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Burgundy Fine Wines
Five regions, 100 appellations, 230 kilometres, 300 villages, 3,000 domaines, almost 30,000 hectares of vineyards (not to mention a UNESCO World Heritage site since 2015), Burgundy (Bourgogne) is all things to all people. The region produces 200 million bottles per year, which might sound like a lot but in fact makes up just 0.5% of world consumption. Therefore it is unsurprising that with such stellar statistics, Burgundy is the thinking investor’s wine.
Not to be overlooked by its bigger, sexier, cousin (hello Bordeaux) Burgundy is content to sit quietly in the wings and let Bordeaux lap up the limelight. That’s not to say that there are no star players in the Burgundy region – au contraire. In fact, some of the most expensive fine wines in the world are Burgundies. Think Domaine de la Romanée-Conti (as of 2019 a single bottle averaged a cool €20,000 and rising), Henri Jayer, Louis Jadot, Emmanuel Rouget, Domaine Dugat-Py, Domaine Leflaive and Domaine Armand Rousseau and you’ll understand what we mean. Put simply, Burgundy fine wines are some of the most compelling wines in the world.
And the reason why this region stands head and shoulders above others? One word and one word only: terroir. Whether you’re drinking a Cote de Beaune, a Cotes de Nuits, a Gevrey-Chambertin or a Montrachet, a bottle of Burgundy is akin to centuries of French heritage.
The region is known – nay, heralded – for its complexity. It famously hosts two grapes varieties, pinot noir for red and chardonnay for white. Yet the beauty, the strength, the overall perfection of these two grape varietals that produce silky, fruit-forward pinot noir and beautifully balanced chardonnay is a lesson to us all. And yet, with just two grape varieties dominating the region, one would think that understanding the Burgundy would be a piece of cake. But, like most things in France, the opposite is true.
The region has a complex hierarchy that encompasses everything from regional wines – accounting for around 50% of production, right up to Premier Cru and Grand Cru vineyards (accounting for just 2% of fines wines. Romanee-Conti, of course, is among the top 2%). This is because both producers and negociants have equal rights in Burgundy, but while a negociant can only sell wines (but own vines), producers can own, make and sell. Which means that some negociants might give their grapes to a producer to make the wine while that same winemaker might own the neighbouring vineyard and produce wine under his own name.
Furthermore, with the parcels of terroir being divided through inheritance, then being sold off or divided again, it is unsurprising that domaines are scattered around the region. In the middle ages, parcels were inherited by the firstborn son exclusively (second and third sons went into the clergy and military respectively), and if there were no sons, the land was sold off at auction or given to the state (daughters, whether born first or last, had zero rights). This resulted in vineyards being owned by families whose Château was miles away from the original domaine, and whose parcels of land were scattered around the region. Ergo, with domaines producing 100% chardonnay and pinot noir from vineyards sometimes hundreds of kilometres apart, varieties of terroir and meteorological conditions are bound to affect the taste, performance of the wine, but result in a richness and depth of flavour that no other region can compete with. Makes sense?
The strict focus on terroir has given Burgundy the edge, over its many competitors in taste for sure but equally in the investment market. Small really is beautiful here. Tiny production numbers make for coveted cuvees – for reference, Bordeaux big hitter Château Lafite Rothschild makes around 20,000 cases of grand vin in an average year, while Château Latour averages about 18,000. This figure for Burgundy’s star attraction DRC – Domaine de la Romanee-Conti is a measly 450 cases annually. These very limited quantities, along with superstar owners (LMVH bought Clos des Lambrays in 2014) are both tangible explanations for why both the quality of wine and the prices have been skyrocketing in recent years, and show no signs of slowing down. In 2018, 42 out of 50 of the most expensive bottles of fine wine sold at auction were Burgundy, a 20% increase on 2017 sales, and prices have nearly doubled since 2015. Longevity for the region is excellent (between 10 and 20 years), although this is where Bordeaux might have the edge; Bordelaise wines can age up to 100 years in some cases. Conversely, wine with a shorter ageing potential can see higher returns and a quicker turnaround, although investors still have to wait upwards of a decade to get the best results.
So what is it about Burgundy fine wine that makes it quite so special? Basically, in a country as patriotic as France, the Burgundy wine region and its produce are a source of national pride. Every harvest is a minefield. With the weather being much less clement in the north-east of France than in the south-west, every hailstorm, every gust of wind, every summer heatwave, means potential disaster for the harvest. And this is translated into prices – which investors lap up with gusto. Enthusiasm for luxury goods – of which fine wine is very much a part of – has not quelled in the past decade despite austerity measures being put in places across Europe and high taxation (and a fall in the markets) in Asia. The US narrowly missed a recession post-2008 and in its quest to be bigger and better at everything, is fast buying up vintage after vintage of Burgundy’s finest. Could it be then, that when it comes to investing in fine wine, all roads lead to Burgundy?
