Beyond the realm of mortal pockets
Every generation faces its own challenge. Not so long ago, Burgundy’s domaine owners were chasing ripeness and customers. Today, their children are more likely to be faced with a surfeit of both, but it is the latter that is proving particularly unwieldy, writes Gabriel Stone.
The world has seen an explosion of fine wine fanatics and, after the inevitable detour through Bordeaux, many turn their gaze to the Côte d’Or. The trouble is, and this only adds to the allure, unlike in the Médoc there just isn’t that much of the top stuff to go around. Cue a basic supply and demand imbalance that has left long-term customers of these wines in despair as allocations shrivel and prices soar.
While Domaine de la Romanée-Conti has long been beyond the reach of mortal pockets, it is now being joined by a host of other names. January 2019 saw Liv-ex report a 168.8% price rise for its Burgundy 150 index over the last decade, with the region’s share of trade during that same period expanding from 1% to 14.5%.
Domaines Armand Rousseau, Leroy, Coche-Dury and Ponsot are just some of those caught up in this frenzy. Inevitably some of this secondary market buzz is having an effect on current releases too. Many of the top wines do not even make an appearance in the annual en primeur tastings and all too many that do make it into the merchants’ tasting booklets are marked with the dreaded ‘POA’.
It’s a situation that has certainly changed the buying habits of those who used to drink these wines on an enviably regular basis. Steven Spurrier’s recently published memoir reads at times like a gastronomic romp through the world’s finest wines, in particular Burgundy and Bordeaux. These days his shopping habits have changed. “The last vintage I bought grand cru Burgundies was 2002 and I have to confess that I have sold 75% of them on,” he reports. “Now I would find the value for pleasure aspect negative.”
Clearly however not everyone shares his view. Unlike Bordeaux where deep pockets can generally secure you any first growth in a vintage of your choice, the greatest wines of Burgundy tend to be made in tiny quantities so there’s a genuine urgency to snap them up on release, not to mention kudos in being on the right allocation list to do so. Combine this scarcity with the fact that there are more than enough individuals around the world who still view today’s prices as small beer compared to their art or classic car collection, and the current situation looks less like a bubble and more like the new status quo.
“I think the top wines will continue to go up,” predicts Jamie Strutt, sales director at Burgundy specialist merchant Goedhuis & Co. What’s more, he confirms the increasing rarity of the smartest names as allocations have to be spread across an ever more international customer base. “In the past we were selling cases but now the top grand crus, things like Richebourg from Grivot, are sold by the bottle,” comments Strutt. “Buyers would prefer to have a bottle than nothing.”
A similar strategy is in place at Pol Roger Portfolio, which has represented Joseph Drouhin in the UK since 2007. “Our view is always to give more people less wine,” explains (now former) wine director Cassidy Dart MW, who notes the additional challenge of managing allocations across the recent run of three consecutive small vintages. As for the thorny issue of pricing, he notes that, for this producer at least, “There have been incremental increases but it’s not gone crazy.”
Dart also highlights the rather different commercial considerations faced by a larger outfit such as Drouhin, whose combined domaine and négociant arms encompass almost 90 appellations. “Perhaps unlike a lot of the small domaines, négociants have to maximise volumes across all wines so they use their top wines as a lever for that,” he explains. “If you help us out with some Mâcon then we’ll give you some Musigny.”
This broader perspective offers a valuable reminder that there’s still plenty of Burgundy available for those willing to shop lower down the hierarchy. “The demand for the top wines has gone crazy but that’s a very small proportion of total production,” remarks Dart.
Even better news is that thanks to a combination of climate change and improved management, the quality of these lesser appellations is better than ever [see box out]. “If people are prepared to stop label stroking the choice has never been better,” Dart concludes.
You might expect Burgundy’s producers to be thrilled at this rampant demand for their wine. Certainly the cars are becoming less suitable for this region’s narrow roads and there are rather more swimming pools tucked behind the domaine walls than before, but the mindset here has always been self-consciously distinct from the corporate suits and multinational ownership of Bordeaux.
There are many who fear that today’s surge in demand threatens the very elements that make Burgundy so special in the first place. “It’s not fun anymore,” says Jeremy Seysses, managing director of Domaine Dujac, echoing the sentiment of fellow top Côte de Nuits producer Frédéric Mugnier. “I know that when we increase prices we lose some of our multi-generational clients,” he accepts. At Dujac, the policy is to cap price rises at 5-10% but Seysses acknowledges not everyone shows the same restraint. “We’ve been caught up and overtaken by lots of producers on the grand cru front,” he notes. “The question of sales is not an issue any more; it’s a question of reputation management.”
You can hardly blame the domaines, all too aware of the prices fetched by their wines on the secondary market, for seeking to claw back some of this profit from the middlemen. What’s more, while consumers may bemoan the escalating prices of Burgundy’s wine, producers are having to contend with the even more dramatic surge in vineyard valuations this demand has provoked.
French land agency Safer released a report last year suggesting that grand cru vineyards are now changing hands for €14 million a hectare, double the already hefty fee a decade ago. Not only does that put a brake on expanding your business but, thanks to the pressures imposed by scrupulously egalitarian French inheritance law, it threatens what currently exists. When family members with no day-to-day involvement in the domaine see the paper value of their share and decide to take the cash, there simply isn’t the money in real life to buy them out. That leaves the door open for business moguls such as François Pinault, Stan Kroenke and Bernard Arnault’s LVMH to snap up Burgundian gems for millions of euros per hectare, exacerbating the problem still further.
