Buying wine 'En Primeur' is a popular and growing practice in the UK, which holds allure for many different sorts of people. It is essentially the pre-ordering of wine, purchased in anticipation of its bottling and release. Although taking the first steps into the world of En Primeur can be daunting, the process is also exciting! As you will see in this article, it is well worth considering if En Primeur wine could be for you.
What is En Primeur?
In French, En Primeur roughly means 'having it first' which corresponds to the practice of certain wines being shipped to clients immediately upon their release. The trade is sometimes known as 'wine futures' because the wine is paid for two years before its release. Chateaux in Bordeaux started this practice in order to provide a cash flow before the market release of their wines. The process begins in the months following the harvest, years before the wines are released, when young cask samples are made available to the industry and selected fine wine merchants . Based upon their ratings and predictions, merchants inform prospective buyers and anticipate the release of a wave or 'tranche' of stock for En Primeur purchase. Customers may then buy a stake of the wine through their merchant, still in cask, but measured in unmixed cases. They specify their preferred bottling format e.g. halves, bottles or double magnums for the time when the wine is bottled.
Time taken between purchase and release of En Primeur wines generally lasts between 2 years. During this time the wine is matured in cask or tank at the Chateau and is eventually bottled, sealed and labelled before being shipped. The wine arrives in the UK into a bonded warehouse which is a qtax-free zone. Your merchant will seek your advice on your further instructions for the wine whether you want to store it in the bonded warehouse or have it delivered duty paid.
Why Buy En Primeur?
En Primeur purchase can offer several benefits for the early-bird wine investor. First you can choose what format your wines are bottled in. Many large formats are not available later as not all Chateaux will hold cellar stock of large formats. Traditionally the wines are sold 10% higher from the Chateau after bottling, hence En Primeur offers a buying discount. Values of the wines can increase over time and you may find that the wine you bought 10 years previously is now valued at twice the price! In such cases, selling a case gives you a chance to pay for either more wine or to simply recoup your investment. Increasingly En Primeur is being considered as an alternative investment opportunity, as well as a channel for securing your favourite wine. As in all markets wine values can go up and down depending on market sentiment and demand.
The aim of obtaining a particular wine can be reason enough to start buying En Primeur. Various wines at the top end are sometimes difficult to obtain due to the high demand and in some vintages low production yields. In such cases, buying En Primeur can often be the only way to guarantee an allocation. By building up a relationship with your wine merchant over time you should also be afforded insight into whether a wine is worth the money along with tips for good value and whether the wine suits your personal needs.
A third reason to buy En Primeur direct from the Château is to ensure the provenance of a wine. With a globalised trade, counterfeit goods are now common on the world market and buying direct from the Chateau through a reputable merchant offers a safe and secure way to obtain your wines.
What do I pay when I buy En Primeur?
At the time of purchase, buyers pay an En Primeur price tag, which includes the cost of the wine, shipping to your merchants UK bonded warehouse and insurance. Because the wine is lying abroad, UK buyers do not pay duty or VAT at this point. There is no further charge until the wines arrive into the UK bonded warehouse. Once your wines have arrived into the UK bonded warehouse and you are contacted by your wine merchant you may choose to:
a. Have your wine delivered, duty paid. To have your wine delivered duty paid you must pay the current rate of UK excise duty as well as VAT of the original purchase value. Delivery charges may be required.
b. Leave the wine lying In Bond. You may decide not to have your wines released from Bond, leaving them in the bonded warehouse. Leaving a wine in bond is recommended if the wines are for investment purposes only as once tax is paid on a wine, it cannot be recouped. If keeping the wine in bond do make sure that the wine is allocated to you under your name and is insured. Storage charges will apply.
c. Sell the wine. Once your wine has arrived physically into Bond you may ask your merchant to sell it and broke the wine on your behalf. A percentage charge will apply for this service.
What Wines are Bought En Primeur?
There are two main En Primeur periods each year in the UK, Burgundy (starts in January) and Bordeaux (starts in April). Prior to sales, merchants who have visited the wine regions and tasted the wine publish reports to help advise clients, sharing their tasting notes and predictions. Increasingly other wine regions have started to offer wine En Primeur. These include Italy, the Rhone Valley, California and Australia .
Bon Coeur Fine Wines have dealt in En Primeur purchases for nearly two decades and have the experience and expertise to guide the seasoned investor or first time buyer. We'd love to talk to you, so please contact either James Goodhart to discuss your requirements. You can also follow our En Primeur Campaigns on our Blog and Website.
