Futures

The English speaking world call it ‘Futures’, the French call it ‘En Primeur’. After a harvest, and when the wine is still in barrel, wine producers offer their wine for sale with immediate payment. The importers buy it, and sell it to the retailers who sell it to us, the public. The wine is delivered to the buyers when the wine has been bottled, typically in a couple of years. This eases the wine producers’ cash flow, and allows the Winevestor to lock in hard-to-get wines at a known (and hopefully low) price. Bordeaux used to be the only wine available through futures. Now you can find Burgundy, California, Rhone, Italian and Australian wines. These wines, though, are still hard to find from retailers.

In Bordeau the well known chateaux have been selling wine futures since the 1970s. The practice is catching on in other areas, especially where the wines are highly sort after. Inevitably these are the wines that are attractive to the Winevestor, and so understanding Futures and how to find them is key.

In Bordeau, the harvest is done in September/October. At harvest, and even before, the rumors about the quality of the vintage start to radiate outwards. As these rumors start with the wine producers, they normally are very rosey. It is surprising, how many years start off as the Vintage of the Century! In the springtime after a harvest (March/April), the key tasters of the wine trade descend on Bordeau for a concentrated period of barrel tasting to assess the vintage. Today, you can follow their progress through blogs and the wine magazines. They spend two to three weeks there and spread the news of the vintage. The rumor turns into more objective analysis when the scores of the individual wines are released, and a more careful interpretation of the vintage is concluded and endlessly debated and written about. It is at this point that the wines become available as futures and the prices are posted. Wine futures are typically released in up to three price groupings (tranches), and in a good vintage the futures price progressively increases until the vintage is available in general release. The chateaux sell their wines only to negociants. They do this as the negociants are obliged to buy the wine in good or poor vintages, or they will lose their allotments. The negociants then sell the wines to the wine importers, who bring it to the US and sell it to the wine retailers. Even in this chain, though, the concept of the tranche continues as all parts of the chain want to receive their money immediately. Therefore, if you decide that you want to invest in a vintage, you should buy the earliest futures you can through your supplier. In a typical decade there are 2/3 vintages worth investing in.

So what are the Winevestor guide lines for Futures? Buy:

• Only IGW
• In a great vintage