The rise of Burgundy in the secondary market has been very notable in recent years, being the best performing region and registering significantly higher trading volumes. But as economic storms brew, is consolidation on the way?
Matthew O’Connell, CEO of LiveTrade, Bordeaux Index’s online trading platform, said the beverage trade that the history of Burgundy has been – and remains – centered mainly on the high end of the market, the 20-30 “blue chips” which are attracting a growing number of ultra-rich collectors.
The company’s strong results in the first half of the year were partly driven by demand for these super rare Burgundies, which rose by +26% in price, well above the impressive 10% in the secondary market. global,” O’Connell points out. .
“In fact, buying has widened slightly within this group: where the price increases were particularly pronounced at Leroy and Rousseau towards the end of 2021, we saw certain cuvées from Dujac and Mugnier, for example, also really outperform in 2022,” he said. said.
Some producers have established “a kind of cult,” he noted, pointing to Arnoux-Lachaux and Jean-Yves Bizot.
“The demand for these is narrower than for the broader blue chip universe, but fierce enough on its own,” he said.
Meanwhile, white Burgundy has been through a particularly strong period, with Bordeaux Index data showing that Coche Dury, Leflaive, Raveneau and Ramonet have seen particularly remarkable price appreciation.
“The multiple new ‘short’ vintages are attracting market attention,” he added. “While on the one hand it doesn’t make a huge difference to the overall stock of these wines on the market (given there are 20-25 vintages on the market), there is now a clear expectation of a long-term dwindling supply of Burgundy and people sat up and took note of that.
Some of the best performing names on the market in 2022 include Arnoux Lachaux Nuits St Georges Poisets 2009, which has seen an astonishing 152% increase in 2022 year to date, followed by Leflaive Chevalier Montrachet 2010, up 87% , ahead of De Vogue Musigny 2005 (+56%) and Meo Camuzet Cros Parantoux 2017 (+51%). The momentum largely persisted in Q3 with particularly marked interest around the 2019 and 2020 vintages of the big names in the secondary market.
As O’Connell points out, it’s natural to see a period of consolidation after such impressive growth – after all, Burgundy has been on an upward trajectory since 2015 – but that may not be what we’re seeing this time around. -this.
“Upward price movements can often be followed by periods of stability as the market adjusts to new price levels, before potentially resuming gains,” he said, pointing to the price consolidation of 2019 after the substantial gains of 2018.
“However, that’s not what we’re seeing in the market right now – demand remains very strong and the current GBP weakness will likely act as a tailwind,” he said.
It’s still likely to inspire the very wealthy to start looking elsewhere, in other regions if one of them peaks.
However, O’Connell insists that hasn’t happened here, especially among the top 20-30 names. “Indeed, we believe the opposite is true – one of the main reasons Burgundy prices continue to rise is the inability to substitute very high Burgundy for other regions,” he explained. “Collectors who buy these names don’t want to look elsewhere.”
He notes the thought that as you move down the Burgundian spectrum, this “worship interest” diminishes and substitution becomes more of an issue.
“In this context, Oregon and New Zealand are the two regions most likely to benefit,” he said.