyer.
 
Only buy wine you like. If you end up spending too much on it, you can drown your sorrows. If it makes serious money then you can sell half and pay for the other half with the profits.

Either way, you come out of it OK.

I spent about 3k on 2005's. I had them all delivered, then sold all but one case over the last few years. That case is now effectively free. I could get about £360 for the case, but it is my favourite chateau and should soon be drinking well. Very stupid use of 3k if you are an investor, but very sound use of 3 k if you want some free wine that would otherwise cost you £30 or so a bottle.

However, had I spent 3 million quid, then I might have made £360,000 which is a bit better.

Ergo, if you are moneybags, then you can make money on en primeur. If you are remotely 'normal' in terms of income, then you might get a small reduction, or even some 'free' wine.
 
If you get it right, it's an interesting way to have liquid assetts as long as you figure in that you might have to drink it yourself. A bottle Chateau Lynch Bages 2000 was around 50€ eP in 2001. Wine searcher lists it at around 150 € right now. Therefore you might be able so sell it around 125 € . If you have to pay storage costs it might be not lucrative, but if you can store it yourself it looks much better: you can sell half of your bottles, drink the remaining bottles yourself and have some money left to cook some decent dinner when drinking your bottles. Professional storage is a killer yield wise for lower & medium priced wines.
 
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