Getting Ahead of the Crowds - buying Burgundy en primeur

POSTED ON 01/02/2008

At the Paulée de Meursault one year, the stomach-challenging feast that takes place on the third day of the Hospices de Beaune in November, the burgundians had all brought along a special bottle of something from their cellars for the delectation of the lunching hordes. Not surprisingly, they were duly surrounded by eager guests anxious for a taste of Meursault, Chambolle and Vosne Romanée. Thinking himself rather clever, a solitary bordelais had brought several bottles of rather grand claret from a variety of top-notch châteaux. He might just as well have been Banquo’s ghost at Macbeth’s feast for all the attention he and his wines were getting. In the sense that burgundians and bordelais support the same national rugby team, it would be fair to say that the two have something in common. In almost every other sense, not least en primeur pricing, two of the grandest wine regions are about as close as Marie-Antoinette and Robespierre.

The concept of en primeur began with the bordelais for cultural, economic and practical reasons. Bordeaux is a region whose aristocrats and merchant classes have traditionally relied on the négociants and brokers to sell the wines of their extensive châteaux via the equivalent of the tradesman’s entrance. In contrast, Burgundy’s growers are the tradesmen and artisans, operating in a region of altogether more fragmented vineyards. With its grand châteaux, Bordeaux badly needs the power of distribution, while in Burgundy an 18-hectare domaine like Grivot is considered large, and its owner might make and sell wines from 10 to a dozen different appellations. Furthermore, the transparency of Bordeaux’ prices and the tradeability of châteaux as if they were shares makes Bordeaux an investor’s heaven. The lack of such visibility, coupled with a comparatively negligible secondary market, puts comparatively minimal speculative pressure on Burgundy.

The term en primeur tends to be applied to Burgundy in the sense that it’s become possible for consumers to buy certain red and white burgundies while the wines are still in barrel. Burgundy itself sees it more as a pre-release system. There’s no great trade and media tasting circus like the shenanigans in Bordeaux in the spring after the vintage. In the case of Burgundy, a wine merchant reserves the wines he or she will be offering their customers in the second year after the vintage. Once you or I decide what we want to buy based on a merchant’s tasting or reading of the press in the second January after the vintage, we place our order and pay the wine merchant the in bond price. It is unusual that the UK wine merchant has to fork out a customer’s money until 60 days after shipping, whereas with Bordeaux, our cash generally leaves the UK within three months of us paying. In Bordeaux prices are transparent. In Burgundy, we have no idea what price the burgundy domaine has asked. This gives the UK wine merchant an opportunity to make a substantial margin, so in practice, we are often paying more for Burgundy compared to its ex cellars price than we are for Bordeaux.

This is ironic because Burgundy’s growers are generally more modest in their pricing. According to the experienced burgundy broker Becky Wasserman, who lives in Burgundy and has around 80 growers on her books, the system of setting prices in Burgundy is largely determined by an honest assessment of how they perceive the vintage and what the individual domaine believes its outgoings to be. ‘The people that we know do not think of positioning. It’s not as calculating or as rusé as in Bordeaux, but, much more down to earth’ says Becky. She sells mostly to the US, which doesn’t have anything like the UK’s now well-established January en primeur tastings week. Richards Walford’s Roy Richards has been buying and selling burgundy to wine merchants since the late 1980s, and he too believes that Burgundy simply doesn’t suffer from the same pressures that cause the sort of inflated Bordeaux prices seen in 2000, 2003 and 2005. According to Richards, ‘Burgundy used to just go up five per cent every year or remain static. Today it does go up and down more, but you don’t get speculation or collusion. Sure growers want the best price but they’re still nor motivated by the concept “what can we get for it”’.

Jim Eustace, of Haynes, Hanson and Clark, who have offered burgundy en primeur since 1996, finds in the case of their 20 growers that ‘fluctuations tend to be reasonable, normally between three to five per cent, although 2005 saw some greater increases than normal, for domaine bottles, often as much as 20-25%, but nothing like the extremes of Bordeaux’. Eustace points out that ‘we often see growers selling the odd barrel to the négociants for cash, at the high market price, and subsequently selling their own bottle stock to their regular importers at more reasonable prices’. Sebastian Thomas of Howard Ripley says that ‘the main point is that Bordeaux is a commodity and burgundy is not. Burgundians have more respect for the client so there are no great hikes and no crashes either, but rather a steady gentle upwards movement’. Jasper Morris of Berry Bros & Rudd agrees that ‘prices may go up in relation to either a very small crop or an exceptionally fine one but never by a ridiculous amount’.

In common with Bordeaux, there are perhaps 30 domaines in Burgundy that can attract big money, but as often as not it’s a specific wine rather than an entire range: Roumier’s Bonnes Mares, for instance, Rousseau’s Chambertin or Mugnier’s Musigny. Even then, it’s not necessarily the grower asking extortionate sums. According to Roy Richards, even the likes of Coche-Dury and DRC are not that expensive initially compared to Bordeaux. But because trading takes place behind closed doors, it’s much easier for the agent to take a fat margin, with the proviso that less glamorous vintages like 2001 and 2004 can remain with the merchant until ready for drinking. It’s not necessarily the distributor or agent who makes the biggest margin. As Becky Wasserman points out, ‘we sold the 2005 Rousseau Chambertin at £552 for six and it’s now trading at £800 a bottle, the 2005 Roumier Bonnes Mares at £80 a bottle, and it’s now £8,500 a dozen’.

Jim Eustace feels that not only is there ‘less posturing’ but also ‘almost zero Parker affect in Burgundy, compared with Bordeaux’. The fact that the American wine writer Robert Parker has been altogether less visible in Burgundy means that its growers are not waiting for Parker as if he were Moses coming down from the mountain. Burgundy specialist Allan Meadows has a certain influence, but it’s negligible – as yet – compared to the Parker influence in Bordeaux. Of greater concern to those involved in selling young Burgundy is the presence of the Bordelais in the shape of François Pinault’s (owner of Château Latour), €13m purchase of Philippe Engel’s six hectare Vosne-Romanée estate. ‘I am not aware of many growers who price speculatively’, says Roy Richards, ‘but this purchase has put cat among the pigeons because there’s a danger that they’ll start playing the market in the bordelais way and people will tempted to follow’. The scary prospect of Burgundy à la bordelaise is not one that Burgundy and its customers will relish.

Tabel 1 - Burgundy opening prices 1999 - 2005

1999 2000 2001 2002 2003 2004 2005 change
99 to 05

Volnay vieilles vignes Potel £130 £130 £130 £144 £150 £150 £168 29%
vosne romanee Grivot £175 £174 £175 £198 £240 £198 £240 37%
clos vougeot Grivot £402 £402 £408 £498 £594 £480 £600 49%
vosne romanee cathiard £182 £188 £189 £237 £276 £264 £330 81%
vosne romanee Malconsorts cathiard £285 £302 £328 £465 £588 £570 £780 174%

Complied by Jasper Morris MW

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