Liv-ex Fine Wine Market Blog

Burgundy 2010 campaign off to a promising start

Last week, fine wine merchants and traders attended a series of Burgundy 2010 tastings in London. Initial reactions to the vintage have been exceptionally positive, with Allen Meadows (aka Burghound) noting that the wines could in fact be superior to their 2009 counterparts. This is particularly surprising given the challenging weather conditions that growers faced in 2010. 

Meadows suggests that the wines are notable for their refinement, balance and great sense of energy:

"It’s one thing to have racy acidity and punch but it’s another to ally these attributes with real substance. And this is what the 2010s do with such brilliance." 

The table below shows his top picks of the vintage. 

Whilst many growers overcame the elements and produced "genuinely excellent" wines, yields were down between 30 and 40 per cent on 2009. As a result, stock is in limited supply and buyers may need deeper pockets this year. 

Many of our trading members have reported modest price rises of five to ten per cent across all quality levels. Of course, where vineyards (and hence production) were severely affected by the adverse weather, increases can be as high as 40 per cent. Despite this, merchants maintain that the market has absorbed the price hikes "with little if any resistance". All of the fine wine traders that we spoke to said that demand for the Premier Cru and Grand Cru reds was outstripping supply. According to one merchant, "Price is definitely not the problem. Because yields were so low, not enough stock is available." Buyers who have not been able to secure allocations will have to hunt for stock on the secondary market, where prices are likely to rise quickly. 

Interestingly, anecdotal evidence suggests that there has been a strong rise in demand from Asia this year. "In Hong Kong five years ago there was no recognition [of Burgundy]," said one leading trader. "Now it's something that people are incredibly excited about. Buyers are bored with Bordeaux."  

Interest from Asian clients (who are reportedly a mix of speculators and collectors) appears to be concentrated in the high-end wines, including those of Roumier. As noted last week on the blog, Asian buyers are increasingly favouring Burgundy's top labels. This was clear at the Sotheby's auction in Hong Kong on Saturday, where Bordeaux suffered but Romanee Conti sold at a premium.

DRC prices surge in Hong Kong

We recently reported on the blog that Lafite's performance at Christie's Finest and Rarest Wines auction in Hong Kong was relatively underwhelming. Burgundy's most eminent producer, however, has created quite a stir this month.

Over the past few weeks, DRC has been a major feature of several auctions around the world, including Hong Kong, London and New York. But although top lots of Tache and Romanee Conti set new records for the estate in London and New York, the results achieved in Hong Kong are equally, if not more, significant. This can be seen from the table below, which compares the winning bids from the Sotheby's auction in New York on the 10th with those from the Christie's sale in Hong Kong on the 4th. Auction prices include buyer's premium and are shown alongside current merchant list prices.

 
All prices are for 12x75cl cases and have been converted to GBP.

The above comparison reveals that buyers in Hong Kong were willing to pay an average of 48 per cent more than their New York counterparts for the same vintages of DRC. This seems to confirm that Asian interest has indeed expanded beyond Bordeaux - and it is the top names from Burgundy that are first in line to benefit.

What is DRC worth?

 

As regular readers will know, we recently attempted to value the great estates of Bordeaux. So what result would we get if we applied this same methodology to Domaine Romanee Conti? 

The answer is a valution of €1.23 billion, which places it just below Mouton and just above Margaux.

Of course, the multiple of production value to estate value we used (15x) was based on historical sales in Bordeaux, not Burgundy. But for a wine such as DRC, there seems little reason why it should not equally apply. 

(Please note that the same errors and omissions that applied to our original piece of research apply equally to the above). 

 

DRC - vintage by vintage

With only limited space available in our monthly Market Report, we thought it worth posting some additional data on DRC here on the blog. Below is chart that shows the year to date price increases by vintage for a basket of one each of the red Grand Crus. (Each of the wines in the basket have been give an equal weighting).

At first glance, the percentage increases appear relatively random. If we overlay the total basket price for each vintage, however,  we can see that they were actually entirely rational. The recent price movements have positioned each of the vintages into one of three distinct price bands. The 1999s have moved up to match the 2005s at £15,000 per case; the 1996s and 2002s have moved ahead of the pack to arrive at £11,000; with the rest positioned at around £9,000. This simplification of pricing stuctures is the exact same phenomenon that we saw take place amongst the First Growths in 2010 - with only the very best vintages able to attract a significant premium over a rapidly increasing baseline.

