Sunday, 24 May 2009

EN primeur - the con's

For consumers there are several risks in buying wine on an en primeur basis. Whilst selling early is a benefit for the producer, this passes all of the risk on to the investor. Should the wine not be as good as was expected in the original tasting, investors can suffer huge losses none of which will be covered by the Châteaux from which they purchased the wine.

Investors and collectors can also find that the wine they have bought is not as good value as they first thought, and in some cases, it is often possible to pick up the same vintage several years later for the same price, or even for less. An example of such a case can be seen with a case of 2000 vintage St Joseph Offerus which was offered en primeur in 2002 for ten pounds per bottle. Many invested in this, seeing it as an opportunity to make a healthy profit margin, but were disappointed, when in 2003 Seckford’s began selling it for eight pounds in their January sale.

There is also a possibility that having paid upfront, the merchant may go in to liquidation before the wine is delivered. This often leaves the investor with no way in which to obtain the wine they bought, or get any kind of refund on the money they have spent. There is also a risk that the merchant may have oversold their allocation of the harvest, leaving customers disappointed. This can result in issues for those who have gone on to take orders from others, as they will no longer be able to fulfil their promise.

The best wines offered through the en primeur process mean that not only does the consumer have to wait an additional eighteen months for delivery, but they must then wait up to another decade before the wine reaches its full potential. Not only does this mean that consumers have to wait a lengthy amount of time before they can even taste the final product, it also means additional costs are involved in cellaring charges, unless you’re lucky enough to have an underground cellar of your own.

Whilst en primeur wines are valuable if you are looking to stock a cellar, and have the money to invest for long periods, for those who want to experience the wine this is often not the right way to go. This leads to yet another financial issue for buyers who find that end consumers only want to buy the wine when it is ready to be drunk, so investors in en primeur have to tie up their money for a long time, before they can see any return.

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