1855.com: an update

Château Latour

Bordeaux en primeur wines known to be outstanding (as of 15th December 2010):

Total: 665 bottles (over 55 cases)

Of these, there are:

2003 vintage:  37  bottles
2004 vintage:  18  bottles
2005 vintage: 471 bottles (37.25 cases)
2006 vintage:   43 bottles
2007 vintage:   96 bottles

Unfortunately the list continues to grow.

**

Response from Fabien Hyon, COO of 1855.com to my questions (received 15th December 2010 but apparently sent 9th December):



Dear Jim,

Firstly, Thank you for your clear and direct questions. I will try to be as clear and direct as you have been.

Again, before getting into your questions, as I mentioned, our company, created 15 years ago, went though some turmoil in 2008 and early 2009. When a company goes though difficulties as we did, it takes (a) to get back to profitability and (b) to get proper funding to get back to optimal quality of service for our clients. An then, once these two things are done, it is still not a "magic wand" : it always takes more time than expected to get back to "everything is perfect" as you have seen. Nevertheless, be assured of our daily work with our team to get back to a great standard of service deserved by our clients.

Now regarding your questions.

General questions:

a) When does 1855.com place and pay for its en primeur orders?

During the Primeurs campaign, directly to some Chateaux — as we are "Négociant" — or to some "Negociants" that have en Primeurs Allocations but only sell to professional distributors such as our company.

b)  When you issue your ‘proof of ownership’ document to your clients, have you placed an order for these wines?
We do sell and buy en Primeurs on daily basis. They are done at the same time.

c) If 1855.com places and pays the relevant Bordeaux négociants for all orders of en primeur placed by its clients, why is there a considerable backlog of deliveries, in particular from the 2005 vintage and even back 2003?

Well it is fairly simple : if a company is sized for strong growth — and a 50 ME revenue stream — but the reality is a lower than expected growth due to the economic environment, this company loses money. Then faces difficulties to process on time the remaining payments. Therefore, wines that are not totally paid are not delivered by our suppliers. It take to rebuild profitability, financial capacity and confidence to be able to "unlock" these wines and deliver them to our clients that are waiting — patiently in most cases.

d) You say: ‘Our company, created 15 years ago, ‘some turmoil in 2008 and early 2009’. Why and how did this affect deliveries of 2005 en primeur that should have been delivered in the first half of 2008?
As you have noticed on our web site, the delivery date of en Primeurs is June, every year. The main reason for "June delivery" is that as we do offer more than 500 hundred references, we do need to have all of them to deliver. Which is not always the case as some Sauternes are deliver in Autumn... The 2005 Primeurs deliveries have been coming at the time our turmoils started.

e) What proportion of the 2005 Bordeaux en primeur orders placed with 1855.com remain undelivered?
It is now down to 5%. Which is still too much. Until every single case is resolved, we do work on answering and following any single client case.

2007 Carruades de Lafite

6 cases (72 bottles) known to be outstanding. Please see attached file: XXXX.doc, which details the history of the delays they have experienced and the series of unfulfilled promises from 1855.com
Fortunately our work to take care of the situation produces some effects as it is not hundreds of clients and thousands of bottles... But until every single client has his wines at hands, it is still too much, you are right. Be sure we are working on these situations.

Questions relating to 2007 Carruades
a) 1855.com indicated that delivery of these wines would be during Spring 2010. Yet by 1st December 2010 1855.com still had not received the wines?
Why is this and when did 1855.com place the necessary orders and pay for them?

We have been delivering en Primeurs 2007 since June. As we have been also delivering the regular business, plus the back-log of 2005 and 2006, while using a new contractor for preparation and deliveries, we had troubles to process all orders in due time. Again "no magic wand" although our teams have worked on this situation, we may not have been as focused on "international customers" as we should have. You can be sure these cases will be solved by dec. 31st 2010, a it is just matter of focus.

b) Where are these six cases of Carruades and when will clients receive their wine?

We are receiving them at our plateform and clients wil receive them by Dec 31st 2010 at the latest.

c) Clients paid the additional sums due for transport on their cases in June/July 2010.  They were told that they would receive their wines within three weeks – it is now six months and the wine have not been delivered? Where were the 2007 Carruades when clients were asked to pay the additional fees?
I guess the two first answers also answer this question.