▻ The Bordeaux Market

Let's Talk About

9 Apr

Written By Sarah Kemp

In conversation with Justin Gibbs of Liv-ex

Episode Summary:-

Justin Gibbs, co-founder of Liv-ex, the online trading platform used by over 600 merchants, talks to Sarah Kemp about how the Bordeaux market has fared over the years, and shares his thoughts on the 2024 En Primeur Bordeaux campaign, which is about to begin.

Liv-ex is one of the world’s largest collectors of data on fine wine; 35-40% of Liv-ex’s global market share is Bordeaux – 25% down in the last two years, in line with the fine-wine market, which has seen a steep decline since October 2022. “Bordeaux takes an unfair share when people liquidate,” he explains, “as it’s the largest quantity in the fine wine market, Burgundy is down a tad more.”

The UK is the largest En Primeur buyer in the world. The top 20 UK merchants were selling in excess of £240 million for the 2009 and 2010 campaign, but recently they are selling a quarter of the amount. “It’s not a good look,” he admits

It relates almost entirely to price, he believes. “The promise, the contract, used to be ‘buy now because it is the cheapest entry point to market, and it will only ever be so’,” he says. “The contract broke down with the 2009/10 vintage, and for the last eight years, you would be out of the money if you bought vintages En Primeur. The vintages 2011/12/13 bounced back, but from the 2016 vintage, if you bought En Primeur, you are out of the money.”

He adds, “I think they need to use this vintage to build a relationship with the next generation of buyers.” Justin explains that the traditional buyers, now in their 50s, have their cellars full and don’t need any more. He believes that it’s vital to have a reset – another vintage unsold just adds to the stock overhang.

There has been a run of stellar vintages recently, and merchants have been able to talk about quality, but with a lesser vintage, which is sometimes known as a “drinkers’ vintage” or a “classic vintage,” merchants aren’t going to be able to assert that the quality compares to the stellar vintages, so price is crucial in their discussion with consumers.

It is not all doom and gloom: “There is a willing market for Bordeaux, without a doubt, the secondary market is very active,” he says. However, his final conclusion is acute: “If you are buying En Primeur and losing money, why would you continue to buy?”