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The Art and Science of Bordeaux Futures – a Chat with Hortense Bernard of Millesima U.S.A.

We have mentioned it before, how our wine journey really took off when we started to appreciate Bordeaux.  From there, the rest of the wine world opened in turn, but it was an unlikely bottle of 1997 Chateau Potensac which started it.  We ordered this, for no particularly good reason,  at a family dinner in one of our favorite restaurants.  From a middling vintage and a less heralded estate, this wine none the less had a stream of amazingly pure fruit running through it.  It was eye opening.  We ended up finding it at a retail store and buying a case.

That was in 2002.  We started to drink more and more Bordeaux, although the price tag on the better bottles was out of our reach, by a lot, so we focused on more everyday price ranges.  The 2000 vintage was heralded as spectacular, but the prices were very high for something called ‘futures’.  The term is technically en primeur, which translates to ‘in futures’.  When I looked into it I found many of the best wines already sold out in many places, and the wines had not yet been released!  What was this all about, I wondered.  There is actually very little mystery here, as the futures mean what they do in any other financial transaction- you are purchasing something for future delivery and locking in the price.  This sounds very much like an investment discussion, doesn’t it?  In many ways it, in fact, is just that.

I recently had a chance to discuss the world of Bordeaux futures with Hortense Bernard, director of Millesima, U.S.A.  Millesima is one of the five largest Bordeaux futures buyers in the world.  Actually, Millesima has an incredible inventory of wine from across the world, with a focus on France, Italy and the West Coast of the U.S.  You can find futures offerings there along with current releases from Bordeaux and an extensive selection of back vintages, with many reasonably priced options included.  It is impressive, and you can see for yourself at http://www.millesima-usa.com/.

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Millesima was founded in 1983 by Patrick Bernard, Hortense’s father, and thanks to its expertise and reliability has become one of Europe’s leading fine wine mail order merchants. The company began life as Les Vins des Grands Vignobles and became Millesima in 1988, when it published its first catalogue of 100 of Bordeaux’s greatest wines, the Grands Crus Classés.  Patrick Bernard’s aim then, as now, was to bring some of the world’s greatest wines direct to wine lovers from the Chateaux.  Today, Millesima maintains an inventory of over 2.5 million bottles of fine wine that age gracefully in the company’s cellars in Bordeaux.

Hortense grew up in the French wine industry, literally, and she has seen the futures landscape evolve and change over the years.  When I asked her about the pricing of Bordeaux, and especially about the run up in prices for top Chateaux in 2009 and 2010, she immediately pointed to the investment nature of most of the high end wine being bought.  This was arbitrage at it’s finest.  The First

Large format anyone?

Large format anyone?

Growths of Bordeaux, the ‘Premiers Crus’, soared to over $1000 a bottle with no end in sight.  They were all quickly bought up.  In fact, Hortense informed me that even though prices are now more reasonable, they still sell virtually all of the Premiers Crus wine as futures.  If you’d like a little background on the classification system in Bordeaux, and what the term First Growth means, just click here.  In a nutshell the best wines of Bordeaux, at least in the Haut-Medoc, in the area known as the Left Bank, were classified into five tiers way back in 1855.  A very large group of other Chateaux which did not make the lists also make great wine as well, but the five classified groups tend to be the best known, and command the highest prices.  The top tier are the Premiers Crus, and are five legendary Chateaux:  Lafite-Rothschild, Mouton-Rothschild, Latour, Margaux and Haut-Brion.  Even in today’s world of lower pricing and a lower Euro, these are going to run you upwards of $500.

We’ll skip the discussion about whether any wine is worth that amount of money, as it depends on so many factors.  Remember also that many of these are bought as investments, so my impression is much of this wine doesn’t really get opened very often.  I would certainly like to be there when some of it is!

Back to the futures though, and why you should care about them.  We personally started buying some Bordeaux futures in 2003, having missed the truly great 2000 vintage.  We can’t afford the Chateau Latours of the world, or really most of the second tier,

One of very few remaining 2003 in our cellar

One of very few remaining 2003 in our cellar

‘Deuxiemes Crus’ wines.  When you start getting into the third level and below,and especially the large number of excellent but unranked Chateaux, then prices get pretty good.  In a great vintage, these names represent some of the best values ever available in the wine world.  These are the vintages you definitely want to look at as futures, even if you plan on doing nothing more than drinking them, as we do.  We bought 3 cases of 2003, and had some great wine.  All that is left is a bottle of Cantenac Brown and one from Faugeres. Both will be drunk soon.

The 2005 vintage was heralded as great early on.  The Chateaux knew they had something special at harvest, and the barrel tasting in the spring confirmed it.  Keep in mind that much of the wine is purchased while it is still in barrel, based on the first round of tastings.  The big buyers send their teams in to evaluate, and then the Chateaux set their pricing.  This can certainly have its advantages, as Hortense described how Millesima actually can determine which bottle formats their wine gets put into, allowing their customers to buy any size bottle they wish.  If you are a lover of the large format bottles this is great.  Buying in barrel allows them to do this, as Hortense put it, “we own the liquid at this point”, and they let their customers drive the format size up until bottling occurs.