Does it really matter who owns the land if its inherent calibre and the winemaking expertise remains the same? For a region such as Burgundy where domaine owners have long prided themselves on a close connection to their vineyards, this issue is particularly pertinent. As Seysses observes, “People are becoming leaseholders and even if we still try to treat it as if it were ours there’s an erosion in the bond between us and the land and that might be detrimental.” Meanwhile Jamie Strutt sets out his own fear about the impact of this increasingly international ownership on the finished product. “The wines will be a bit more formulaic,” he warns. “You won’t have so many individuals doing different things, which is what makes Burgundy so wonderful.”
Artificial scarcity
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Although it’s widely accepted that little can be done to slow this pricing polarisation, that doesn’t stop Seysses from expressing frustration at the “artificial scarcity” that is exacerbating the problem. “I understand a retailer with a client who spends half a million pounds wants to give them what they want,” he remarks, “but these people are buying more than they can drink and then sell that at inflated prices a few years later to buy more.” All the producer can do, other than wrest back some control by selling direct – “never say never” says Seysses – is to work with importers who will manage their allocation fairly. “We would like them to sell to people whom they feel are long term customers and to charge a normal mark up,” he sets out.
While it’s generally acknowledged that the quality of Burgundy, as with other wine regions, is consistently higher than 30 years ago, the fact these wines are now so inaccessible both in terms of price and physical availability poses a challenge for those whose job it is to assess them objectively.
Michael Schuster is particularly well placed to track this change, using his many decades of experience to educate a new generation of both trade and consumers through his highly regarded wine courses. “Tasting is not the same as drinking,” he observes, recalling: “When I was young we would be able to compare all the Bordeaux first growths or top Burgundy because they were all in our cellars. Even in the ‘90s you were still looking at £40 a bottle for something with 15 years of age but today it’s 10 times that.”
Now for most people even having the chance to taste these great wines is a challenge. “Up until five or six years ago I used to put a grand cru Rousseau on my fine wine course, notes Schuster. “For a long time it cost under £100 to do, but today it costs over £1,000 a pop and I just can’t afford that.” He points to a knock-on effect among those seeking the wine trade’s highest professional accolade. “One of the recent criticisms by MW examiners has been in the assessment of quality,” Schuster observes. “You have to taste these wines regularly to do that.”
To its credit, the Institute of Masters of Wine is acutely aware of this barrier, with marketing & communications manager Sarah Kirkpatrick outlining recent steps to address it. “The IMW aims to give students all opportunities possible to help them on their MW student journey,” she stresses. “As such we have increased the annual funds for the purchase of difficult to access wines, to ensure students on the study programme can taste fine wine.”
Kirkpatrick confirms that some of the £1.1m raised through the Masters of Wine Endowment Auction in 2017 was used for precisely this purpose. In addition, the IMW hosts annual Bordeaux tastings in London, Sydney and San Francisco with a Burgundy tasting planned for London this Spring. In most cases these events are open not just to MW students but the general public, feeding a thirst for knowledge that is crucial to keeping these increasingly hallowed wines in healthy perspective.
It’s certainly important for Seysses’ peace of mind when he worries about his region’s current trajectory. “One thing that will save us is that there’s now a generation of wine drinkers who have understood knowledge is power,” he remarks.” As long as the substance is still there then perhaps someone drinking it will recognise that.”
Burgundy that won’t break the bank
With all the frenetic record breaking underway at the top end of the market, it’s easy to forget that Burgundy still has plenty to quench the thirst of more modestly financed wine
lovers. “There’s never been a better time to buy from lesser villages or producers,” maintains Cassidy Dart MW of Pol Roger Portfolio, citing appellations such as Maranges, Fixin or Santenay as particularly rewarding hunting grounds. Likewise, Michelle Cherutti-Kowal MW, who hosts regular masterclasses on this region, has a long shopping list to share. “The best value for money within Bourgogne today is within the villages of both the Côte Chalonnaise and Mâcon-Villages regions, as well as from lesser known villages in the Côte d’Or and the Appellations Contrôlées of Haute-Côtes,” she suggests.
In particular, Cherutti-Kowal highlights the white wines of Mâcon as “one of the more dynamic areas in the last few years.” She explains: “There are many excellent winemakers that have worked for major domaines and have established their own label, sourcing grapes from the area and who are producing Côte d’Or quality wine with excellent pricing.”
Such value becomes even more exciting at a time when many rather ordinary village wines from the Côte d’Or now appear unjustifiably expensive. “As much as it makes sense for grand cru to be elitist, it doesn’t make sense for the villages,” remarks Jeremy Seysses of Dujac. “I’m seeing a lot of villages over €100 on local restaurant lists and I don’t get it.”
Jamie Strutt of Goedhuis agrees, noting: “There’s a lot of rubbish being produced but because it says Meursault on the label they charge a high price. Are people really going to want to keep paying these prices?” If Burgundy does experience a price correction anytime soon, it’s likely to be at this lower end of the hierarchy.
His glass ever half full, Steven Spurrier offers consoling words for those feeling priced out of the action. “Instead of worrying about what you can’t afford, you should take advantage of what you can afford, which will almost certainly be much better and more interesting than what you might have been able to afford in the past.”