Not to be overlooked by its bigger, sexier, cousin (hello Bordeaux) Burgundy is content to sit quietly in the wings and let Bordeaux lap up the limelight. That’s not to say that there are no star players in the Burgundy region – au contraire. In fact, some of the most expensive fine wines in the world are Burgundies. Think Domaine de la Romanée-Conti (as of 2019 a single bottle averaged a cool €20,000 and rising), Henri Jayer, Louis Jadot, Emmanuel Rouget, Domaine Dugat-Py, Domaine Leflaive and Domaine Armand Rousseau and you’ll understand what we mean. Put simply, Burgundy fine wines are some of the most compelling wines in the world.
And the reason why this region stands head and shoulders above others? One word and one word only: terroir. Whether you’re drinking a Cote de Beaune, a Cotes de Nuits, a Gevrey-Chambertin or a Montrachet, a bottle of Burgundy is akin to centuries of French heritage.
The region is known – nay, heralded – for its complexity. It famously hosts two grapes varieties, pinot noir for red and chardonnay for white. Yet the beauty, the strength, the overall perfection of these two grape varietals that produce silky, fruit-forward pinot noir and beautifully balanced chardonnay is a lesson to us all. And yet, with just two grape varieties dominating the region, one would think that understanding the Burgundy would be a piece of cake. But, like most things in France, the opposite is true.
The region has a complex hierarchy that encompasses everything from regional wines – accounting for around 50% of production, right up to Premier Cru and Grand Cru vineyards (accounting for just 2% of fines wines. Romanee-Conti, of course, is among the top 2%). This is because both producers and negociants have equal rights in Burgundy, but while a negociant can only sell wines (but own vines), producers can own, make and sell. Which means that some negociants might give their grapes to a producer to make the wine while that same winemaker might own the neighbouring vineyard and produce wine under his own name.
Furthermore, with the parcels of terroir being divided through inheritance, then being sold off or divided again, it is unsurprising that domaines are scattered around the region. In the middle ages, parcels were inherited by the firstborn son exclusively (second and third sons went into the clergy and military respectively), and if there were no sons, the land was sold off at auction or given to the state (daughters, whether born first or last, had zero rights). This resulted in vineyards being owned by families whose Château was miles away from the original domaine, and whose parcels of land were scattered around the region. Ergo, with domaines producing 100% chardonnay and pinot noir from vineyards sometimes hundreds of kilometres apart, varieties of terroir and meteorological conditions are bound to affect the taste, performance of the wine, but result in a richness and depth of flavour that no other region can compete with. Makes sense?
The strict focus on terroir has given Burgundy the edge, over its many competitors in taste for sure but equally in the investment market. Small really is beautiful here. Tiny production numbers make for coveted cuvees – for reference, Bordeaux big hitter Château Lafite Rothschild makes around 20,000 cases of grand vin in an average year, while Château Latour averages about 18,000. This figure for Burgundy’s star attraction DRC – Domaine de la Romanee-Conti is a measly 450 cases annually. These very limited quantities, along with superstar owners (LMVH bought Clos des Lambrays in 2014) are both tangible explanations for why both the quality of wine and the prices have been skyrocketing in recent years, and show no signs of slowing down. In 2018, 42 out of 50 of the most expensive bottles of fine wine sold at auction were Burgundy, a 20% increase on 2017 sales, and prices have nearly doubled since 2015. Longevity for the region is excellent (between 10 and 20 years), although this is where Bordeaux might have the edge; Bordelaise wines can age up to 100 years in some cases. Conversely, wine with a shorter ageing potential can see higher returns and a quicker turnaround, although investors still have to wait upwards of a decade to get the best results.
So what is it about Burgundy fine wine that makes it quite so special? Basically, in a country as patriotic as France, the Burgundy wine region and its produce are a source of national pride. Every harvest is a minefield. With the weather being much less clement in the north-east of France than in the south-west, every hailstorm, every gust of wind, every summer heatwave, means potential disaster for the harvest. And this is translated into prices – which investors lap up with gusto. Enthusiasm for luxury goods – of which fine wine is very much a part of – has not quelled in the past decade despite austerity measures being put in places across Europe and high taxation (and a fall in the markets) in Asia. The US narrowly missed a recession post-2008 and in its quest to be bigger and better at everything, is fast buying up vintage after vintage of Burgundy’s finest. Could it be then, that when it comes to investing in fine wine, all roads lead to Burgundy?