A lot can happen in a couple of weeks – particularly in this country. The weather, of course, being English, we are used to - autumn in the morning, spring by lunchtime, a glimpse of summer in the afternoon and winter in the evening. The central heating still kicks in at times and the winter woollies still haven’t quite disappeared. Other things take us more by surprise, such as the unforgiveable performance of the England football team in Euro 2016 and not forgetting Brexit (if only we could).
There is still much debate about what will actually happen after the Referendum result, but some immediate effects have been felt which may have an impact on the wine market. This is principally due to the sharp fall of sterling on the foreign currency markets. While companies still have some stock bought before 23rd June and others have perhaps hedged the possibility of an exchange rate fall, continuing low levels of the pound, particularly against the euro, is bound to have an effect. The smaller the company, the more effect this will have, since they are less able to absorb price rises than larger outfits.
There is thus the prospect that the price of wines from European countries may increase by between five and 10 per cent. However, if exchange rates with other countries such as Australia, New Zealand and South America remain largely unchanged, then wines from these countries could have a significant price advantage. The same holds true for UK wine producers, since there are no currency issues.
At the less expensive end of the market the effect is that much less. Since excise duty is a set amount rather than a percentage, and shipping prices are mainly in sterling, the amount of the cost price which is attributed to the wine is less for the cheaper wines. Price rises for the actual wine imported are thus less significant than with more expensive wines.
Apart from the Brexit effect on wine prices, there have been some other startling price changes in recent weeks. These concern the top wines from Bordeaux in what is termed the ‘En primeur’ market. This traditionally has been a way for the top chateaux to sell the new vintage at an early stage for cash flow. However, this system seems to be less and less attractive to buyers and I believe that it may be gone altogether shortly. The 2015 vintage in Bordeaux has been universally acclaimed for its high quality but then 2014 was pretty good also. Price rises ‘en primeur’ seem to have been ridiculously high in the circumstances, with the average increase over 2014 of around 45 per cent and one chateau upping their price by a whacking 107 per cent.
Since there is an increasing policy by these top chateaux of keeping back their wines rather than selling ‘en primeur’, plus the fact that with recent volatility, many of these wines are cheaper several years later than when they were first released for sale, the incentive to buyers is largely disappearing. My view for the private individual, is that buying ‘en primeur’ is to be avoided, but instead, seek out some of the older vintages of these chateaux from a specialist in this area with good stocks, such as Bakers & Larners in Norfolk or Monopole Wine in London. They may be more affordable and have the added advantage that you can drink them straight away, rather than waiting 10 years or so.