The Bordeaux En Primeur 2023 campaign kicked off this week. The choice of the top châteaux for these 2023 Primeurs is not an easy one. They’re under pressure from all sides and have to make a Cornelian choice: do we continue the journey in first class or switch to premium? The decision is not a trivial one for these brands, as it involves a choice between creating or destroying value.
Luxury is a business model distinct from the premium model. It’s also a completely different mindset. Critical to the luxury business model’s success is keeping supply far less than demand, maintaining highly selective distribution and never selling at a discount. Because fine wine is not disposable fashion, fine wine is timeless luxury. True luxury brands build timeless icons that never go out of style and whose value increases over time.
At a time when the world of luxury continues to raise the prices of its iconic products while adopting new strategies to meet consumer expectations in a new economic climate, some of the great names of Bordeaux are choosing to discount their iconic wines. Lafite Rothschild -30%, Leoville Las Cases -40%… We’re talking here about their flagship, iconic wines that best represent the excellence, values and history of the château, that is to say the brand.
Applying major discounts may sound weird at a time when wines have never been so good, and where the qualitative difference is increasingly difficult to perceive when tasted young. In fact, these great wines no longer have time to age; they are offered young because retailers, and particularly restaurants, can no longer afford to let them age in their cellars. Added to this is the fact that fans of great old Bordeaux wines like myself, with 20 or 30 years of ageing, are becoming increasingly rare. I’m the first to regret this, because the magic of a glass of an old Bordeaux is a fabulous experience.
If the vintage effect is becoming less and less audible as a reason for sharp price declines, what other reasons could we give? Could the economic situation be another good reason? In the same economic climate, Hermès, Chanel and Louis Vuitton continue to raise the prices of their iconic products. Why not fine wines? Finally, the ultimate reason: pressure from merchants, buyers, customers? As a consumer, I’d like to see Hermès or Brunello Cuccinelli products 40% cheaper, as well as Estée Lauder cosmetics and Omega watches. If so many of us ask, would the brands do it under pressure? No. For luxury brands, pricing power is key.
In the world of luxury, brands have obviously had to adapt, and the challenges were and are still many: developing the right distribution strategy, exploiting the secondary market potential, positioning oneself in the face of market premiumization, successfully attracting young and female customers…Challenges that the great names of Bordeaux also are facing, while working alongside the Place de Bordeaux when it comes to distribution. For this is not the end of La Place de Bordeaux, as I may read or hear. Of course it isn’t! On the other hand, this En Primeur 2023 campaign does mark the end of an era, and that’s obvious. La Place de Bordeaux has done an extraordinary job since the beginning of its history, building brands and names that are recognized the world over. But this is no longer enough.
Just as all the big names in luxury have done over the last decade by taking control of their distribution network and developing their brands, we need to rethink this distribution by including the Bordeaux negotiants and being much more dynamic with brands. Luxury is pure value creation. Luxury brands need cult products that fix the dreams of customers who have to say to themselves: “One day I will buy a bottle of Romanée Conti, Vega Sicilia or Sassicaia”. Working on dreams and desirability to finally make us fall for them, even if the price is high. This is what the best wines of Bordeaux have to continue to work on, as well as the world’s greatest wines. In order to maintain their pricing power, to continue to create value and not to fall into the “premium” discount trap, but to continue the journey in first class.
Contact Guillaume Jourdan via LinkedIn
