Fair Warning: Burgundy 2022 - The Market

BY NEAL MARTIN | JANUARY 17, 2024

“I cannot help thinking that Burgundy, or specifically the Côte d’Or, is analogous to a passenger in a sports car in which the accelerator has become stuck, and there is no means of slowing down. Everything hurtles past faster and faster. Everything is sped up.” – Burgundy 2021: The Market.

Written almost a year ago to the day, how is that analogy playing out? Well, we are still strapped into that sports car. However, there’s a perturbing rattle in the engine, and it’s lost some of its acceleration. That’s not necessarily a bad thing. Hurtling along at such speed is scary. Still, you cannot get out and fix the car because the accelerator pedal doesn’t work. Of equal concern is the lack of road signs to indicate where you are heading… 

Who knows where you’ll be in another 12 months?

One of a dozen or so merchant tastings for the 2022 Burgundy vintage that have been held across London each January for around the last 30-odd years. This was the first year, post-pandemic, that Burgundy winemakers flew out to pour the wines en masse. Readers can expect additional reviews for mainly bottled wines to be added to the main report in the near future.

It has been well-documented that the heat has come out of the hitherto frenzied Burgundy fine wine market. That was inevitable. Wines reached a critical point where prices have lost upward momentum and financial returns can no longer be guaranteed for those who waded into Burgundy incentivized by financial gains. Softening began around last spring. Merchants tipping me off that even blue chips, accustomed to being snapped up in the blink of an eye, were twiddling their fingers waiting for homes. 

A correction is unfolding, though merchants resist slapping discounts on existing stock, lest they instantaneously write down the value of their assets by 30% to 40%. That gives you some idea of the scale of unreported discounting. Therein lies part of the problem with respect to the forthcoming 2022 vintage. Some winemakers, but especially landowners that sell fruit, short-sightedly base selling prices upon what they see listed by the trade, whereas they ought to be using prices consumers are willing to fork out. Of course, that’s more opaque. Selling prices are dampened by a perfect storm of extraneous economic factors: the knock-on effects of a stuttering Chinese economy, relatively high-interest rates, geopolitical instability, conflict and pessimism about the future.

Recently, I read an exchange on social media between a respected Burgundy winemaker and a European importer. The former was applauding his strong showing in a blind tasting that he attributed to efforts in the vineyard husbandry. No doubt to that winemaker’s chagrin, an importer shot back, advising that self-congratulation was moot since it was impossible to sell that wine at their asking price. It was a microcosm of the standoff between two valid economic viewpoints that can stymie this once fluid market.

Too many wine producers, not only in Burgundy, I might add, but across many regions, aim portfolios towards a wealthy niche that sees wine as an aspirational product, one that is totemic of success, instead of prosaically, a beverage that tastes nice. The result is that too many courts have the same minuscule percentage of society. There’s not enough of them, certainly not enough willing to accept wallet-busting price hikes even for feted cuvées. This is especially true at the lower end of the hierarchy. There’s a huge difference between a purported ‘best’ Bâtard-Montrachet and the ‘best’ Bourgogne Aligoté, even if, in reality, differences in quality are a fraction connoted by their price tag. Whereas 20 years ago, prices were mostly driven by perceived quality, speculation distorts demand so that when potential profit evaporates, demand can blow away in the lightest breeze.

Underlying unease is found in the quantities of 2022 and in particular, the forthcoming 2023s. Demand was turbocharged by scarcity and consumer regret of missing out. As I wrote before, some winemakers actively poured gas on the fire via egregious price hikes. Just as many observed such frenzy with disdain, not least those that capped increases at their own pecuniary loss, hoping to maintain their loyal customer base.

A couple of years ago, I opined that after successive small vintages, especially the depleted 2021s, Burgundy would need three abundant vintages to impact supply. Two thousand twenty-two marks the first of those. It is an exaggeration to describe it as huge in volume, but with generous yields often within 10% to 15% of the maximum (excepting for some frost/hail-affected parcels like Lavaux Saint-Jacques), cellars are fuller than 12 months ago. Heading down the train tracks is the unprecedented volume of 2023. I heard some harvesters were instructed to skip every other vine and leave fruit for the birds just to keep yields below legal maximums. 

Two vintages down, one to go? 

The plenitude of 2023 concurrent with the aforementioned economic factors could potentially burst the Burgundy bubble rather than result in preferable gradual deflation. Consumer behavior has already changed, so even hardcore Burgundy lovers are more cautious, less impulsive, less coerced to pull the trigger, and more willing to pass over a deal.

Montrachet Grand Cru on a rare sunny day in Burgundy.