DRC leads in 2011

Friday's close saw the Liv-ex Claret Chip Index move 1.5 per cent lower for the week. The Liv-ex Fine Wine 50 also lost ground, finishing  down 1.2 per cent. Both indices are now up little more than 7% for the year to date. 

In  contrast, the wines from Burgundy's top producer, DRC, are gaining increasing market momentum. Indeed, the six Grand Crus produced by the legendary estate have significantly outperformed their Bordeaux equivalents since the start of the year, showing a price uplift of almost 30%. (See below.)

We will be releasing an in-depth look at DRC -  as well as all the latest market information and analysis - in tomorrow's Cellar Watch Market Report. 

 

The World of Fine Wine on Burgundy 09

The World of Fine Wine magazine is offering readers of the Liv-ex blog a preview of its Burgundy 2009 report, which includes tasting notes and scores on more than 300 of the region's top wines. Liv-ex users can also access more than 1,000 WOFW scores by logging on to Liv-ex.com and visiting our individual wine pages, where they are displayed in full alongside the reviews of other leading critics.

The World of Fine Wine is a highly acclaimed quarterly magazine whose tasting panel includes Tim Atkin MW, Clive Coates MW, Hugh Johnson, Oz Clarke and Tom Stevenson. In addition to the Burgundy 09 report and the coverage available on Liv-ex.com, The World of Fine Wine is offering Liv-ex blog readers discounted subcription rates (five issues for the price of four). To benefit from this offer, please follow the link below.

http:www.subscribeonline.co.uk/finewine/LIVEX

A glimpse of DRC 2008

 
 
Following the recent flight of 09 Burgundy tastings, the past few days have seen the first notes and scores emerge for Domaine Romanee Conti 2008. Every year, DRC waives the region’s en primeur campaign and then – with the dust settling – presents its latest vintage to be tasted by the world’s press.Though many of the major critics have yet to publish their in-bottle scores for the 08s, the first string of reviews seems to bode well.

Allen Meadows of the Burghound rates the vintage particularly highly, with the estate’s six flagship wines averaging 94.7 points (compared to 92.8 points for 2007). Having championed Tache 2007 over Romanee Conti last year, the latter received the highest 08 score at 97 points:

“The underlying sense of proportion and perfect balance very much confers a Zen-like character to the '08 Romanée-Conti. A potentially great vintage for this most storied of wines..."

As you can see from the table below, Tim Atkin and Julia Harding (a contributor to Jancisrobinson.com) are also clear fans. Will the rest of the critics echo their enthusiasm?

 
Sources: Burghound.com, Timatkin.com, Jancisrobinson.com.

With production down significantly on 2007, release prices for the latest vintage are up around 20 per cent on last year. Of course, those without allocations will have to chase stock on the secondary market, where prices are likely to rise rapidly.

Top Burgundy fetches record sales at Hospices de Beaune auction

 

Burgundy’s top lots generated record-breaking bids at this year’s Hospices de Beaune auction, with a number of wines achieving higher prices than those seen in both 2009 and 2005. According to Decanter, the average prices paid for white wines rose by 15.7%, whilst the average for reds rose by 12.5%. But although the mean price per lot increased this year, the number of barrels on offer was curtailed by more than 20% owing to the vintage’s lower yields. As a result, total sales descended from last year’s high of €5.4 million to €5.1 million.

Hospices auction results are no longer considered to have a significant impact on vintage pricing; however, they are seen as a guide to general sentiment. And given the plethora of enthusiasm that surrounded the event’s most eminent wines – culminating in a bid of over €400,000 for a 500-litre tonneau of Beaune Premier Cru Nicolas Rolin - there does appear to be a keen appetite for the 2010 vintage. Importantly, a growing portion of demand now appears to be coming from Asia.

This year saw more registered bidders from Asia than from the US, with the former accounting for 12.5% of total sales, ahead of 1.6% of sales. (The vast majority of lots, however, still remain in Europe.)

These results add to the growing anecdotal evidence that the Burgundian trade has the Chinese market firmly in its sights. Nonetheless, we have yet to see any notable increase in demand for top Burgundy on the exchange (or significant upwards price movement). For now, at least, Bordeaux's dominance in Asia remains unchallenged.

