How to Invest in Bordeaux En Primeur, Tariff Free!
What is Bordeaux En Primeur
Bordeaux En Primeur is a century old system that has been used for Merchants & Collectors alike to purchase Bordeaux Wine Futures. This system has been mutually beneficial for Chateaux’s & consumers, the Chateaux gets to capitalize on a vintage worth of work while the wine is still in the ageing process, while the consumer gets to secure their wine at a cheaper price vs if it were physically bottled.
In recent vintages there has been a debate surrounding if the En Primeur system was still mutually beneficial. Some would argue release prices trended towards greed on behalf of the Chateaux’s, gone was that mutually beneficial relationship. This pushback has been shown in the marketplace, Bordeaux wines have been consistently excellent from a quality perspective over the past 5 vintages, but demand & prices have been steadily dropping, how could this be? We are happy to say that the message has been received, Chateaux’s have crafted another stunning wine in 2019 but more importantly they have listened to the market when considering release prices.
Pontet Canet is historically a Chateaux that releases their wine early, they give a great indication on pricing, the 2019 has been released at a 31% discount to 2018! This is a wine that has received 98-99 points from James Suckling & still it was released at an impressive discount to last vintage. This is truly remarkable and a welcomed change by everyone involved.
Is 2019 Bordeaux a good vintage to buy?
2019 as a vintage has been praised by critics, thankfully the vineyards avoided any growing season issues like the frost in 2017 & mildew pressure is 2018. Early vintage reports indicate a very good quality vintage, not quite at the level of 2016 but far above the 2017. Neal Martin, a well-respected critic for Vinous, wrote in his Bordeaux 2018 report that there is an “excitement surrounding the 2019 vintage” & “a majority of winemakers believe that their 2019s are superior to 2018 due to slightly better pH. Having witnessed the harvest first-hand, I believe their optimism is not misplaced.” Jane Anson of Decanter expressed similar sentiment when she said “There is cautious optimism for an excellent vintage with serious quality in the bottle”
What are the current US tariffs on Bordeaux wines?
As a wine lover & collector in the United States we have been navigating rough waters over the past 6-8 months. While Bordeaux En Primeur should be a joyous time for collectors with all the excitement that comes with securing high-quality Bordeaux wines for great prices, we still have to contend with the dreaded Tariffs hanging over our heads. The additional 25% EU Wine Tariff imposed late in 2019 is still subject, however the US wine world won a slight victory when the threat of 100% Tariffs were postponed for 180 days back in February. Yet still, this gives collectors pause, what will happen if I were to participate in a highly investable vintage and take shipment then, bang, a tariff increase? It is in the back of everyone’s mind every time they purchase a wine. This unnecessary tax is due to a dispute surrounding funding for the aeronautics industry, what that has to do with wine is beyond me, but nonetheless this is an issue that needs a solution.
Is there a way to be able to participate in Bordeaux En Primeur and have the wines held in Europe until I either want to ship & consume the wines, or possibly sell for profit?
The words “In Bond Warehouse” are not well known in America. Sadly, the United States has not adopted In Bonded storage for Wine the same way those in the UK & EU have. The In Bond system is essentially a duty free zone, overseen by the government. The textbook definition is "a building or a custom-controlled warehouse where goods are kept for processing before delivery".
Can I invest in Bordeaux wine tariff-free?
What does this mean for American wine collectors? It means you could participate in Bordeaux En Primeur knowing with confidence the wine can be stored in an ideal facility without the threat of Tariffs or Duties. A type of Tariff-Free safe haven where the Wine can be kept securely until the day comes when you choose to ship it back to America, hopefully when the Tariffs are gone, or you sell the cases back into the market place for a gain.
The unique aspect of In Bond Storage is every case needs to have an underlying owner registered to it, this means every single case you invest in has your name registered as owner with the government, This provides peace of mind as a collector. The In Bond system removes a variety of issues for the owner: the threat of unnecessary Tariffs, unwanted duties & customs charges, having to physically store & insure the wine until it is ready to drink or sell. All these issues can be solved by taking advantage of the In Bond warehouse system.
Bordeaux is of the most revered Fine Wine regions in the world, producing highly prized & age worthy wines, En Primeur is the most competitive way of collecting these wines. Finding a way to gain access to that marketplace while negating a variety of risks is essential for wine collectors. Participating in En Primeur with the ability to store In Bond during these uncertain times is something all American wine collectors should take advantage of.
If you are based in the US and interested in learning more about this year’s en primeur campaign, download a copy of our report here.