Wine investment: Strong demand for Burgundy 2022

Fine wine buyers have shaken off their caution to pounce on highly rated Burgundy 2022 en primeur releases, according to UK merchants. David Roberts MW, Burgundy and Bordeaux buying director at Goedhuis & Co, said: ‘After such a small crop in 2021 , clients are very keen to buy what is an extremely attractive Burgundy vintage in 2022 .’ Vintage quality appeared to override concerns about the economy, observed Jason Haynes, Burgundy buyer and director at Flint Wines. ‘Many domaines have been heavily oversubscribed,’ said Haynes, commenting on demand at Flint’s private client arm Stannary Wine. [subscriber-content]Liv-ex, a global marketplace for the trade, said the campaign ‘has so far gone better than many dared imagine late last year’. Several merchants reported release prices largely consistent with last year. Liv-ex said some 40% of producers still increased prices, even if modestly, ‘which has made selling tricky in some quarters’. It acknowledged producers’ need to cover higher costs by raising prices, but it also questioned whether current price levels can be sustained, particularly given the relatively large 2023 vintage waiting in cellars. A separate survey of Liv-ex members found 36% of respondents were ‘quite pessimistic’ about the fine wine trade in 2024, with 41% ‘neutral’. Tuscany and Bordeaux came top when members were asked to predict which regions would perform best on the market this year. Burgundy prices soften further Recent figures suggest Burgundy grand cru prices continue to retreat on the secondary market, although auction buyers are still interested in the rarest names. Top Burgundies have been underperforming major equity markets, unlike a couple of years ago, indicated Liv-ex, a global marketplace for the trade, in a new report (see chart). Its Burgundy 150 sub-index, which tracks the prices of mainly grands crus, also fell 3.7% in January. It was down nearly 20% over 12 months, and some wines dropped more sharply – such as Domaine de la Romanée-Conti ’s (DRC) Richebourg 2014 and Domaine Armand Rousseau ’s Chambertin 2015. Matthew O’Connell, CEO of the LiveTrade online trading platform at merchant Bordeaux Index, said blue-chip Burgundy prices fell around 13% in 2023, although performance varies. Even on worst-affected names, ‘prices remain well above the early 2021 levels – it’s all relative’, he added. In a recent outlook report, the merchant reiterated its wariness about price sustainability outside the top 25 ‘blue-chip type’ producers. [caption id="attachment_524695" align="alignnone" width="600"] Data source: Liv-ex report. ' Burgundy 2022 – Hair of the Dog ', February 2024.[/caption] Auction buyers still eyeing rare wines A review of the year 2023 by New York-based auction house Zachys found Burgundy prices remained above pre-Covid pandemic levels. Trends cannot necessarily be discerned from individual auctions, but a Sotheby’s sale of DRC wines at a Hong Kong-based online auction offered a snapshot of buyer sentiment in early 2024. Highlights included a three-litre jeroboam of DRC, Romanée-Conti 2002. It sold for HK$520,000 (£53,000), including buyer’s premium (estimate: HK$500,000-$700,000). A magnum of Romanée-Conti 1998 sold for HK$187,500 (e: HK$170,000- $260,000), and a single bottle of the 2013 vintage realised HK$137,500 (high e: HK$130,000). ‘Value’ grand cru Liv-ex’s recent Burgundy report found ‘many village wines have become disproportionately expensive compared to grands crus’. It also said Clos des Lambrays, Clos du Vougeot and Corton-Charlemagne were comfortably below the average market price of other grands crus. The former is a near-monopole of Domaine des Lambrays, which has been owned by LVMH since 2014. Young vintages of its Clos des Lambrays Grand Cru wines recently received strong ratings from Decanter’s Burgundy correspondent Charles Curtis MW. The Bordeaux Index view Fine wine & spirits specialist Bordeaux Index kindly sponsors this section of Decanter, and provides its view on the market here every issue. It can be found at bordeauxindex.com. Across 2021-2022, ‘blue chip’ Burgundy saw price gains of about 60%, with some producers up towards doubling – this came not that long after outsized price gains in 2018, the prices resulting from which had largely been sustained in the interim period. It would have been surprising if there was not some ‘settling’ of prices at slightly lower levels (as per 2019) after such a sharp move. However, the significant decline in activity in the wine market has led to prices drifting further than we had anticipated in Burgundy – mid to high-teen percentages, with some producers moving further down, usually those who had seen the biggest gains (Leroy, Rousseau). We said in 2018 that prices over the long term would continue upwards (rather than a ‘bubble’ bursting), and this remains our view. The increase in global UHNW luxury consumption is an ongoing dynamic and when that demand side meets a strained supply side, like Burgundy, the results are inevitable. Indeed, we have seen already this year that for the ‘right’ Burgundy wines (high rarity, large formats etc), prices are close to the 2022 highs; we do, however, see the recovery of prices more broadly to 2022 levels as being beyond H1 2024. [/subscriber-content] Related articles Wine investment: Falling rates to boost activity? Collector’s Guide: Champagne Rare whisky bottles lose froth but not allure, says Knight Frank

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Wine investment: Strong demand for Burgundy 2022

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