We scoured the reviews, and bought 6 cases of the 2005 vintage from various Chateaux.  Some were fourth and fifth growths from the left bank.  Much was right bank wine from St. Emilion, which has its own rating system.  All were excellent, and all were outstanding

2005 Chateau Duhart-Milon

2005 Chateau Duhart-Milon

values.  While we would not sell anything, much of the wine did increase in value.  The 2005 Chateau Duhart-Milon nearly tripled from our purchase price.  Best of the bunch to me, however, was the $12 Chateau Caronne Ste. Gemme, which James Suckling described as ‘hard to believe, it’s so good”.  We bought a case, and still have a bottle or two left.  This wine drinks like $50+ wine, and shows what you can do with careful selection, and a bit of luck.  We took a quick look around but couldn’t find any of it still for sale.  I’d buy as much as I could if that $12 price tag was still out there.

In less heralded vintages we tend to not even look at futures (which Hortense pointed out might be a mistake!).  In 2009 and 2010 we went back in, as both were declared “great”.  We would tend to agree.  The same philosophy was applied, and we ended up with a lot of incredible wine for very reasonable prices.  These were the years things got crazy, as the ‘investors’ Hortense mentioned bought up everything at the top end.  Prices soared.  We paid more than 2005 to be sure,

Some 2009 bottles waiting their turn

Some 2009 bottles waiting their turn

but still managed to find great values.  This kind of price appreciation could not go on forever, and the less successful vintages of 2011 through 2013 forced a correction.  That actually is a good thing, as the quality went back up in 2014 but the prices did not go crazy, a vintage which Hortense believes brings great value.  Millesima was in an excellent position for 2014, as many had started to pull back from the futures market, and maybe Bordeaux in general, and thus got back in the game a little late.  Millesima was there throughout and could capitalize when the 2014s showed well.  There are still plenty of 2014 Bordeaux wines available, even some futures I believe, so keep an eye out.  We will be picking some up for our cellar based on her recommendation.

If you do buy 2014, Hortense indicated she favored the Left Bank, believing the dominant Cabernet Sauvignon there did very well.  She described the 2015 and 2016 vintages as “very good”, but you need to be selective as there are probably 10-20% of the wines which you might wish to avoid.  There are some great values in there however, so do investigate.  In 2015 Hortense believes the Merlot on the Right Bank did better, so you might want to look at St. Emilion, Pomerol and the other right bank AOCs.  The 2016’s are still evolving.

And people are still buying en primeur.  Hortense described today’s buyers as looking for value, not just investors chasing the first growths and high end Chateaux.  In fact, their best selling future from the 2014 vintage was the Chateau Siran, from Margaux on the Left Bank, which sells for $30.  I think there are a lot of people looking for value in something they plan to open and drink.  That is a philosophy I can relate to.

While we still have some 2003 in the cellar, and older wines from various other wine regions, the trend away from older wines in today’s wine drinker is something very real and which Hortense has seen emerge.  Today it is much more about young and fresh wines.  In many areas of the world styles have swung this way.

The amazing 2005 Caronne Ste. Gemme

The amazing 2005 Caronne Ste. Gemme

You can find new, fruit forward versions of venerable classics like Rioja, Barolo and, of course, Bordeaux.  We still love old wines, and will continue to keep some stashed away.  That’s the beauty of wine, there is something for everyone.

These days Hortense is extremely busy managing Millesima U.S.A.  Her father, Patrick, is ‘retired’, which apparently means he travels about and scouts out good wines for Millesima.  Hortense’s brother, Fabrice, is now CEO of the parent company.  They have a near term focus on increasing their Californian portfolio, and Patrick will be working on that.

If you are interested in jumping into the world of Bordeaux futures, and maybe starting with 2016, you should sign up for Millesima’s email notification.  You can see that on their website at by clicking here.  Just look for the ‘Alert Me’ button to the right of the wine listing.  They let you know immediately when it becomes available, and that is pretty much the second they finalize the price with the Chateau, so you are likely to get an email at 3:00 AM.  You might get woken in the middle of the night, but if you want to make sure you get that certain Chateau, this is a good way to do it.  It is unlikely anyone will beat you to it.  They’ve been doing this for a few years, and it can take most of the effort out of trying to catch a wine on release.

Check out Millesima’s selection at http://www.millesima-usa.com/.  We’ll be buying from them in the future, including some futures! (That assumes they start to ship to our state of course.  We really need to move to a more wine friendly place.)

My thanks to Hortense Bernard for her time and her insights.

We’ll say it again, nothing beats some of the values you get in a great vintage from Bordeaux.

A votre santé!

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