Bordeaux is back in the news with the 2022 vintage said to be the best this century. But is it really that good? And, above all, should you buy these wines and at what price? Let’s find out1.
Get ready for Bordeaux's primeur season in Spring 2023
As with every year, the wines from the latest harvest were first presented to critics, merchants and all the other players in the wine market, who were able to form their own opinion on the quality of the 2022 vintage and share it with their community. Now we’ve entered the thick of the “en primeur campaign”, and the wines are gradually being released by the various châteaux. As is often the case, the most sought-after crus will probably be among the last to be released, i.e. towards the end of June.
The en primeur machine is well-oiled and everything is proceeding as usual, with a few nuances. Firstly, the tastings took place a little later than last year, which slightly delayed the release of the tasting notes and ratings. But, above all, the vintage appears to be absolutely magnificent. Climate is a recurring source of uncertainty, but in the case of 2022, it seems to have contributed to the production of absolutely beautiful wines.
Historically, great vintages are synonymous with strong demand and therefore high prices. In the current century, this has been the case for the 2000, 2005, 2009, 2010, 2016, 2018 and 2020 vintages. The magnificent 2019 vintage is an exception. It was offered at rather low prices due to the pandemic and subsequent recession. The 2022 comes at a very different time: the health crisis has waned, but the war in Ukraine and inflation have stoked geopolitical and economic uncertainty.
The objective of this article is to determine the prices at which Bordeaux 2022 should be released, given the conditions currently prevailing on the fine wine market.
Fair Pricing for Bordeaux Wines
To determine the “fair” price for each wine, we use a model based on a simple principle: the price of the latest vintage must be consistent with the vintages already on the market and still available for sale2.
In concrete terms, for the price of a 2022 cru to be considered fair, it must reflect the current reputation of the château producing it, and take into account the quality of the wine in that particular vintage and its age (which, unlike wines already on the market, is close to zero). In other words, for a price to be considered fair, a potential buyer would be just as likely to buy a 2022 cru versus a comparable wine from an earlier vintage. The term “comparable” is used deliberately: the idea is not to find wines that are totally identical – that’s not possible. Rather, the idea is to identify, on the basis of their attributes, wines whose relative weaknesses as compared to other wines are offset by qualities of equivalent importance. For example, a château could justify selling its 2022 at the same price as its 2010, if the 2022 is clearly better than the 2010 – which would compensate for the age difference in favor of the 2010 bottle. Similarly, given the exceptional quality of the 2022 vintage, some châteaux will be able to sell their wines at a price equivalent to or even higher than 2021s from producers with a stronger reputation and which are therefore usually more expensive.
We applied our approach to 73 châteaux for which we had access to all the necessary information and variables. This sample is representative, as it contains the majority of the “most prestigious châteaux” from Bordeaux. Only a few Pomerol wines are missing, for which it is more difficult to obtain reliable data.
In order to establish the fair price for each wine of the 2022 vintage, we proceed in two steps. We first analyze the prices of older vintages that already trade on the wine market and estimate the value attached to each château (reputation effect) as well as the effects of age and quality ratings on prices. We then use these estimates and the ratings of the 2022 crus to determine their fair release prices.
At this point, it should be noted that “fair price” is not synonymous with “good deal”. It is simply a fair price based on the information and variables available to us at the time of writing.
Table 1 reports the price at which wines from the 2022 vintage are expected to reach the market. The table also compares these estimates with prices for the same wines in the 2021 vintage. For the vast majority of wines, a price increase can be justified on the basis of the model. This is due to the quality of the 2022 vintage, which appears to be significantly better than that of the 2021. On average, this increase should amount to 13%.
We have also included in the table, the few wines that have already been released. On the whole, these wines are offered at prices close to those estimated by the model. We can therefore consider them to be correctly valued. But there are also some notable exceptions.
