Two totally separate but related comments caught my attention at Vinexpo this week. First, there was the discussion during the Brexit seminar about whether UK wine merchants were beginning to trade in euros rather than pounds sterling in an effort to maintain their – and London’s – place at the heart of the global wine trade. Then there was the comment that Angelo Gaja had made the night before, when he was guest of honour at the brilliant Domaine de Chevalier party. Gaja voiced his regret that there were not more Bordeaux chateaux represented among the stands at Vinexpo. Vinitaly, he implied, was far more representative of its country and region than the comparable Gallic event.
This last sentiment raised a few eyebrows among the listeners; there were, after all, lots of bottles of red and white Bordeaux on show at Vinexpo. Most of them, however, were not on stands bearing the names of the estate; they were presented as part of a portfolio by a negociant - a merchant.
For anyone who understands the way most of Bordeaux’s top wines are traded, this would come as no surprise. You can buy Gaja’s Barbaresco from Gaja; for Chateau Margaux, you have to deal with a Bordeaux negociant, who has, in turn, made his purchase via a courtier (a broker).
Traditionally, however, as a buyer in, say Hawaii or Hong Kong, you probably wouldn’t even have had anything to do with a negociant in France – you’d have talked to a charming, impeccably-suited and brought-up Englishman working for a wine merchant situated within walking distance of Buckingham Palace. Long before the success of Britain’s recent crop of sparkling wines, London wine merchants were proudly showing off the Queen’s Awards for Exports they had won by successfully selling top Bordeaux across the globe.
In other words, Bordeaux has long had its own version of America’s famous ‘three tier system’, with at least three margins taken out of the price of each bottle by the time it reaches a consumer’s wine rack. The only difference has been that the Bordeaux three-tier system has included traders based offshore.
But nothing lasts forever. Globally, the trend is towards cutting out middle men. While most imported wines in the US still pass through separate importers, wholesalers and retailers, the growth in direct selling by wineries has been dramatic. Over the last six years, the value of this sector has risen by over a billion dollars, to $2.33bn. The average price of the more than 60m bottles sold in this way in 2016 was a heady $38.69.
Elsewhere, there are other signs of real or apparent cracks in the three-tier system. Successful flash sales sites like Wine Til Sold Out source wine directly, while Naked Wines’ business model involves putting its customers in direct contact with the men or women who produced the wines they’ve bought.
Chinese buyers are notorious for resenting the margins taken by middle men, and for asking if they can buy directly from Bordeaux chateaux. Often, when they make this request, they are directed towards a negociant with a close connection to the estate. The Bernard family, for example, owns both Domaine de Chevalier and Millésima, one of France’s most dynamic negociants.
So where does all this leave the wine merchants of London, and their place at the heart of the world of wine? With or without Brexit, and whether trading in Sterling or Euros, I’d say that it looks rather vulnerable. And to those who scoff and say that London will always retain its role, I’d respond with a single three-letter word: tea.
For three centuries from 1679, the British capital was the heart of the international tea trade, thanks to the London Tea Auction. In the 19th century, a third of the world’s tea was traded at weekly sales whose auctioneer, like the one at the Hospices de Beaune, used candles. When the flame went out, the lot was sold. Mincing Lane where the auctions were held was known as the ‘Street of Tea’, just as St James was seen as the home of the wine trade.
June 29th 1998 saw the last of those sales. Today, tea is traded globally online. Like wine.
A buyer in Hong Kong might bid on a case of Lafite at a Christies auction New York – or, the way things are going, quite possibly buy it more or less directly from the chateau.
Robert Joseph
