Investing in Burgundy: Elite names in high demand
Tightening allocations do nothing to slow trading in blue-chips, but collectors are pulling corks to enjoy top wines, too.
Global demand for top Burgundy wines has continued to be strong, with wealthy collectors buying to drink as well as to invest, say merchants. UK-based Goedhuis & Co told Decanter that its Burgundy en primeur sales hit a new high during the recent 2020-vintage campaign.
White wines were particularly in demand as savvy buyers anticipated shortages in the 2021 vintage, due to adverse weather conditions.
Prices have risen strongly for several top Burgundy wines in the past year, from well-known reds to highly regarded whites, suggest figures from Bordeaux Index (see below). Liv-ex, a global marketplace for the trade, said in March that its Burgundy 150 index was up 40% over 12 months and has doubled in value in the past five years. It rose by 3.6% in February.
Matthew O’Connell, head of investment at Bordeaux Index and CEO of the merchant’s LiveTrade platform, told Decanter that top-tier ‘blue-chip’ names – including Domaine de la Romanée-Conti, Rousseau, Leroy and Roumier – continued to drive Burgundy market momentum, combining strong price rises with regular trading.
These wines ‘trade very quickly’ as ultra-high net worth (UHNW) individuals seek them out, he said. ‘UHNW demand is more significant in Asia and the US than in the UK and Europe, but that isn’t to say demand isn’t healthy in the UK and Europe – it is,’ O’Connell said.
These buyers are uncorking the wines, too. ‘There’s a lot of consumption,’ O’Connell said. ‘People often assume it’s an investment thing. It’s very much both.’ Arthur Coggill, fine wine buyer at Goedhuis & Co, agreed and said it was ‘heartening’ to see people drinking the wines. For some wealthy buyers, ‘cost is more or less no object, and they just want to drink the best stuff’, he said.
Several merchants and analysts have said they expect Burgundy prices to rise further. Things could change, Coggill said, but the scarcity of the top Burgundy wines and the level of demand means ‘this doesn’t look like bubble territory’.
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He reiterated the extent to which allocations have tightened as producers and distributors manage global supply. ‘[For example] in 2015 we had 120 bottles of this one wine; this year we had 12,’ he said.
Goedhuis has listed new domaines and focused more on up-and-coming areas, such as Hautes Côtes de Nuits. ‘I think ultimately people love Burgundy and they will always want to drink it,’ Coggill said. In a special Burgundy report, Liv-ex recently highlighted a rising share of trades for several communes, including Pommard, Morey-St-Denis, Clos de Vougeot, Aloxe-Corton, Montagny, Mercurey and Rully, among others.
There are mixed views on Burgundy investment potential, but O’Connell said: ‘I think the issue is that with the investment market, you have to buy the blue-chip stuff.’
Other wines may go up in price, but wealthy collectors are focused on this top tier, O’Connell said. After months of gains, some observers have recently sounded a mild note of caution on the overall fine wine market’s performance. Miles Davis, head of professional portfolio management at Wine Owners, wrote that trading had ‘slowed a little’, versus the ‘exuberance’ of late 2021. The Liv-ex 100 index also saw momentum slow in February.
O’Connell said: ‘Our base case is another strong year of price gains in the wine market in 2022; at the margin there is some potential for these to be slowed slightly by macro concerns.’
Monitor: latest sales activity
Burgundy
A major Zachys auction event in New York on 10 and 11 March focused on Burgundy and saw good results. ‘We saw strong prices for wines from all regions, not just Burgundy,’ said Charles Antin, auctioneer and head of wine auction sales at Zachys.
Top Burgundy lots included six bottles of DRC, Romanée-Conti 2003, which fetched $136,950 (£105,128), versus a pre-sale high estimate of $120,000.
Twelve bottles of Domaine Leroy’s Corton-Charlemagne 2004 sold for $118,275 (pre-sale high e: $65,000), emphasising buyer thirst for top white Burgundy within an auction market dominated by reds.
Antin highlighted the rare wines of Domaine Bizot and Domaine d’Auvenay. ‘It’s amazing to watch the wines from d’Auvenay,’ he said. One bottle of d’Auvenay Criots-Bâtard- Montrachet GC 2002 fetched $29,880, almost double its pre-sale high estimate. Only 300 bottles of the wine were produced, the auction house said.
Of the Bizot lots, two bottles of Echézaux 2018 fetched $17,430 (pre-sale high e: $13,000), one bottle of Echézaux 2005 fetched $5,976 (pre-sale high e: $3,600), and two bottles of ‘Le Chapitre Domaine’ 2018 – a Bourgogne Rouge – sold for $5,478 (pre-sale high e: $4,000).
Prices include buyer’s premium.
Tasted & rated for Decanter Premium
Domaine de la Romanée-Conti, Romanée-Conti Grand Cru 2019
DRC’s Romanée-Conti 2019 lived up to the label’s lofty reputation at a recent tasting. ‘A remarkable wine balancing power, purity, ripeness, restraint and longevity all in one glass,’ said Decanter’s Andy Howard MW, rating it 99 points. Time will tell if the young wine can eventually match Decanter’s 100pt scores for some previous vintages, including 2015, 2009 and 2005. Getting hold of it remains the big challenge. Howard said 2019-vintage production was equivalent to just under 5,000 bottles.
He also gave 96pts to DRC’s new white Burgundy, the Corton-Charlemagne Grand Cru 2019. ‘A hugely impressive start,’ he said.
The Bordeaux Index View
Fine wine & spirits specialist Bordeaux Index kindly sponsors this section of Decanter, and provides its view on the market here every issue. It can be found at bordeauxindex.com When Burgundy prices almost doubled across 2017-2018, there was much talk of an unsustainable ‘bubble’.
At the time, Bordeaux Index articulated the contrarian view that, in fact – looking at buying patterns ‘on the ground’ – price moves were driven by the ongoing increase in Ultra-High Net Worth wealth and purchases were not investment-led, as many believed, but reflected an ever-growing global consumption of these rare wines.
Since that time, for the most part the market has remained stable, before spiking again in 2021, driven primarily by the same Ultra-High Net Worth factors, with many top cuvées posting gains of 20%-30%.
The main difference this time round is that there is far more concentration on the ‘blue-chip’ names: DRC, Rousseau, Leroy, Roumier, Cathiard. While demand for 2020 en primeur has been strong, we continue to predict that the market price performance in producers not in the upper bracket of 25-30 names will be lacklustre, while subsequently selling the wines in the secondary market can also be a slow process.
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Chris Mercer is a Bristol-based freelance editor and journalist who spent nearly four years as digital editor of Decanter.com, having previously been Decanter’s news editor across online and print.
He has written about, and reported on, the wine and food sectors for more than 10 years for both consumer and trade media.
Chris first became interested in the wine world while living in Languedoc-Roussillon after completing a journalism Masters in the UK. These days, his love of wine commonly tests his budgeting skills.
Beyond wine, Chris also has an MSc in food policy and has a particular interest in sustainability issues. He has also been a food judge at the UK’s Great Taste Awards.