Speaking to dozens of winemakers, the sentiment amongst them is more mixed than I ever recall. On the one hand, a majority believe that the 2022 vintage is one of the best in recent years. After tasting over 2,000 wines myself, I would not disagree. It’s not hyperbole. Had the Burgundy market not overheated in recent years and without economic headwinds, the quality of 2022s might have justified price increases. However, as the Bordelais discovered to their own cost when they ‘consciously uncoupled’ (to borrow a phrase) release price from quality, raising prices might yield a short-term bonanza, but in the long-term, it backs you into a corner, and you lose the levers of control. Respond to the chorus of protest, reduce prices and risk sending out the wrong message about the vintage? Or maintain or increase prices and wait for the backlash from merchants and consumers alike? It will be interesting to see how many producers avoid either and hold prices the same as 2021, justifying one by lack of quantity and the other by level of quality. 

Of course, it is a very complicated scenario with a multitude of interconnected factors. 

Firstly, the continuing ingress of outside investors, either individuals or corporations. Sometimes, this is well publicized. Consider LVMH’s acquisition of Domaine des Lambrays or Bouygues’ now completed purchase of Henri Rebourseau. More often, it is an undisclosed private investment, a change in ownership by stealth. Due to untenable inheritance taxes, many winemakers can no longer afford to buy land and worry about passing their estate to the next generation. An investor comes in and offers a few million euros in return for a few cases of wine and, more importantly, a piece of the pie. They’re not viewing this in terms of the value of the wine but rather as a long-term real estate purchase in the most expensive and coveted agricultural land in the world, as well as an efficient tax deduction. The winemaker maintains his position as the public face of the Domaine, thereby conveying continuity and circumventing accusations of selling out. They can now expand their holdings, if desired, and improve their modus operandi in the vineyard and winery, essentially putting the domaine on a solid financial footing. 

The success of such transactions depends much upon the relationship between the winemaker and their sleeping investor(s). Much of the time, the investor simply writes the cheque, happy to allow the winemaker to manage the estate as they see fit. Despite handwringing about a “loss of soul”, this nearly always results in technically improved, more consistent wines. On the other hand, despite winemakers frequently insisting that they have carte blanche to run the domaine as they want, there are often expectations and goals to be met, notwithstanding that suddenly you can be relieved of your position. More often than not, investors will expect prices to rise and match those of the perceived ‘elite’ to become part of the unofficial premier league. Successful entrepreneurs didn’t get rich by coming second. They’re not inclined to begin once they enter the wine industry. 

It would be easy to accuse domaines financed partially or entirely by outside investors of having a potentially less consumer-sympathetic stance vis-à-vis family-run domaines. On the other hand, Burgundy has its own fair share of winemakers with no qualms clawing as much profit as possible from whoever buys their wine, just as others sacrifice income to buffet loyal long-term buyers from price rises. This will surely play out with regard to the 2022 vintage. 

Secondly, Burgundy is complicated in structure, a tangled mix of proprietors, négociants, courtiers, fermage and métayage agreements, and so forth. Those whose enterprises are reliant on buying fruit have had to weather enormous price increases as landowners stubbornly refuse to perceive the Côte d’Or as anything other than a bull market. One told me how prices of fruit from Corton-Charlemagne rocketed from €15,000 to €45,000 per barrel (though I wager this is exaggerated by the Grand Cru’s decimation after the 2021 vintage). Still, another grower told me how Meursault Poruzots increased by 70% for the 2021 vintage that he could justify to consumers because of the small quantity. That makes justifying a 40% increase for the voluminous 2022 vintage “tricky” to say the least. “We couldn’t understand it, as there’s a lot of fruit,” he told me, exasperated. “The vendor said that everybody wants it, and they said it was a courtesy that they were offering the fruit! It depends on the person. For me, the crunch point is going to be 2023.”

Here's a direct quote from another producer who genuinely keeps prices sensible. “It’s a kind of unfair market. I buy the must from growers who calculate prices based on the market demand [as I wrote earlier, often by a cursory glance at merchants’ lists]. Then, we have to add our margin. They might have three producers asking for must, and they sell to the one that bids the highest, even if their cost price is low [insofar that they do not incur costs of harvesting, the winery, distribution, etc.].” This is how you end up in a situation where someone like Anne Morey sells her Bâtard-Montrachet for €200 while her peers sell their fruit for €350 per bottle to those banking on affluent, dare I see gullible people, desperate for the next big thing. 

This underlines why many domaines have decreased their négociant activity, why Anne Morey did not produce any whites under her Morey Blanc label in 2022 and why one of Artémis Domaines’ first decisions was to terminate buying contracted fruit for Bouchard Père & Fils, another factor that potentially increases supply since all that fruit has to find new homes. Some producers almost completely rely on contracted fruit, Benjamin Leroux and Camille Giroud, two well-respected examples, plus a large shoal of micro-négociants that swam into the Côte d’Or in the last two or three years. Some, like Maison Harbour in Savigny-lès-Beaune and those two I have just mentioned, are clearly driven by passion and have been in the game long enough to build stable, mutually beneficial long-term contracts. For others, it seems more like an ego trip with inflated prices matching their hubris, nurturing their image and mirage of scarcity on social media. It’s up to you what you buy, whether the label is more important than the wine. Thankfully, more consumers are wising up to substandard wines from arrivistes with unearned reputations that use scarcity to justify premiums, parsing them from genuinely exciting new prospects that represent tomorrow’s stars. 

