The cost of Burgundy wines is ballooning. As to why, there is a confluence of events, from global supply chain blockages to a worldwide pandemic, and climate-change-induced weather disruptions that produced severe frost damage.
The annual Hospices de Beaune Wine Auction, a key market indicator, seemed to prove the point. This year’s auction, presented by Sotheby’s in late November at Halles de Beaune, offered the lowest number of barrels in 40 years — but still managed to break sales records.
The event of the year
Established in 1859, the Hospices de Beaune Wine Auction ranks as the world’s oldest, most prestigious charity wine auction in the world. All wines sold derive from the 60 hectares (148 acres) Hospices de Beaune estate, an accumulation of parcels gifted by wealthy benefactors dating back to Hospices founders Nicolas Rolin and Guigone de Salins in 1443.
Poor yields due to 2021 frost damage yielded just 362 lots, versus 638 lots in 2020. Yet despite the reduced inventory, average barrel prices increased from the previous year a whopping 115% for white Burgundy and 56% for red wines. Final auction proceeds totaled $15.3 million, including a jaw-dropping $900,000 for the Pièce des Présidents charity barrel of Grand Cru Corton Renardes.
Anne Moreau, president of the Communication Commission at the Bourgogne Wine Board and Domaine Louis Moreau in Chablis, says that a lot of international collectors were looking for rare Burgundy wines made by Ludivine Griveau, the highly respected winemaker at Hospices de Beaune. Moreover, she says, “the Hospices auction is not a reflection of the market!”
Others agree with Moreau’s assessment. “The Hospices de Beaune prices no longer have anything to do with the prices of Burgundy in the general market,” says Scott Wright, owner of Oregon-based importer Caveau Selections. “In decades past it may have been somewhat of a gauge, but ever since the auction was opened up to the masses via Christie’s, and now Sotheby’s, it’s become a game for mega-wealthy individuals, luxury hospitality groups, and the like, and literally has nothing to do with the actual market for Burgundy, from what I can see.”
But everything’s going up
“The rising of prices in Burgundy for 2022 is due to several reasons, but the Hospices Wine Auction that took place in November is not one of them,” Moreau emphasizes. “The main reasons are, firstly, the increase of costs for the dry goods.” She says that the cost of cardboard for cartons, glass for bottles, and even wood for the pallets has risen — up to 30% for cartons and 100% for pallets.
Ironically, the whole of France is suffering a pallet shortage, the result of restaurants and bars using them to fashion outside terraces during the coronavirus pandemic to accommodate customers barred from inside service. Moreau also points to logistics, such as transportation delays due to shipping container shortages. “Most containers are stuck in Asia,” she says, “and don’t come back towards Europe.”
Finally, France’s increasing number of climate-change-related weather disasters, such as the 2021 frosts, decimated vineyard yields, thereby reducing wine volumes. “Of course, the anticipation of a small crop in 2021 also has an impact on the price raise,” Moreau admits. This year, Burgundy harvested only 50% of a normal grape crop.
All of that pales compared to the biggest issue.
“I am sure that global supply chain issues will be partly relevant, especially for the lower-priced items, where it will be felt most as a percentage,” says Jasper Morris MW, noted Burgundy expert and author of “Inside Burgundy.” But for Burgundy as a whole, the core issue is the level of demand versus the small supply.
“Producers are just now setting their prices for the 2020 vintage, taking into account the shortfall of the following year,” he explains. “I expect them to set levels which will be stable across the two vintages and which will probably work for 2020 and be trickier for the more challenging 2021 vintage.”
But what about future pricing? “The demand for Burgundy has never been higher, even as the prices continue to rise,” says Wright. “Most producers will be raising prices on the 2020 wines anywhere from 5% to 25%, from what I’ve seen so far, to try and compensate for the massive crop loss in 2021. Will those prices be too high for the market? In the past, I would have thought so, but there does not appear to be a ceiling — or at least we haven’t hit it yet.”
Which begs the circular question: Do Burgundy wines have a price ceiling?
The market continues to amaze Morris, who marvels that despite the ceaseless price increases, Burgundy wines continue to sell out. “The Burgundy commercial year seems to be one of 50 weeks,” concludes Morris, “When everybody complains that prices are too high, then the release of the new vintage — and everything sells through in two weeks!”
3 Burgundy wines to snap up:
One of Burgundy’s most respected estates, Maison Joseph Drouhin produces consistently elegant wines ranging from Grand Cru to regional, including this refined, pleasurable Pinot Noir from the lesser-known village of Rully in the Côte Chalonnaise.
This third-generation domaine started growing vines in 1953 and making their own wine in 2014; they converted to organic farming in 2020. This golden-robed, right-bank Premier Cru pours out with laser-like, mineral-driven precision.
Sommelier-turned biodynamic winemaker Thiebault Huber seeks harmony in the field and cellar. This graceful, ruby-hued Pinot Noir from Volnay in Côte de Beaune showcases the winemaker’s deft touch and the village’s trademark finesse.
NOTE: This bottle is sold out