Portugals Market Place Essay

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3. The Functioning of Bordeaux’s Market place
To analyse price dynamics in a given market requires a description of the market, of which these prices are the consequence. The market place of Bordeaux is the common name for a complex system in charge of the trade of Bordeaux’s fine wines. It comprises several stages during which each actor has its attributed role. We have divided the relevant actors of this system in four main professions, namely the producers, the brokers, the traders and the critics. The functioning of the market place is very well described in Pierre-Marie Chauvin’s book: “Le Marché des Réputations” (Chauvin, 2010). This section will therefore rely much on it to show how the actors interact in the market place and what kind
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Bordeaux’s Futures Market
Although the study proposed in this paper does not address primarily the futures market, it appears to be necessary to introduce the reader in it. Indeed, this system presents many opportunities for investors, which is probably one of the reasons why the wine sector has experienced such a financialization. Besides, the influence of opinion leaders is very much related to this futures
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This price is called “prix de sortie en primeur” which can be translated into releasing price in the future market. The price is imposed by the producer, who has based his decision on the critics he received, the comparison with his competitors as well as on his general appreciation of the demand. Chateaux may be able to dictate the price, but they cannot oblige traders to buy, which is why they must set appropriate prices. “Good grades may cause prices to rocket sky-high, while, inversely, very bad grades may leave wines practically unsaleable unless their prices are adjusted downwards” (Hadj Ali, Lecocq, & Visser, 2008, p. 158). The big impact on price of certain critics leads to a situation in which producers wait on the most important evaluation’s publication to set their prices. The release of the “primeur” price is in fact the market entry of a specific wine on the futures market, and represents the most decisive economic happening for Bordeaux’s market place. It consists in communicating the price to brokers, who will transmit the information to the traders. Each trader is attributed a certain allocation by each producer, which is in fact the amount of wine he is allowed to buy in the futures market. This explains why the futures market is so exclusive. Some traders simply don’t have the allocations to take part in it. Like in many things in Bordeaux, brokers are involved in

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