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Cheval prices 'over the top'

24 Mar 2009 by Andrew Black

This revealing interview with Pierre Lurton, director of both Chx Cheval Blanc and d’Yquem, has just been published by Andrew Black, a resident of Bordeaux about whom Jean-Claude Berrouet, recently retired winemaker at J P Moueix and Ch Pétrus, is quoted as saying: ‘I have known Andrew Black for 25 years. As a teacher specialised in English for wine professionals, he has given me classes over the years. More recently, these classes have taken place during lunches with Pierre Lurton at Cheval Blanc. The inevitable effort I have had to make to progress has been more than helped by the fun and the good bottles we have shared. The moral of this story is that while my progress in English has been steady, at least that’s what my fellow professionals tell me, Andrew has undoubtedly become a wine expert’.

The top growths must set an example in this campaign to breathe new life into the primeurs market, says Pierre Lurton.  The primeurs market was once an opportunity for buyers to invest at advantageous prices that were sure to increase by the time their orders were delivered. ‘We have to attract the traditional buyers back into this market for the ‘08 campaign, and the top growths should set an example’, says Pierre Lurton in the interview below.

The primeurs campaign, beginning with the tastings during the first week of April, looks like being a bit different from what we’ve got used to since 2000. Are you a little apprehensive?

'No, but there is a reality that we have got to be prepared to face. A lot has changed since the heady, euphoric months that followed the 2005 harvest. Prices spiralled with all the speculation that ensued, but in my view, all that was quite normal, because 2005 was special. However, in the following campaign, though the ‘06 vintage was delicious, some of the prices that came out for that vintage, including Cheval Blanc, were over the top. The demand nevertheless was there, and it would have been wrong not to respond to that demand, and we succeeded in selling that vintage at those high prices.’

So was last year’s campaign a reality check?

‘We started to complicate matters with the 2007 vintage. The quality of the wine was nothing like the levels of the two preceding vintages, but we were unrealistic with the price. Then towards the end of 2008 the world economy started to take a nosedive and mirrored what was happening in the Bordeaux market – we had been living beyond our means, so to speak, and now it was time to get back down to earth.’

Some producers have mooted the idea of changing the primeurs dates or opting out of this year’s campaign, fearing very weak demand. Is that taking things too far?

‘Nothing is certain at the moment, but it seems pretty clear to me that transactions for the 2008 vintage are going to be fairly limited. However, I would like to think that if a famous growth like Cheval Blanc came out at a price that represented value for money, it would help the primeurs campaign get back to what it once was – an opportunity to buy at a good price, which increases by the time the wine is delivered to the client. We have an opportunity with the 2008 vintage because there are some superb wines – and I can assure you that the 2008 Cheval Blanc is an outstanding wine. Visitors during primeurs week will see the difference that the great Bordeaux terroirs made in ‘08. Also they will see the difference made in those top growths that could draw on their experience and expert vineyard management. That difference will be obvious, but it doesn’t mean that Cheval Blanc will reflect that in the price. I think all the first growths, super seconds and equivalents have got to adjust the price to the market and help breathe new life into the primeurs market. Maybe in 2009 and 2010 we will see a return to more speculative prices, who knows? But in the present context…’

The Bordeaux négociants are surely going to find it difficult to honour their annual allocations…

‘They have had to carry stocks at high prices, I’m very conscious of that. Some houses though are in better shape than others. They will continue to do transactions, but at this point in time business is pretty flat. Having said that, wines continue to be shipped; deals are done. In fact, their aim is to run stocks down to as low as possible, so that gradually they get themselves into a better position to play their usual role in the primeurs campaign, but, and this is a big ‘but’; will there be buyers for this 2008 vintage? Even at very attractive prices?

Is it worth making big price sacrifices in a market with no buyers? Isn’t this why some have considered opting out this year?

‘We have to get back to fundamentals. We have to get away from the speculative parts of the market that are too volatile and susceptible during crises and return to our traditional markets. It’s up to the first growths to set an example. I’m not sure if this will help the rest of the market. There are many excellent growths lower down the hierarchy that are already inexpensive. They cannot feasibly lower their opening prices. So what should they do? Opt out this year? Frankly, I don’t think so. It would be a mistake to break the link in a chain of a system that has worked so well for them, particularly this year in a vintage like 2008, which is excellent quality. Cheval Blanc is solid enough to skip a primeurs campaign or two, but this system is at the heart of the Bordeaux market, and it would be a pity to break it up.’

You talk about a hierarchy of growths and about the financial solidity of Cheval Blanc. You, Pierre Lurton, have your own estate, Château Marjosse, which could be described as being nearer the bottom of that hierarchy because it is a simple Appellation Bordeaux Contrôlée for the red and Entre Deux Mers for the white. How tough is it for you, as a producer, at the moment?

‘Very tough indeed. I’ve invested heavily in Marjosse over the years in order to enhance the quality of these wines and to be able to price them at a level that would allow me to make something of a profit. The quality I sought has been achieved, but at the present moment the costs are rising and the price of the wine is decreasing. For a vintage like 2008, I probably won’t make a penny. This situation cannot go on, because you need to make money for more investments and to reward the people who have helped you raise the quality of the product. I’ll have to think seriously about simplifying my marketing strategy, by maybe taking the easier option of offering exclusivities. In times like these I’m glad to have the security of my post at Cheval Blanc, I must admit.’


Tags:  Bordeaux 2008
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