The Bordeaux cycle

Commentators have recently claimed that Bordeaux’s fine wine system is in crisis. Rebecca Gibb MW says it’s all been said before.

Allan Sichel
Allan Sichel

Allan Sichel is sitting in his family’s offices on Quai de Bacalan in Bordeaux. Sichel, the head of Maison Sichel and current president of the Conseil Interprofessionnel du Vin de Bordeaux, has discovered family correspondence going back to the 1950s. It reveals that his grandfather had to listen to the same criticisms as he hears today. “It’s exactly the same comments put to him by his customers – ‘The prices of these top clarets are far too high, impossible to sell them with a margin, and there’s no future in it,’” he says.   

Reading back through Bordeaux’s rise and fall and rise, it becomes apparent that what is new is old. History shows that the fortunes of Bordeaux’s classified growths have undulated like the Alps over decades – even centuries – but the cycles show remarkable similarities. Recent headlines during Bordeaux’s annual En Primeur campaign have included: “High Hopes But Nerves Linger on Prices”; “High Price Could Make It Unsaleable”; “Trade Divided Over This Year’s En Primeur”. Yet, it turns out that these sentiments are as integral to Bordeaux’s trade as vintage variation. As Nicholas Faith wrote in his book, The Winemasters of Bordeaux, “the periodic price surges due to speculation and accompanied by the influx of outside capital – has in fact been regular features of the Bordeaux scene for centuries past.” 

The great cycle

There’s a sense of déjà vu with every boom – a buoyant economy paired with a promising vintage leads to rising demand and speculation, which inevitably leads to a bust, whether it’s the late noughties, mid ’90s or ’70s, or early ’80s. Each fall has had a unique set of economic and political factors, whether it is rampant inflation, the oil crisis, or the global financial crisis, but the past has an uncanny knack of repeating itself, as Sichel’s grandfather once explained: “Older members of the Bordeaux wine trade often refer to the Bordeaux ten-year cycle, illustrating the fact that Bordeaux never learns.”

The younger Allan is more measured. History does not repeat itself, he believes, but it’s always the same supply and demand economics that apply, “and they’re very difficult to anticipate”. However, there are distinct commonalities in recent cycles – the arrival of a good vintage, or two, after some difficult years is a recipe for speculation. Whether it is 1969 and 1970, 1995 and 1996, or 2009 and 2010, a good vintage is hailed as a new beginning. But what happens in every case? Bordeaux gets excited, the first growths set their prices high, the other classified growths follow, the market starts speculating – and then, inevitably, comes a lesser vintage.

Yet whether it’s 1971, 1984, 1997 or 2011, the Bordelais seem determined to keep their prices high, overestimating how interested the market is in its wines and how much they are willing to pay. The resulting wines are often sold off at cheaper-than-opening prices, leading to yet another debate over the merits of the En Primeur system. The bust usually involves a string of unappetising vintages that are overpriced, combined with rising stock levels and an economic malaise, as happened in 1973, where the situation was compounded by the oil crisis and the Bordeaux Winegate fraud scandal. Inevitably, a good vintage comes along, but still licking their wounds from their past mistakes, the Bordelais decide to price the wine reasonably, as they did with the famed 1982 vintage.

Lessons unlearned

Yet, no sooner do you think they’ve learned from the past, when it turns out they haven’t. The 1982 and 1983 wines were doing well in the market, rising well above their release prices, and the classed growths released their next wines at even higher prices. Unfortunately, not only was 1984 a poor vintage but the Bordelais also insisted that buyers take it if they wanted any of the charming 1985 vintage.

You can’t blame anyone. Sellers are always going to want to charge the highest price they can achieve sustainably while buyers always want to pay less. However, past periodic ebbs and flows should be understood by the trade to ensure history doesn’t repeat itself. Admittedly, there is a unique set of economic, political and legal conditions to each rise and fall of Bordeaux fine wine fortunes, but there are lessons to be learned. If only they can remember them.

Going back to his grandfather’s correspondence, Sichel concludes, “And so, all this time later, it’s still the same arguments because it’s still the same fundamentals, although the circumstances have changed.” 

 

 

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