No Dutch auctions in Bordeaux
It’s crazy. Decanter reports that Latour and Margaux have now released their futures prices at more than £4000 ($7,300) a case. As I mentioned previously, this raises serious questions of whether you are going to put a roof over your head or a wine in your cellar (yes, cellar, not belly).
But the craziest part is that there is demand for these futures (the wines won’t arrive until 2008). Retailers from LA to London are talking about how even at these prices, they don’t think they will be able to get enough for their customers. That’s part of the reason the top chateaus waited this long to release their prices, hoping to be able to whip up demand and keep as much profit for themselves. Robert Parker recently accused them of greed.
But why not let it rip? In the same way that an IPO opening day gain is money that the company left on the table, chateaus fear a rise in price once the wine leaves the cellar door as lost profit:
Chateau Margaux general director Paul Pontallier told decanter.com, ‘the market decides the price. If we had released at a lower price the wine would have gone to London and then been sold on at its real market value. Our choice is limited.’
So why not try a “Dutch auction”? Let buyers bid on the wine and then the market really will set the price–with greater profits accruing to the chateau.
The only problem is the next vintage. What if it stinks? The producers need the negociants and retailers to push it. Cutting them out through a Dutch auction in an excellent year would no doubt alienate them in a future bad one.
The Dutch drained the swampy Medoc in the 17th century. The Dutch auction will not be draining consumers anytime soon.
tags: wine | Bordeaux 2005 | Dutch auctions
On July 1st, 2006 at 10:53 pm ,Salil wrote:
Utter madness. I think I’ll pass on this.
Quite amazing how such exorbitant sums are bid for these wines, especially with the range of very good wines around the world.
I was in Sydney two weeks ago, and spent some time out in the Hunter Valley (in fact, wrote a bit about it on my blog Off Wandering). Enjoyed some phenomenal wines there – and what struck me was the incredibly low prices.
I picked up some stunning wines in the Valley for about 10-20 AUD, and some other fantastic ones in the city shops in the 15-50 AUD range. And yet there are others just a bracket above going at 50 or 60 times the price in Bordeaux…