Why all the talk about Burgundy?
In the latest of our regular wine briefings for entrepreneurs looking to invest, Justerini & Brooks’ Kate Janecek follows her key insights for strategic purchases with her appraisal of the Burgundy situation. So why are Burgundy wines the big investment topic at this time of year?
The New Year for the wine trade means largely one thing – the Burgundy En Primeur campaign. En Primeur is the ‘wine futures’ market, where vintages are purchased by collectors while still in the barrel, before they are bottled.
This usually occurs a year or more before the official release and applies to Burgundy, Bordeaux, Rhone Valley, and Port. It’s a difficult time of year for any salesperson, as we attempt to walk over water to meet our client’s wishes and requests on extremely limited stocks of stock from Burgundy.
Burgundy is not like Bordeaux where there are another 5,000 cases of a top wine available to buy. With Burgundy, vintages still vary in quality and quantity and consistency is impossible. However, the difficulties involved are also the reason why just about anyone in the wine trade will name Burgundy first and foremost as their passion.
Scarcity building Burgundy value
The supply problem for Burgundy is compounding itself year on year – especially for 2010, 2011 and 2012, where all vintages were of incredibly small yields. Staggeringly, over the course of these three vintages, producers in Burgundy have lost an entire vintage. That sort of figure is unthinkable for most of the world’s major wine regions, so one can imagine the appeal to both collectors and investors.
Burgundy as a region has grown in popularity substantially throughout the world’s emerging markets and has put increased pressure on the quantities available to UK merchants, which are already reducing due to the low yields of the last few vintages. At Justerini & Brooks we are lucky enough to have the largest Burgundy portfolio in the UK with 90 estates currently available.
Even with this in consideration, 70% of our entire Burgundy offer was oversubscribed with orders before our tasting on the 14th of January. This is quite significant as 2011 was considered by various press reports a “lighter” vintage to 2010, one where the vigneron – otherwise known as growers – and not the weather determined the outcome of quality.
The rise and rise of Burgundy
Amazingly, some of the greatest wines from Burgundy were difficult to sell 20 years ago, even those of Domaine de la Romanée-Conti which are often considered one of the greatest wines in the world. These wines were available for general sale and not every release sold out. This is in vast contrast to today, where strict allocations are only available to a privileged few.
This increased interest has shown some spectacular price rises over the last two decades. A case of Domaine de la Romanée Conti 1990 (which was around £3,000 per case on release) trades now for just under £200,000 per case. Because these wines are so rare and have very little quantity produced, they have shown over the last two decades a great deal of value added from their basic release price.
This insatiable demand for Burgundy is a trend I do not see slowing down in the near future as there is just not enough volume to fulfil demand. Most of those who buy and collect Burgundy are not as willing to part with such special stock as those who have high volumes of wines from other high-production regions. This makes Burgundy the blue diamond of the world’s fine wine gems, rarer and more sought after than any others.
Kate Janecek is a private account manager for Justerini & Brooks, one of Britain’s oldest wine merchants, which received the Royal Warrant from King George III in 1760, and has continued to hold each ruling Monarch’s Warrant since. www.justerinis.com