The 2022s are starting to come onto the market in the UK and will appear slightly later in the United States. Fortunately, many growers have given notice that they intend to keep prices the same as last year or add a small percentage to cover increased costs in labor, bottles, fuel, capsules, etc. Will that be enough to tempt consumers to open their wallets? Catherine Jaën MW, Burgundy buyer at Lay & Wheeler, wrote: “I've come back [after the Festive break] with a renewed sense of optimism. The few cuvées/domaines we released before Christmas have met with pleasing demand. I don't believe the 2022 campaign will see the ferocious demand of campaigns like 2019 and 2020, where lockdown combined with the release of a great vintage led to a heady state of impulse buying [impulses that were often good ones, it turns out]. I see it playing out in a calmer fashion.” Another merchant told me: “Judging by a few initial releases that we did before Christmas, there seems to be an appetite to buy those wines that are correctly priced. However, I think significant price increases will be met with something of a cold shoulder, though, thankfully, so far, I have not seen too many of those.”

Growers at least seem to be listening, sympathetic to the plight of disenfranchised Burgundy lovers. At the same time, as consumers, we must appreciate how galling it must be to sell your wine for reasonable prices only to find middlemen and full-time flippers profiteering with sometimes very little effort or risk. Growers do not have the protection that the Place affords Bordeaux châteaux, a consequence of which wines will accumulate in their own cellars should importers decline allocations instead of négociants’ warehouses, with all the financial implications that entails. 

It's going to be a balancing act when it comes to the 2022 campaign. It’s quite easy to draw parallels with Bordeaux, consumer fatigue at yet another Burgundy price increase that perversely can make Bordeaux comparatively cheap. Surely, we will see some domaines holding stock back in 2022 and 2023, and in the long term, that would be beneficial in avoiding wild pendulum swings in supply that lead to such uncertainty and volatility. Assuming that plays out, then, of course, they need somewhere to store those bottles that incur their own cost. Once again, this is a decision that could depend on the involvement and aim of outside investors. The danger is that back vintages can build up and because of the impasse outlined earlier, stocks might begin to accumulate as they have done in Bordeaux, undermining en primeur as back vintages become cheaper than the latest. Yet quantities in Burgundy are far smaller, and therefore, they can be managed better. Perhaps down the line, we might see more multi-vintage cases? 

There is a great deal of doom-mongering apropos Burgundy, more accurately, the Côte d’Or. Even that is misleading, for there is an ocean of wine beyond its most famous names that remains reasonably priced, even if the quality does drop off dramatically and perhaps faster than in Bordeaux, Pinot Noir being the fickle grape that it is. There is the perennial debate about whether consumers respond by trading down to less-feted producers and/or appellations or whether they eschew the region altogether and move on elsewhere. I tend to find it is the latter because they take it as a personal rebuke and hold a grudge against the region. It’s less demeaning to ask for the best wines of an alternative wine region than the third or fourth best of the one you love. Like moving on from an ex-lover; it’s easier not to see them at all than to see them once in a while, especially if they begin dating someone wealthier. In recent years, Piedmont, just a few hours’ drive away, has become a replacement for Burgundy because, despite differences in grape variety, there is propinquity not only in terms of style but also the allure of site-specific cuvées and artisanal winemaking. There are also other countries offering ever-improving Pinot Noirs: South Africa, Oregon, Chile and Germany, even the UK.

The next few months are going to give a fair warning of where the Burgundy market is heading. There are causes for optimism. Burgundy winemakers tend to be less avaricious than their Bordeaux counterparts, at least those at the top of the hierarchy, even though that has changed in the last decade, especially among those who’ve only known halcyon days when wines flew off shelves. There might be a rude awakening for some, though that’s not necessarily a bad thing. Also, despite wines being hit and miss due to Pinot Noir’s unforgiving nature, the general standard is certainly better than a decade ago. Consumers have far more choice. Another factor to remember is that complainants are always more vocal than those who acquiesce and accept any price changes. 

The 2022 Burgundy vintage offers a bounty for those with a passion for its wines. 

Let’s hope that prices don’t leave a bad taste in the mouth. 

Post-script: This article was written prior to the release of prices from London merchants in early January. Thankfully, there does appear to be some restraint from producers with a majority appearing to maintain similar prices to last year and one or two that have decreased. That does not imply Burgundy is suddenly cheap or those that can no longer afford its wines will flood back. But it does show good sense and an understanding of the economic climate. Of course, restraint by winemakers must be replicated throughout the distribution chain.

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