“In 2017, wine produced in the Bordeaux region of France slipped below 50 percent of Sotheby’s total wine auction sales for the first time in the auction house’s history. Prestige producers from the region, including Château Mouton Rothschild and Château Latour, used to dominate the market. Last year, though, Bordeaux represented just 42 percent of the auction house’s global sales, according to a report the company released on Wednesday.”
Could be because of the price escalations of the last decade drove off previous enthusiasts who never looked back. Now please, someone tell me of all the great values to be had from Bordeaux.
Hypothetical - assume there are 500 heavy players worldwide right now who are actively buying top wines in the secondary market.
Let us say 50 of them make $10 million+ per year,
100 make $5 million - 10 million,
150 make $2 million - 5 million,
200 make $1 million - 2 million.
In any given top recent vintage, I think it is safe to say there is ready access- albeit it at a price- to hundreds, and perhaps more than 1,000, cases of any of the first growths at auction or from a retailer who did not have an existing customer reserve the wine in advance (or in the wholesale system and ready for delivery)- save for Latour now that they are doing their new thing of course.
Romanee Conti? Maybe 20 three packs? Yes, supplies are that tight now- and wines like this are getting very efficiently funneled directly to consumers who are unlikely to flip. I really think that is about the greatest amount of RC in recent vintages that is not spoken for by an end user who does not plan to resell in the open market.
In this scenario, all 500 of our buyers can get their hands on at least a case of each first growth in the secondary market or at primary retail without getting into too much of a battle over it.
Romanee Conti- assuming the 3 packs remain intact, then at most 40% of your top tier people making $10 million or more a year will get 3 bottles each. In reality, the wine is likely to end up in far fewer hands and in greater quantities.
Again- a very simple example, but it plays out with most all of the really top Burgundies. And note that the auction fever has spread to many houses that most of us have never considered all that great, or certainly that are currently selling well out of proportion to relative value.
Agreed. I am just suggesting that shorter supply drives the stronger competition that leads to the higher hammer prices. I do not spend any time in wine investor circles, so I cannot speak to that. But in drinking circles, which includes some of this buying activity, I think Bordeaux still has a much larger buyer base.
To directly support your point- let us say that Bordeaux has some kind of crazy super-tiny vintage of high quality where the first growth production levels are on a par with Romanee-Conti. In that scenario, I think the prices would actually exceed Romanee-Conti as you would have the same supply but a much broader base of people chasing the wines.
I note with interest that the article is speaking entirely in terms of sales- there is no mention of bottle count. Nor is there any discussion of “churning”- the fact a lot of top Burgundy bottles get sold with scary frequency. The Doris Duke sale was a good example. 20 years ago, I would have expected those old bottles of DRC to go to end users who would drink them (and soon if they had any sense). Instead, many of the bottles have come up for sale again repeatedly at auction.
So when considering total sales as the metric, yes Burgundy may be leading in sales at present- but I think it has to do with supply and churn, and not with the idea that- all else being equal (which it never will be in practical terms)- buyers have a “higher threshold for pain” with Burgundy over Bordeaux.
This has always been a back and forth game…Bordeaux raises its prices and then Burgundy wonders why it doesn’t get that kind of money so they raise prices. And then people realize that top burgs are $500 so why can’t top champagne? And if Salon is heading to $500 why can’t Insignia? and on and on…
The rich will always pay these prices because they just don’t care. Even if you have only $100 million as long as you have it invested well and are still earning money, a million a year on wine is no big deal. So now it’s 2 million for the same wines…yawn. Their main concern is getting what they want in a timely manner. Now what I think is really instructive is what a Bordeaux futures order for a great vintage is today versus 1982 (when I got in the biz). I think all the first growths were $350/cs, Petrus $500. We could even get Le Pin and Lafleur although I don’t remember the price. What did the 2015s open at? That is where we have arrived. A 10 case lot of the top wines was a two month’s salary for me back then, today it’s a year’s? But it is no different than the stock market or some real estate markets. It’s just wages that are stagnant.
Fred, you are old news… 100 m US is the new poor and with current yields hardly pays for your 2 million $ wine bill. You need to work harder!.. too much time on WB
I think that historically Bordeaux has been the easiest wine to buy. Just buy the first growths and a handful of second growths. Don’t need to be a wine expert, just need to have money.
Now, Burgundy is becoming easier to buy (assuming money is no object). Allen Meadows has told people who are the great producers. Does not matter if he is correct or not (not criticizing Allen at all, but I think many rich buyers are seeking the “best” whether the wines are or not) and now there are a number of safe brands for rich buyers - DRC, Leroy, Coche, Rousseau, Roumier, etc. And, likely for rich buyers, the fact that these wines are more scarce makes them more attractive. A friend went to a wine auction not too long ago and told me he was surprised at how different prices were for different producers - way out of whack with differences in quality. Wines from really hot producers sold for huge prices. Wines from excellent producers without quite the buzz (e.g., Jadot) were bargains.
You touched on an issue I considered–$$$ of bottles sold vs. number of bottles sold. If I had to guess, I would guess Bordeaux still leads in terms of numbers of bottles sold at auction.
Right, the law of supply and demand has 2 sides. Supply of Burgundy has always been low compared to Bordeaux. That’s in part why Bordeaux has led auction sales for so long: volume.
Burgundy hasn’t suddenly become less available. The increased demand is what has caused prices to spike and propelled Burgundy to the top spot. It’s what the cool kids want to drink. Bordeaux is your father’s Oldsmobile. Fine with me, as my heart is in Bordeaux.
Also, note that this is not about the entire market - only Sotheby’s auction sales. Which were $63.8 million in 2017. I wouldn’t be surprised if HDH, Zachy’s, Acker etc. were bigger. So this isn’t a story about the entire market, just a narrow view into the auction/high end.
For the entire market, there is far more Bordeaux than Burgundy. Rough numbers: global sales for Bordeaux is something like $6 billion, on 900 million bottles produced. Burgundy somewhere south of $1 billion on roughly 200 million bottles.
The auction business is all about fighting over the fraction of a percent that ye high rollers seek.
I’m surprised it hasn’t happened before now. I started buying burgundy when the prices for even the village burgs from the great producers started skyrocketing. At the same time I remember hearing the refrain that Bordeaux pushed out a lot of buyers with what felt like excessive price gouging.
It makes me wonder what percentage of the auction market is speculation vs consumption bidding. I would personally be more likely to purchase an expensive and rare bottle of Burgundy rather than Bordeaux partly because I have this vision in my mind of thousands of Bordeaux bottles in the cellars of the first-growth houses just waiting to come to market.
