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BORDEAUX (Reuters Life!) - The caves of Bordeaux are a beehive of activity this week as the wine trade presents and auctions the "primeurs" first samples of the 2008 harvest to its customers as wine prices come back to earth.
Over the past three years the price of the Bordeaux Grand Crus has only risen and the Bordeaux traders -- specialized middlemen between the vintners and wine buyers -- would like to see a decline this year.
The 'primeurs' are a specialty for Bordeaux and only involve the big names. Buyers from all around the world and professional tasters and critics will taste the new wines and can order them in advance for delivery in a year's time after the wine has spent a bit more time aging.
During the week, the prices of the 2008 harvest of the greatest names of the world's best-known wine growing area will be set -- creating the upper echelon of the global wine price structure for buyers ranging from Russian billionaires to supermarket shoppers in Britain.
This year some 150 'Chateaux' out of 10,000 wine growers in the Gironde area around Bordeaux, will participate and the challenges are big.
"We need appealing prices for the 2008 millesime," said Francois Leveque, president of the wine brokers' body of Bordeaux, Gironde and South-West.
"Since the leap in prices in 2005, with a exceptional harvest and in a context of euphoria, the prices of 2006 and 2007 were overvalued. But the speculative bubble has burst and we now need to be pragmatic," he told Reuters.
Allan Sichel, president of the wine and spirits traders association of Bordeaux and Gironde said the rising prices for wines which followed on from 2005 must be addressed.
"The 2008 campaign is very important for the entire sector. It is important that it exists despite the difficult world economic context, with significant volumes traded. That cannot be done but with prices that are compatible with the economic situation," he added.
With big Bordeaux export countries such as Britain, the United States and Russia severely impacted by the crisis, this year's campaign is key for Bordeaux and could determine the price levels for years to come.
Five thousand visitors are expected in the region where there are 400 traders and 120 brokers. Sylvie Cazes-Regimbeau, president of the union of Grand Crus de Bordeaux (UGCB), said she thinks prices will come down.
Cazes-Regimbeau, who owns the Chateau Lynch-Bages, noted however that prices rose in the past few years because there was demand.
"In 2005, the harvest was exceptional and prices leapt because there was strong demand. The prices this year will be the prices of the market" she added.
Leveque noted that the world wine market had come to a virtual standstill since October. But he said the 2008 harvest was a good year which has had all the advantages.
While demand is down, the harvest is the smallest harvest in volume since 1991. "The paradox is that we have a historically weak harvest in a context of lower prices," said the broker.
Most attention will go to the big names such as, for instance in Saint-Emilion, the top growths of Châteaux Pétrus and Ausone or in Medoc Châteaux Margaux et Latour, and their prices will serve as a reference mark for the entire appellation.
However, the overwhelming majority of the wine growing area is not involved in the primeurs, even though in the entire Bordeaux region there will be tastings, parties and visits.
Jean-Louis Triaud, manager of the Gloria and Saint-Pierre chateaux in Saint-Julien, sells 95 percent of the harvest primeur. He rejects the notion Bordeaux wines are too expensive.
"There are a lot of excellent wines at affordable prices," he said. "The past 20 years the price rise in Bordeaux was hardly higher than inflation. This year it could be a bit complicated, but we will find a price that we will need to adjust to demand."
For more Reuters stories on wine see [nWINE]
Editing by Marcel Michelson and Paul Casciato