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En Primeur Investesting

How to invest in wine futures and En Primeur wines

Your guide to the risks and rewards of purchasing wine from producers like Petrus, Château Mouton Rothschild and Louis Jadot before it’s bottled.

By

Date

CultX Team - Wine Investment Specialists
18/08/2022

Considering investing in En Primeur wines?

Today, purchasing a matured vintage of a classic wine like the Lafite’s 2014 costs around £6,540 Château Margfor a case. This is a considerable leap from its En Primeur price of £1,450, providing investors with an incredible 351% return on their investment.* 

With the potential for capital appreciation like this it’s no wonder that many investors want to get in on the action. 

In this guide, we take a new look at this age-old investment strategy of buying wine before it’s bottled and share our insights into how speculators can harvest the juicy gains available to early owners of the great vintages of the future.

Read on to understand the origins of the En Primeur market, how the system works today, and our expert advice for choosing the En Primeur investment wines that offer the best growth potential.

If you would like to discuss En Primeur investing or any other aspect of your portfolio with one of our experts team, please feel free to book a call with a Relationship Managers at Cult Wine Investment.

Contents

  1. En Primeur: A Primer
    • What is En Primeur wine?
    • Ancient approach, modern methods
  2. Purchasing wine En Primeur
    • How to purchase wine En Primeur
    • When to purchase wine En Primeur
    • How is the price of En Primeur set?
    • Where can you purchase wine En Primeur?
  3. Conclusion: Is En Primeur wine worth it?

En Primeur: A primer

What is En Primeur wine?

The French term ‘en primeur’  literally translates to ‘first’ or ‘premier.’ En Primeur wine refers to the En Primeur price wine producers offer exclusively to brokers and merchants, before the wine is available to anyone else.

En Primeur wine is your opportunity to invest in promising vintages prior to maturation, with the expectation that the price will appreciate in the time between purchase and bottling. In investment terms, En Primeur is a futures market where an incomplete asset is purchased at its greatest level of supply and, therefore, its lowest price.

Investing at this stage in the development of a future great vintage can be very rewarding. However, as with investing in stocks and shares, cryptocurrency or any other asset class, you need to pick the winners.

The greater potential for return comes with a higher level of risk for the simple reason that the market demand for that specific vintage is unproven.

“The value in buying futures for the consumer comes with the opportunity to buy at prices less than what the wines will cost 2 years later after the wines are bottled.”

Ancient approach, modern methods

Buying wine En Primeur dates back to Roman times, when grapes were bought from vineyards while still on the vine. In 18th Century France, a system more similar to that we recognise today was developed when buying wine futures became popular in the Bordeaux region.

In the En Primeur market, negociants (merchants) would visit wine estates, known as Châteaux, to purchase promising vines of Cabernet and Merlot grapes. The Châteaux would then harvest the grapes and produce wine, and the merchants would sell the bottles produced from their vines.

The more in-demand the vintage, the more profit the merchants would make. However, if the harvest failed due to a drought for example, the vineyards would have covered some of their costs, but merchants would lose out. It’s a model which provided a hedge against the myriad risks of wine production for the Châteaux, and offered speculative merchants access to cheap wine from trusted vineyards.

Since the 1970s, most wine En Primeur has been offered after the wine has undergone its first fermentations, but not yet been transferred to casks to mature. The Châteaux produce samples of the young wines which are then tasted and scored by experts from the international wine trade.

Following this assessment, the Châteaux will set an opening En Primeur price and release a proportion of their total production of that vintage to the market. The Bordeaux and Burgundy regions are best known for offering their wines En Primeur. However, these days Châteaux across many of the major wine producing regions have adopted a similar model. This means that there is literally a whole world of opportunities for savvy En Primeur investors.

You may be able to purchase wine En Primeur produced in:

  • Bordeaux
  • Burgundy
  • Rhone
  • Piedmont
  • California
  • Portugal (Port)

Purchasing wine En Primeur

How can I purchase wine En Primeur?

As a consumer, you can’t generally buy directly from a producer, which means you need to go through a series of brokers. Bordeaux has a long-established brokerage system called La Place de Bordeaux, which is a complex model for selling En Primeur that has been adopted by many of the world’s top wines.

The Châteaux sell wine to wholesalers known as  “négociants” via another intermediary known as a courtier. Historically, the purpose of the middleman in the system was to avoid the aristocratic Châteaux owners having to deal directly with the merchant classes! Once the wine was bottled, the wholesalers would take delivery and sell their allocation of bottles to merchants around the world.

These days, while the aristocratic owners of vineyards have been replaced by companies which produce and sell their wines, the brokerage system is still very much in place.

How can I sell my En Primeur investment wine?

This is much more tricky! Brokers will normally only list wines for sale that are physically located in their warehouses. This meant that up until very recently the only way to liquidate your investment into an En Primeur wine was to wait until delivery of your bottles into bond, which can take up to 18 months!

Today, however, there are a number of innovative solutions that are empowering investors with the ability to buy and sell investments themselves. With a mission to make investing in Fine Wine as effortless as drinking it, at Cult Wines we’re always looking for ways to use technology to improve the wine investor’s experience.

In 2021, we released a non-fungible token (NFT) in collaboration with Chateau Angélus. The token represents the right to ownership of one barrel of Chateau Angélus, Premier Grand Cru Classé A, Bordeaux En Primeur 2020.

“‘I love the aromatics on this,’ she wrote of Angélus, also praising the wine’s discreet power. ‘This is a sleek, poised, and confidently-constructed Angélus.”
Jane Anson
@janeansonwine

The holder of this fine wine NFT, minted on the Ethereum blockchain, can sell on the token, and the right to ownership of the barrel to anyone through an NFT marketplace, such as OpenSea. This experimental project was a groundbreaking demonstration of how new technologies will be and, in fact, are being used to revolutionise the ownership of fine wine.

