Looking for future perfect
Wine futures, a once-arcane part of the business of wine, have become a field of battle for Bordeaux's best.
By Chris Sherman
Published February 22, 2006
"The futures are coming, the futures are coming'' seems a senseless alarm.
In the wine business, futures, like the future, are always coming. In Bordeaux, especially, futures are how many wineries sell their wine each year and make much of their money.
Keeping past and future straight in the wine-buying present would make a grammarian tense. Right now the hottest future is from 2003, and a hotter future coming is from 2005. Wouldn't 2005 be last year's futures? Well yes, but . . . Every spring for more than 200 years, wineries have dipped into barrels of wine made from grapes harvested the previous fall. After endless tasting of 6-month-old wine and extensive dickering, chateau owners and wine merchants agree to terms.
Each chateau sets a price at which it will sell a certain amount, 10 to 30 percent of its expected production, for cash two years before the wine is actually delivered. It might be $15 a bottle for a petit chateau in a modest year, or $500 for a great bottle.
That first slice of a vintage, called the premiere tranche, begins a long, fluid example of supply and demand. In the two years that follow, the reputation of the wine may grow, and sometimes the number of buyers grows, which drives up the price of succeeding tranches. That depends on hype and the vicissitudes of the world economy: the value of the franc, the relative wealth of Japanese buyers, the state of Francophobia or the competition from California.
Once the wine hits shelves and private cellars, the value can climb for decades at auction. Or not.
For centuries, the futures trade was an essential but arcane part of the wine business that took place far from American wallets.
No longer. At B-21 Fine Wine & Spirits, the massive wine store on the Pinellas-Pasco border, Florida wine drinkers now buy futures by the bottle or the case. Owner Bob Sprentall joins tasters in Bordeaux every year and scores the new wines.
He posts his ratings on each chateau next to those of Robert Parker of the Wine Spectator on his list of futures for sale in Tarpon Springs. At present B-21 (43380 U.S. 19 N, Tarpon Springs; (727) 937-5049 or www.b-21.com) offers 120 futures on 2003 Bordeaux, from $15 to $700,
and another 40 from 2004 from $13 to $230.
Wholesalers and retailers in Florida and around the country always invested in futures for their own stock. Except for the most passionate connoisseurs, ordinary drinkers did not.
Enter vintage 2000. It was a truly exceptional vintage with the added blessing of millennial hype. Prosperous Americans jumped into the fray, paying big cash up front to guarantee they would eventually get a bottle of Petrus or Margaux with the magic year 2000 printed on it.
"I sold 75 cases of Lafite'' in futures, says Jim Sirna of West Palm Wines in Tampa, another local retailer who sells futures. In the following good but not great years, many buyers dropped out, he says.
When the 2001 wines were offered, the U.S. economy was still in 9/11 shock, and the 2002 vintage came on the block while many buyers rejected French wines in protest over wartime politics.
Hype over the 2003 vintage brought them back. Next month, excitement about 2005 will bring them back again.
This year's bidding could be tougher. Bordeaux and its marques are the best-known in the wine world, yet it makes only a tiny amount, less than 2 percent of world wine, and that cannot increase. The number of people who want it has grown immensely. It's not just Americans who crave the hot vintages, but the Japanese and Chinese as well. All are sure to want the 2005 vintage, now said to be of extraordinary quality not seen since 1990 or 1982.
Prices will be high, and those who prize the best Bordeaux will pay to guarantee they get the wines they want, not as an investment to resell.
When bottles of the 2005 Bordeaux do reach the shelf in 2008, they will be fewer and cost more. Futures are virtually always a savings over the eventual retail price. If the wine does not increase in value, Serna points out, "It's not a question of losing money; maybe you didn't gain, but you still have a good bottle of wine. It's a liquid asset."
Futures do cost patience. Pay cash now and wait two years to hold it in your hands.
But waiting is not new for Bordeaux lovers. They sit tight until wine is five or even 20 years old to open them at all.
-- Chris Sherman can be reached at (727) 893-8585 or sherman@sptimes.com.