US demand for blue chip Burgundy sudden and significant says UK merchant
The demand for blue chip Burgundy has been sudden and significant among US buyers since the tariffs on European wine were suspended by the Biden administration, according to UK merchant Bordeaux Index.
A 25% duty by the US Government on most French, Spanish and German wines – but not those from Italy or Champagne – was suspended on 5 March, creating a rapid and marked effect on the buying activity among the American wine trade and collectors, particularly for the most famous and sought after wines from Burgundy, according to Matthew O’Connell, who is head of investment at Bordeaux Index,
Speaking to the drinks business this week, he said that the level of demand and flow of wines from the UK to US buyers had come “quickly”, with a “significant” pick-up.
Even though O’Connell believes the current suspension is unlikely to be temporary, he said that buyers in the US saw the move as “a window of opportunity”, as they moved stock from the UK to the US, as well as bought more European fine wines to restock.
With the March-time move effectively bringing prices of European wine down by 25% overnight with the tariff suspension, O’Connell expected some activity, but expressed his surprised at the level of demand.
“We have seen a significant pick-up in merchants and end collectors moving stock and adding to stock to make hay while the sun shines,” he said, adding, “It is very much focused on Bordeaux and Burgundy.”
Indeed, he told db, “I have never seen Burgundy activity so skewed towards US buyers.”
Among the labels seeing the biggest increase in demand are the famed reds of Domaine de la Romanée-Conti, along with Domaines JF Mugnier, Georges Roumier and Armand Rousseau.
He said, “The market is achieving more adventurous prices for blue chip wines from Burgundy, and there is an appetite to pay those prices in the US because they represent a significant saving to where they had been one month ago.”
In terms of increase, he said he had observed rises of as much as “10% above where the broad market might be, with some of these wines, including recent vintages of Mugnier’s Musigny and 2000 vintages of DRC’s La Tâche selling at all time high prices.”
He commented, “There was already momentum behind prices of Bordeaux and Burgundy, and we felt that the US tariff suspension would be a good tail wind, and that has definitely been the case.”
However, he said that such an impact was centred on the blue chip labels mentioned above, commenting that the price rise had not been seen among “second tier producers or any but the top premiers crus.”
Comparing the situation to a rising demand for Burgundy in 2018, he said during that year “everything moved up”, whereas today, “there is not the appetite to pay over the odds for second tier wine.”
But for those top producers of top premier crus in Burgundy, he expects the “price trajectory to continue upwards”.
Supporting this belief he said, “It is important to look at the actual transactions, not just the prices offered, and we are seeing data points higher than you would expect, although these are in specific and rare wines. So, with something like Rousseau Chambertin or Roumier Les Amoureuses we are seeing outlying prices, which is a sign that the market more broadly is moving upwards, although it is confined to top level producers; I don’t think those investing in second tier producers will benefit this year.”
This news analysis was produced in association with Bordeaux Index.