November 28th 2018
For some time now, the Burgundy fine wine market has enjoyed its fair share of the lime light. Whether it be an auction house reporting another record breaking sale or demand frustrated by the vagaries of the latest vintage, Burgundy has seldom been out of the news. However, it is the price increases in the secondary market that have, perhaps, drawn the greatest attention.
Historically Burgundy’s performance has been driven by demand perennially outstripping supply. Critical appreciation has certainly contributed but rarely does a new vintage pass without the top cuvées of a given domaine selling through: as those fortunate enough to enjoy an allocation of DRC well know. Though it would be remiss to not include a number of other producers in this category; not an exhaustive list but the top wines from such estates as Cathiard, Dujac, Fourrier, Grivot, Hudelot Noellat, Liger Belair, Méo-Camuzet, Mugnier, Mugneret-Gibourg, Ponsot, Rouget, Rousseau and Roumier all find favour with collectors.
As with other premium wine producing areas, there is a finite volume of wine that can be produced in any given year. However, global demand is not so restricted. This difference between supply and demand has been the main driver of price movement in the secondary market. However, the recent acceleration in prices suggests that there are other factors in play.
Firstly a succession of vintages during which the weather has wreaked havoc have only squeezed supply further. Frost and hail have, over the course of four years, decimated vineyards up and down the Cote d’Or, culminating in the devasting frost during the night of 26th April 2016. The aggregate loss over this period is estimated to be nigh on an entire year’s harvest. The resulting lack of wines available at release, has driven buyers to consider back vintages to sate their appetite.
Secondly the growing global pool of buyers adds further pressure to the market. If Bordeaux enjoyed an immediate boon post Hong Kong’s decision to abolish import duties in 2008, it is now Burgundy that is firmly in the collectors’ sights. Tastes change as buyers hone their palates and, whilst interests diverge, most roads would now seem to lead to Beaune.
For the naysayers, what goes up must come down, and certainly the Burgundy market is not immune to global economic forces. However, looking at a snap shot of wines producers a pattern emerges.
Whether village level or Grand Cru, global demand has resulted in positive price movements across the board; even generic Bourgogne Rouge has seen an uptick. The combination of limited supply, compounded by capricious weather, and ever growing global demand would suggest that for the time being Burgundy’s prospects remain healthy.
Looking forward to the release of the Burgundy 2017 vintage, for the first time in several years, Burgundian cellars are full. This combined with a very promising tasting trip undertaken by various members of the Goedhuis team, leaves us feeling enormously excited about the upcoming en primeur releases. As one of our MWs commented ‘the breadth of quality in 2017 means you can buy with confidence’; good news indeed.