Thursday, May 3, 2012

The Spanish Way

A few weeks ago, Chateau Latour announced that it was dropping out of the Bordeaux futures (en primeur) system.  Although not unique to that region, the futures system is most closely identified with Bordeaux’s top-rated wines, of which Chateau Latour sits at the pinnacle.

How do Bordeaux futures work?  In the spring following the harvest (i.e., right now), wines are sampled from the barrel and sold to brokers and other intermediaries (like the LCBO and the SAQ).  Wineries don’t necessarily sell all their wine through futures but it’s a way to generate immediate cash flow and market buzz.  The consumer sometimes gets a better price paying early, although (like any commodity) there’s a chance that the price will have gone down when they bottle the wine in a couple of years.  In the last few years, speculators (along with the nouveau riche in East Europe and China) have used this market to drive the price of the very best Bordeaux wines into the stratosphere.

With this year’s vintage, Chateau Latour turned its back on the futures system.  Instead, Latour embraced what I think of as “the Spanish way”.  They will release their wines when Chateau Latour believes they are ready to drink.  So Chateau Latour 2012 might not arrive on the market until 2021-2023.  They’ll keep back their second wine, Les Forts de Latour, for 7 years.  As well as cutting out the speculators (and keeping more profits for the Chateau), one of Chateau Latour’s concerns is that impatient (or unknowing) consumers drink their wines too soon.

I’ve long been a fan of this approach: wineries holding on to their wines until they are ready to drink.  Spanish wineries did this for a long time and many still do.  Although more wines than ever are made to drink early, many finer wines require several years of cellaring before they can be appreciated fully.  Why not take the guesswork (and cellaring) out the consumers hands by holding back the wines until they are ready to drink?  

For the winery, they get a higher share of the margins by cutting out speculators.  For the consumer, they get a superior product that’s been properly stored and is ready to drink.  Win-Win.  It's an approach that works for any wine that needs some time to age, not just those super-expensive Bordeaux.

More wineries should go the Spanish way.

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