The En Primeur campaign moved up a gear yesterday when Lafite became the first leading Bordeaux property to release its 2011. The vintage came to market €420 per bottle (ex-negociant), representing a price reduction of 30 per cent on 2010.
Despite concerns on Twitter that prices would need to be reduced further in order to attract sufficient demand, the market appears to have responded favourably to the release. So far, Lafite 2011 has traded several times at between £5,280 and £5,500 per case. Of course, its success is largely down to the fact that it is the most affordable vintage of Lafite on the market.
So what does this imply for the remaining First Growths?
In GBP terms, Lafite 2011 is positioned at least 10 per cent below the 2004 – which was formerly its cheapest physical vintage. If the other four Firsts are to sell through, they too will need to ensure that their new releases represent value for money.
We calculated approximate London release prices for the Firsts by deducting 10 per cent from the current prices of their most affordable vintages. We then converted the London release prices to ex-negociant and ex-chateau prices, allowing 10 per cent for merchant margins and 20 per cent for negociant margins. The results of our analysis are shown below.
The table below compares the 2011 ex-negociant prices that we arrived at with actual 2010 release prices. As you can see, following Lafite's model is equivalent to reducing prices by more than 60 per cent.
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