How low can you go: will en primeur price cuts tempt the market?

Much ink has been spilt over the upcoming en primeur campaign, and the fine wine market it launches into – but what pricing strategy are trade customers demanding? The report surveyed 50 CEOs, MDs, and wine department heads on what the maximum viable release price for the 2024 en primeur campaign would need to be in order to rekindle demand. The responses, it found, varied by region, with Asia calling for the largest discount by far – around 45% compared to the 2023 vintage, while America trade customers said a 20% increase would rekindle demand. However, the largest sample size in the survey – Europe - calling for a 30% cut, in line with last year’s demands – bringing an overall average to 31%. Drilling down, it found that top-tier merchants and importers called for the largest price discount of around -40%, with auction houses, specialist merchants and retailers aimed for discount of around 30% discount, while the Place de Bordeaux itself called calls for an average of only -20%. It noted that the lack of consensus on what strategy producers should take in terms of pricing implied that “some believe price reductions alone will not suffice”.

Price adjustment

As Allan Sichel, CEO of Bordeaux-based producer and négociant Maison Sichel told the drinks business last month that there was “definite pressure” on the Bordelaise to bring the pricing down in recognition of the challenging market the campaign is launching into. He added that the trade needed “to be confident” to buy wines and the chateaux were aware of the challenges and “determined to make success of the campaign”. “Everyone agrees that price readjustment is necessary”, he told db. Meanwhile db's Bordeaux correspondent, Colin Hay argued that for the Bordeaux 2024 offer to work commercially, “it needs to be more competitive than it would otherwise need to be” because of the “precarious” position of many leading UK brokers, who have suffered as a result of the downturn of the fine wine market” as they rely on transactions of that secondary market. He argued that “if Bordeaux 2024 en primeur is to work for those [producers] who need it to work the most, they can’t just afford to follow any price signalling that comes from the first [chateaux to release].”