"No More Nouveau Bordeaux for Nouveau Riche"

From the WSJ's Wealth Report:

One of the more rarefied markets of the rich is the “en primeur” system, also known as the wine futures market.

Each year,  French chateaux sell vintages just months after the grape harvest, with the wine still in barrels. Merchants and investors buy the futures and take delivery of the barrels years later, when the wines are more mature and closer to drinking age.

The system was originally created to give chateaux money to finance their next year’s wine production. But like many of today’s trading markets, “en primeur” has become financialized, prone to wild speculation, manic  price swings and over-pricing. As wine prices have soared in recent years, the system also cut the producers out of some of the gains, since they’re essentially pre-selling their wines.

Now, one of France’s more elite wine-makers is pulling out. Chateau Latour said it is no longer going to offer its wines to the “en primeur” system. Instead  it will hold them until years — perhaps even up to a decade — after production....MORE