Bubble bursts for vintage claret

THE SPECULATIVE bubble in prices of the finest young Bordeaux wines - which have doubled and trebled in recent years - appears to have burst.

The 1998 vintage, though generally reckoned to be one of the best for some time, has been selling in the past few days for up to 25 per cent less than the 1997 vintage, which was universally judged to be poor.

The sale of a good wine for less than a bad one goes against all the instincts and traditions of the growers and traders. It amounts to a recognition by the big Bordeaux chateaux that the steep price increases of recent years threaten to ruin the international market for high-quality claret.

"There have been abundant warnings from shippers that prices had to fall this year, however good the 1998 wine might be," one British wine trader said. "The producers have finally seen some sense."

The chateau-cos-d'estournel - the most prestigious claret in the Saint Estephe area of the Medoc - led the way by selling 70 per cent of its 1998 wine at a 25 per cent discount on last year's price. Other high- quality labels have followed suit in the traditional advance sales of "primeur" or raw, still unbottled wines over the past couple of weeks. Cos-d'estournel - one of the worst, speculative offenders - went for the equivalent of pounds 28 a bottle from the chateau last year (perhaps pounds 40 to retail customers). It sold for pounds 21 a bottle this year.

This follows a virtual stand-off in January and February when many wine traders boycotted the advance bidding. Early sales of the 1998 vintage - despite its excellent quality - were less than one third of the normal level.

The drop in chateau prices affects only the highest-quality clarets - pounds 40 to pounds 30 in the shops - which will not be drinkable for another seven years or more. It will have no direct impact on retail prices of more modest bottles of about pounds 10 but it may help to arrest the upward trend in all Bordeaux prices seen in recent years.

Retail prices for the best Bordeaux labels were driven up in the Nineties by a boom in Asian demand, a fashion for claret in America and speculative buying by City traders. Wines were being sold at up to 10 times what the chateau had originally charged.

Four years ago the chateau owners gazed at the profits being made by some shippers and traders, and asked: "Why not us?"

They ramped up the asking price for young Bordeaux (primeur) and, having got away with it one year, did it again, the next and the next.

Last year, partly because of the Asian recession, the market fell flat. Thousands and thousands of cases of the "poor" 1997 vintage remain unsold in wine traders' cellars all over the world. While these stocks remained on their hands, shippers were reluctant to pay a high price for the1998 vintage, however good it might prove to be.