Investing in Burgundy: search on for next stars
With a lot of buzz around Burgundy of late, prices appear to be defying the doubters, though demand may outstrip supply for the biggest names.
Prices for top-tier Burgundy wines have been rising again in 2021, apparently defying earlier suggestions that they might have peaked. More demand from wealthy buyers and a finite supply of bottles have combined to drive ‘a significant uptick in prices’ for Burgundy’s superstar wines, said Matthew O’Connell, head of investment at merchant Bordeaux Index.
Talk of blue-chip Burgundy hitting a peak in 2018 and 2019 looks to have been premature.
This article contains:
- White Burgundy: opportunity?
- Monitor: the latest sales activity
- Tasted & rated for Decanter Premium
- The Bordeaux Index view…
The Burgundy market
Prices on several wines did plateau in 2018 following a strong period of growth, according to Olivier Staub of Cult Wines, a fine wine investment and collection management company. The Burgundy market is performing well and is ‘being dragged upwards by [demand for] iconic producers’, he said, adding that he believes the ‘supply and demand imbalance will remain’.
Price data based on ‘executed trades’ from Bordeaux Index demonstrates some increases:
- Armand Rousseau, Chambertin 2010 Mid-2018 price: £7,750 (6x75cl, original wooden case, in bond) – Mid-2021 price: £11,000
- Domaine de la Romanée-Conti, La Tâche 2012 Mid-2018 price: £20,000 – Mid-2021 price: £25,000
- Prieuré Roch, Chambertin-Clos de Bèze 2010 Mid-2018 price: £3,750 – Mid-2021 price: £11,700
The Liv-ex global marketplace has also reported new highs for prices on DRC’s Romanée-Conti 2009, 2006, 2011, 2005 and 2013 vintages.
Asia- based buyers have driven demand, but a US decision to halt additional import tariffs on French still wines earlier this year has also buoyed the market. There continues to be evidence of growing collector interest below top-tier names.
‘The gap between [names like] DRC, Leroy and Rousseau and the rest of the pack has increased again, but a lot of collectors are looking at what is coming next,’ said Staub. ‘There’s a search for value,’ he said. Charles Antin, head of auction sales and auctioneer at Zachys, said it was apparent that a rising tide lifts all ships. ‘As the most valuable wines become more expensive, they pull up some of the other wines,’ he said.
However, for second-tier wines and further down, O’Connell said he remained cautious about the investment case: less prestigious producers can prove difficult to sell, even if the wines are excellent to drink, he said.
White Burgundy: opportunity?
Liv-ex said in August that white Burgundy was its best performing Burgundy index over the past two years.
Miles Davis, head of professional portfolio management at Wine Owners, said in a recent report that most grand cru wines and some highly rated premiers crus – particularly from the 2014 and 2017 vintages – could be interesting to look at.
‘Prices for white Burgundies are still a fraction of their equivalent red counterparts,’ he wrote. He also said issues with premature oxidation (premox) ‘are behind us now’. Zachys’ Charles Antin said: ‘I think premox still casts a dark shadow over the world of white Burgundy in the auction market, despite the fact that there are many unaffected wines and vintages.
‘That said, from an investment standpoint I would focus on the white “specialists”, such as Leflaive, Coche-Dury, Ente, Lafon and others (the only exception being DRC).’ However, he added: ‘I wouldn’t compare it to red wine in terms of a category for investment.’
Monitor: the latest sales activity
Pinot setting the pace
One of the first auctions in the autumn season generated more eye-catching sales figures for blue-chip Burgundy.
A 12-bottle case of Domaine de la Romanée-Conti’s (DRC) fabled Romanée-Conti from the 2002 vintage was top lot at the Acker-hosted auction, fetching US$298,000 (£215,500).
Wines from DRC, Domaine Coche-Dury and Domaine Armand Rousseau represented nine of the 10 most expensive lots sold at the auction, held in Delaware over 9-10 September.
Other highlights included 12 bottles of DRC La Tâche 2001 selling for $80,925. From the 1999 vintage, six bottles of DRC La Tâche fetched $62,250 and four magnums of Rousseau Chambertin sold for $68,475. Six bottles of Coche-Dury Corton-Charlemagne 2010 sold for $59,760, while 10 bottles of the wine’s 2008 vintage fetched the same price.
In terms of older wines, two magnums of DRC Richebourg 1985 sold for $52,290.
Burgundy, though, faced competition for fine wine auction headlines in September. Bonhams announced it had sold a 15-litre nebuchadnezzar of Château Mouton Rothschild, Pauillac 2000 to an Asia-based buyer for almost HK$1.1m (£101,500) at a Hong Kong auction. That’s a new auction record for Mouton Rothschild sold in that bottle size, Bonhams added.
Tasted & rated for Decanter Premium
Domaine des Lambrays, Clos des Lambrays Grand Cru, Burgundy 1990 99 pts
From the well-regarded Burgundy 1990 vintage, the bottle for this tasting was sourced direct from the Domaine’s cellars. ‘A revelation,’ wrote Andy Howard MW in his recent tasting note for Decanter Premium. ‘So deep in hue, it is hard to believe this is a Pinot Noir, let alone with over 30 years of age.’ He added the wine should drink well for another 20 years. UK-based Crump Richmond Shaw listed magnums for £1,289 (in bond) at the time of writing, while Liv-ex quoted a market price of £5,307 (12x75cl in bond). LVMH bought Domaine des Lambrays in 2014.
The Bordeaux Index view
Fine wine & spirits specialists Bordeaux Index kindly sponsor this section of Decanter, and provide their view on the market here. They can be found at bordeauxindex.com
During the 2017-2018 sharp price-rise phase of the Burgundy market, Bordeaux Index was confident that the move did not represent a ‘Burgundy Bubble’, but rather rises which would over time be supplemented with further sustainable upwards momentum. So it has come to pass: in 2021 so far, Bordeaux Index trading has seen record prices in a number of blue-chip names, some very significantly above those 2018 high levels.
The key difference is where the demand (therefore further price rise potential) is now concentrated. In 2017-2018, there was really a price step change, and strong buying across producers, often without too much focus on reputation, track record and so on. It is clear that ongoing demand is much stronger in the upper echelons than it is for names further down the spectrum, where prices are muted and little wine is really changing hands. This year’s en primeur season was reported as successful, but for all except the top producers it was a far cry from the sort of activity registered for the 2016 vintage in 2018.
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