Spotlight on... Domaine de William Fevre

 

Owner: Henriot Champagne
Classification: Grand Cru, Premier Cru and generic Chablis
Vineyard area: 47 hectares
Colour: white
Standard blend: 100% Chardonnay

History

Though Chablis’ viticultural past is rooted in mediaeval times, the onset of phylloxera in 1887 devastated the region’s vineyards and stifled development for several decades. In the second half of the 20th century, however, William Fevre was among the many producers who set up new estates and restored the region’s winemaking prowess.

Fevre, the son of a vigneron, founded the Domaine de la Maladiere (later renamed William Fevre) and brought in his first harvest in 1959. As well as outspokenly opposing the extension of the appellation's boundaries, Fevre was well known locally for the part he played in the crusade to prevent the New World (and the US in particular) from using “Chablis” as a generic term for dry, white wines.

During his tenure, the domaine became the largest owner of Grand Cru vineyard sites and the wines sold well internationally. Still, the estate’s liberal use of oak did not find favour in all quarters. But with the founder’s departure from Burgundy in 1998 (in order to undertake a new venture in Chile), the domaine was sold to Henriot Champagne, the owner of Bouchard Pere et Fils, and subsequent vintages were produced in a more elegant style.

Under the new regime, no more than one percent of the wine may be put into new oak barrels. As a result, the top-tier wines have become increasingly popular amongst critics and enthusiasts, though, encouragingly, prices remain relatively affordable.

At present, Domaine de William Fevre extends across 47 hectares, encompassing 12 hectares of Premier Cru vineyards and 15 hectares of Grand Cru. Winemaking is directed by Didier Séguier and 17 “principle” Premier Crus are produced, along with eight Grand Crus (including the Clos des Bouguerots cuvee).

The 2009 vintage

In his August assessment of the 09 vintage, Stephen Tanzer of the International Wine Cellar wrote that a warm, dry growing season had produced rich, fruity wines “that will offer considerable early appeal.”

In total, 13 Fevre wines (both Premier Cru and Grand Cru) were awarded more than 90 points, led by Les Clos, which scored 92-95 points, and Bougros Cote Bouguerots – 92-94.

Tanzer describes Les Clos 09 as “Pure crushed rock and flinty minerality on the nose. As dry and youthful as this is, it still conveys the essentially gentle style of the vintage.”

Market trends

Since Henriot Champagne took over the running of the estate more than a decade ago, quality, and scores, have risen steadily. But despite the wines’ critical acclaim, many Fevres continue to represent exceptional value for money.

At present, the benchmark price for the Grand Crus is around £400 per 12x75cl case; however, numerous high-scoring vintages are trading below this level. Bougros Bouguerots 2006 (IWC 94), for example, is currently offered on the exchange at £330 per case, whilst Vaudesir 2004 is changing hands at just £365 per case, despite its 94-point score from Allen Meadows of the Burghound. Preuses 2007 boasts 94 points from Tanzer and 95 points from Meadows – “a wine of crystalline purity that is pure silk and class” and also seems a steal at just £310 per case. For those with less to spend, Vaillons (a Premier Cru) is available at £170 per 12x75cl case – the equivalent of £14 per bottle.

The table below shows a selection of well-priced Grand and Premier Crus. With many of the below representing excellent value and drinking beautifully now, they would appear good options for those on the lookout for wines for the Christmas table. The majority of the wines are currently offered on the exchange - trading members of Liv-ex can view the live markets here.  

  

All prices for 12x75cl cases stored in bond. Scores from wineaccess.com and Burghound.com.

Prices up 20% at the Hospices de Beaune auction

It looks like we can expect significant price rises for the 2009 Burgundy vintage, after strong results at the annual Hospices de Beaune auction.

Prices at the charity auction were up 20% on average over 2008, with €5.8 million raised in total – the second highest amount in the auction's 149-year history. In the distant past, prices achieved went a long way to setting the prices for that year's vintage as a whole; in more modern times it is seen more as a guide to general sentiment. The auction consists of barrel lots (around 24 cases each) produced from vineyards owned by the Hospices de Beaune and is run by Christie’s auction house. 

Further details can be found in reports by the Wine Spectator and Decanter.

The interesting history of the hospices, including the original alms building (pictured above, now a museum and hotel) can be found on the charity's home page and wikipedia.