Investing in Burgundy: Rarity value keeps market moving

Burgundy’s luxury allure has seen the region’s top labels lead the wider fine wine market in the first three quarters of 2022, but will it last?

Data suggests top Burgundy prices have continued rising in 2022, led by grand cru labels of producers such as Domaine de la Romanée-Conti (DRC) and Armand Rousseau. ‘Prices are up about 25% across the year,’ said Matthew O’Connell, CEO of the LiveTrade trading platform at Bordeaux Index. ‘It’s been a little slower over the summer in terms of gains…But that’s pretty normal.’ He added: ‘Recent vintages like the 2019s are trading at very elevated prices.’

Liv-ex, a global marketplace for the trade, said its Burgundy 150 index ran flat in August. It was still up 48.5% and 115.5% over 12 months and five years respectively. In September, Liv-ex told Decanter its five most traded Burgundy wines by value, year-to-date, were:

• Leflaive, Montrachet Grand Cru 2003, Market price £159,843 (12x75cl in bond)

• Armand Rousseau, Chambertin-Clos de Bèze Grand Cru 2016, £33,000

• Anne-Françoise Gros, Richebourg Grand Cru 2020, £13,000

• DRC, Romanée-Conti Grand Cru 2016, £257,413

• Coche-Dury, Meursault 2019, £11,000

Maison Leroy’s Bourgogne Rouge 2017 (£1,316, 12x75cl in bond) was the most traded Burgundy wine by volume on Liv-ex. O’Connell said, for blue-chip Burgundy, ‘my base case is that prices continue to go up, but there’s a chance there’s a period of consolidation’. He said he didn’t expect prices to go down.

Against a deteriorating global macroeconomic outlook, O’Connell highlighted ‘tailwinds’ that may buoy market demand for the top tier, which number 20-or-so producers. These include smaller harvests, weak sterling effectively making wines held by UK merchants more attractive for US and Asia-based dollar buyers, plus wealthy individuals investing in and, perhaps crucially, drinking top Burgundy wines.

‘There is by no means a surplus of blue-chip Burgundy on the market,’ O’Connell said. ‘I think it’s in tighter supply than it has been in the last 18 months or so.’

Arthur Coggill, associate director at UK merchant Goedhuis & Co, recently told Decanter that he agreed blue-chip Burgundy prices were unlikely to drop, unless in the case of a recession ‘of proportions previously unknown’.

Auction house Zachys’ mid-year review also recently predicted prices for rare Burgundy would continue rising, even though the broader market would likely level out after strong gains. Head of Zachys Asia, Terrence Tang, noted particularly strong demand in H1 2022 for Domaines Leroy and d’Auvenay.

From an investment standpoint, O’Connell said: ‘It’s about understanding that the current market drivers are luxury consumption coupled with the kind of brand [and] name focus that goes with it.’ Barriers to entry in Burgundy are high, but he said: ‘If one has a £20,000 wine investment portfolio, then there can be some meaningful Burgundy in there.’ He added that Burgundy prices below the top tier would logically be more susceptible to macroeconomic factors.

Miles Davis, of the Wine Owners trading exchange, previously told Decanter that it’s important to look beyond just the top names, such as DRC and Rousseau, for broader indicators of market sentiment. Still, UK merchants have reported good demand for Burgundy in general this year. Coggill said Goedhuis and its competitors were continuing to seek new producers to cater for drinkers’ and collectors’ thirst.

Monitor: latest sales activity – Burgundy

Trading highlights from Bordeaux Index (see chart) show how some Burgundy wines from sought-after producers have seen significantly higher prices in 2022 so far.

White Burgundies also feature prominently alongside reds on this list. Separately, Bordeaux Index is preparing to add Burgundy wines to its LiveTrade online platform in the near future, said LiveTrade CEO Matthew O’Connell.

On the auction scene, Zachys’ August mid-year review highlighted strong demand for ‘big bottles’ of blue-chip wines. Six of its 10 best-selling lots in 2022 were large-format Burgundy wines, led by a six-litre methuselah of Domaine de la Romanée-Conti, Romanée-Conti 1991 that it said fetched US$323,700 (£280,332). Next up were six-litre bottles of DRC, Romanée-Conti 1989 and 1994, which sold for $211,650 and $161,850 respectively.

In the UK, Cult Wines recently partnered with Burgundy micro-négociant and producer Olivier Bernstein to auction an ‘ultra-rare’ jeroboam of Bernstein’s Romanée-St-Vivant Grand Cru 2017 via the group’s new CultX digital trading platform. Cult Wines said a 37-year-old entrepreneur from Malta secured the wine. The sale price of £57,000 ($69,000) was just under the pre-sale high estimate of £60,000.

Tasted and rated for Decanter Premium

Domaine Ponsot, Clos de la Roche Grand Cru Cuvée Vieilles, Burgundy 2019

‘Built to age for decades,’ said Decanter Burgundy correspondent Charles Curtis MW, who rated the wine 98 points after tasting it at a Domaine Ponsot 150th anniversary event. ‘There is a lovely deep colour here (as with many of the 2019s) and marvellous aromas of ripe cassis,’ Curtis said. ‘The purity of fruit is impressive – chief winemaker Alexandre Abel relates that, despite the heat, there were no shrivelled grapes or sunburn.’ UK merchant Lay & Wheeler offered the wine ‘from a client’ at £2,400 (6x75cl in bond). US merchant K&L priced the wine at $749.99 per bottle, ex-tax.

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

While there was a chance that Burgundy prices would see a period of consolidation in 2022 after strong gains in the second half of 2021, this has not been the case, with the trajectory of prices continuing in a similar vein, albeit with activity more muted over the summer, as usual. Indeed, prices across top red and white Burgundy are up more than 25% in 2022, meaning that Burgundy remains very much at the front of the fine wine market, with only Champagne price gains in a similar area.

We continue to see the demand and price gains in the market at the blue-chip end of the spectrum – this makes sense, given much of the buying is collecting- and consumption-driven, and demand is from the (ultra) wealthy buyer segment. Intuitively, prices should in this context see insulation from global recessionary pressures and could benefit if Asia trading conditions improve (including an end to lockdowns, for example).

Related articles

• Investing in Bordeaux: Trading buoyant, progress steady
• Spotlight on Blockchain: wine NFTs to help guarantee provenance
• Investing in Champagne: Sales boom continues