Among the wines that are almost perfectly in line (between -5% and +5%) with the model are Branaire Ducru, Cantemerle, Chasse-Spleen, du Tertre, and Tour Carnet. There are also a few wines that appear ‘underpriced’ compared to our model’s estimates: Langoa-Barton (-7%), Léoville-Barton (-7%), Ausone (-8%), and Beychevelle (-11%). In the case of Beychevelle, it should be noted that the brand’s value has been on the rise on the secondary market since last year, which largely explains this situation. Had we used information from July 2022 (at the end of the last primeur campaign), the release price would have been only 3% lower than that predicted by the model.
Duhart-Milon (+8%), Grand-Puy Lacoste (+16%) and, above all, Angélus (+24%) and Palmer (+37%) appear to be too expensive. In the case of Angélus and Palmer, this situation seems to be the result of a positioning strategy, combined with low quantities brought to market.
There are also some “good deals”. These include Carruades de Lafite (-25%) and Cheval Blanc (-16%). In the case of Cheval Blanc, this is entirely explained by the fact that this wine stands out as the great success of the vintage among the Premier Crus Classés and the like. In other words, if its scores were closer to 95 than 98 (as is the case), the release price would no longer be particularly attractive, but just right. The case of Carruades de Lafite should be analyzed in conjunction with the rest of the Lafite-Rothschild family, and Duhart-Milon in particular. There is a brand portfolio logic that needs to be taken into account to understand their respective prices. Thus, the reputation 'premium' is priced into our estimates.
Premium vs. discount pricing strategies
Our model shows that a price increase over the previous vintage is justified. For most crus, this premium should remain moderate, between 5% and 20%. However, in view of their quality and/or the strength of their brand on the secondary market, some crus could afford a more marked increase. Among those not yet released, Figeac, Canon, Carmes Haut-Brion, Clinet, La Lagune and Troplong Mondot could increase by more than 30% without becoming too expensive, according to the model. On the other hand, a number of crus, which have been consistently overpriced in recent vintages, should be careful not to increase their prices – ideally they should even decrease them. These include Clarence Haut-Brion and Evangile.
Is Bordeaux 2022 worth the investment?
As mentioned above, our model is designed to determine the fair price based on current conditions on the secondary market for Bordeaux wines. However, it cannot take into account certain complex factors such as the following.
Given the succession of great vintages in recent years, and the fact that the wines produced from them remain widely available on the market, some might wonder whether the quality of the 2022s is sufficiently extraordinary for buyers to be content to purchase them at the fair price, or whether a discount would be needed to encourage them to do so. In which case, the corresponding amount would have to be subtracted from the estimated prices reported in Table 1.
The previous consideration is reinforced by inflation and, above all, rising interest rates. We sometimes hear the argument that inflation justifies higher prices. But for fine wines, there is no direct relationship between price and inflation. Economic conditions do play a role, but not so much through inflation. Sustained economic growth and rising stock markets often translate into higher fine wine prices. Currently, this is not the case. Interest rates, on the other hand, play an important role, as buying en primeur wines means tying up your money for around two years. This must be reflected in a discount. Our model takes this into account via the age effect, but it could be argued that this effect (2% per annum for first growths, and 4% for others) does not yet fully price in current interest rate conditions.
Volumes released on the market are not taken into account in the model, as they are a closely guarded secret. However, it is common knowledge that they have been falling for several years now. This has two effects. Firstly, it provides somewhat artificial support for prices. Secondly, it means that a substantial quantity of wines from the 2022 vintage will be put back on sale in the coming years. In practical terms, this is likely to put downward pressure on the future prices of those wines. This pressure could be reinforced by the fact that many merchants still have large quantities of wine from previous vintages to backlog at some point in the future. It therefore seems wise to focus on buying wines whose price appears fair according to our model, and for which a very significant quantity of production is being marketed now. For these wines, the deal should be good, especially if the vintage turns out to be as remarkable as first tastings suggest.
1. EHL Hospitality Business School, HES-SO, University of Applied Sciences and Arts Western Switzerland, Route de Cojonnex 18, 1000 Lausanne, Switzerland. Email: [email protected].
2. Readers interested in a more detailed view of the model are invited to consult the following article: Masset, P., Weisskopf, J., & Cardebat, J. (2023). Efficient pricing of Bordeaux en primeur wines. Journal of Wine Economics, 1-27. doi:10.1017/jwe.2023.5.