The CultX investment app makes buying and selling fine wine even simpler. With a few taps on a mobile device or clicks on the web, you will be able to buy and sell wines through our global marketplace and self-manage your portfolio in a way that democratises access to the fine wine markets in a way never thought possible.

Check out the future of wine trading, and join the CultX waitlist here.

When can you purchase wine En Primeur?

En Primeur wines are normally released to the open markets in early Summer. One important aspect to note when discussing En Primeur, which can confuse beginner investors, is that the En Primeur season is named after the year of the harvesting, not the year of the release.

So, for example, if you hear someone discussing the qualities of the 2021 En Primeur release, they are in fact talking about the wines made from the 2021 harvest but get sold in an En Primeur campaign in 2022 before later being released in bottle around two years later in 2024. A similar concept with different timings applies in other regions. For example, the Burgundy 2020 En Primeur took place in early 2022 for the wines made from the 2020 harvest.  

The following timeline shows how an estate in Bordeaux like Château Lafite Rothschild or Château Mouton Rothschild might prepare for tasting week and the important events that take place after:

September:

  • The Châteaux harvest the grapes for a given year’s vintage

October – March:

  • The grapes are crushed to produce the juice
  • Alcoholic and malolactic fermentation commences

April:

  • Châteaux host tasting weeks for critics, merchants, and industry insiders
  • Critics score the wines based on the vintage’s anticipated quality when bottled

May – June:

  • Prices are set by the Châteaux

June:

  • Châteaux begin offering wine at an En Primeur price to negociants, who can then begin offering the wine to their customers

How is the price of En Primeur set?

Each producer sets its own En Primeur pricing strategy, and there are many variables which can have an impact, such as the availability of back-vintages, a Château’s quality trajectory and the momentum of demand in the market.

Before pricing, the Châteaux present their young wines to the wine industry at tasting weeks each year, where each wine will be reviewed by critics and receive tasting notes and scores. These scores, as well as the general consensus on how the preceding season’s weather conditions will have affected the quality of the vintage can substantially affect demand.

All these factors play a part in determining the final En Primeur opening price, which is normally set for a 6- or 12-bottle case of 75cl bottles.

Where can you purchase wine En Primeur?

Investing with Cult Wines gives you access to a handpicked selection of En Primeur wines, tasted, scored and analysed by our team of experts. Their unparalleled knowledge and appreciation for both the legendary grand vins and the rising stars available En Primeur is trusted by investors across the world.

Based on our belief that, as an investor, you should be able to have as much control over how you deploy your capital as you wish, we offer two options should you decide to add En Primeur wines into your portfolio:

Trading En Primeur: Access a world-leading exchange with the CultX investment app

  • Combining Cult Wines’ heritage with the latest technology, and powered by world-leading data and predictive AI, CultX is the ultimate marketplace for buying, selling, collecting and investing in over £250m of the worlds most prestigious En Primeur and fine wines.

    If you are looking for the control of a self-managed portfolio with low fees then CultX’s wine investment app is for you. Join the waitlist today.

Cult Wine Investment: Curated portfolio management

  • Looking for a helping hand? Our team of experts build and manage diversified portfolios of En Primeur wines and fine wine bottles on behalf of our global base of retail and institutional investors.

    To reach investment goals, we leverage strong producer relationships, deep market understanding and proprietary AI-driven statistical models derived from millions of data points to identify wines with the best prospects for price appreciation.

    Whether you're thinking about investing in fine wine, want to discuss your options or have any other questions, please feel free to book a call with one of our expert Relationship Managers here.

Conclusion: Is En Primeur wine worth it?

What is En Primeur wine?

If you’re interested in starting or expanding your fine wine portfolio with assets that have the highest potential for capital appreciation over time, then it makes sense to explore En Primeur investing.  

The opening En Primeur prices set by the Châteaux before bottling are usually considerably cheaper than the future price of the vintage available to consumers on the open market. En Primeur can also be the only way to secure wines that are available in very limited quantities. These factors attract many investors looking to secure cases of a rare commodity for which demand, and therefore price, can increase as supply decreases over time.

The global superbrand status of some of the most well-known regions like Bordeaux and Burgundy, and their superstar producers such as Château Angelus, Château Mouton Rothschild and Domaine de la Romanée-Conti  give many investors confidence that their investments are safe. This is because there will very likely always be strong demand for wines from these producers, no matter the vintage, even if the opening prices are higher.

For speculators looking for headline grabbing gains, the risk vs reward ratio can be more favourable when making educated bets on rising stars like Château Figeac and Château Les Carmes Haut-Brion in Bordeaux, or Burgundy’s Domaine de l'Arlot. So, clearly, it’s important to be aware of both the risks and rewards involved. As a speculator, you need to be able to differentiate between those wines that will appreciate in value and those that will not.

Cult Wines’ team of expert buyers communicate with producers year-round to gain first-hand market intelligence. We continuously analyse the myriad factors influencing wine prices using AI-driven statistical engines which allows us to uncover patterns and opportunities for investors. Combining our years of experience in picking winners with the latest technology allows us to identify with a high degree of confidence the En Primeur wines that have the best prospects for capital appreciation over time.  

If you would like to discuss En Primeur investing or any other aspect of your portfolio with one of our experts, please feel free to book a call with one of our Relationship Managers at Cult Wine Investment.

* Past performance is not indicative of future success; the performance was calculated in GBP and will vary in other currencies. Any investment involves risk of partial or full loss of capital.

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