The dynamic does happen. See BDX for a good case study. The run-up in prices in the early 2000s was largely a function of red-hot demand (a lot of real demand, mostly coming from the Chinese) and then speculative demand came on the back of it. Once the real demand fell off, you see both primary and secondary markets tank. When the 2010’s were released, the market was already cooling and the chateaus were mostly caught offsides. Even today, Bordeaux hasn’t recovered to the heights of 2011.
Will this happen in Burgundy? I don’t think as drastic, mostly because of the very low production. But, prices do move, especially on the secondary market and overbuying by speculators will, in my view, get corrected
Look at 1990 La Tache and Rousseau secondary market transactions (I chose these two for their long history and relatively good liquidity - a lot of what you see here is reflected broadly in the burg market). The trend has clearly been up with two huge moves: one around the 2005 release (lots of hype, Rudy, etc) and another sharp move in 2017 (I think a bit more interesting discussion could be had about this move) which continues into 2022.
While the period shows a strong positive trend, it doesn’t mean the market only goes up. For example, right before the pandemic hit, there was a question about whether Burg was stalling. There was a bit of softness felt throughout and some interesting shifts in intramarket preferences.
What we do see is Burgundy’s downs are quite muted relative to their ups and I believe that is a function of not having many leveraged buyers (aka people who must sell). This is the option phenomena I was referring to: you buy and, if it goes up a bunch, you sell but otherwise you will hold for a much later sell date (because through the natural shrinkage there is slow, upward pressure on price) or you drink.
Is premox still an issue though with new releases of white burgundy? In my own experience I have only found premox in mid to late 90s vintages, but have heard from others they found premox in some 2000s vintages from particular producers such as Lafone or Bonneau du Martray
There some companies that started to specialize in wine as investment with the wines kept in professional storage (also for the provenances and traceability) with possibility to both consume or sell on the investment.
Can’t remember which podcast I heard ab interview with one company offering that service but smart positioning/pitch to attract both kind of wine interested and newbies in it for the investment.
Remembering thinking that those kind of companies and guys can “help” driving the demand and prices… enough people getting onboard and things can move fast.
Directing the flow to certain wine will, on the margin, raise prices and, if that money is new money, that money isn’t being drawn from somewhere else. So yes, prices will go up. The question is whether the prices going up reflect a new level of sustained demand or whether it is speculation that needs a backend return. If it’s the former there is nothing to do: the word is out and people who enjoyed it when there was less demand will find themselves priced out. If it’s the latter then there is something to do: wait. When the return doesn’t materialize either the wines will get dumped on the market or drank and new flows will not continue. In the short term it will suck but it will go back (which is why I showed the bdx example above)
To add: this is why moving between retail and auction is important as a buyer. Retail is much slower to react to the market, making it useful to tilt retail when prices are moving up quickly (retail is slow to move their list prices) and tilt auction when prices are coming down (again, retail is slow to move the now-inflated prices down). The broker is the most interesting person to buy from in both of these dynamics.
The key is the OP probably has zero idea what premox is, which of the wines he is looking at use cork closures and which use DIAM (and what kind of DIAM), how good is the producer’s track record on premox, even absent premox whether the wine is one that will taste best 5 years after harvest (not a great investment vehicle) and which 20 years after harvest, etc.
Absolutely. This makes both the ability to speculate and the need to sell important.
Interesting to compare to champagne where the large houses make a lot more (order of magnitude more) champagne than the major Bdx chateaus and they don’t experience the dynamics because of how they release wines.
there’s already a noticeable drop in the secondary market for Leroy/DRC and the like over the last few months if you check winemarketjournal. My friends in the high end wine trade have also noticed a pull back on wines they were easily selling a year ago and they have to let go now at lower pricing.
I have noticed this also. Can it finally be that the air is coming out of the balloon? I think this is a particularly poor time to be buying wine with the hope of big investment gains in practically any category. Maybe the reliable profits still exist in getting some producers wines directly from the winery and then turning them around in the market quickly (DRC private clients?). But then again those buyers are probably the ones most likely to hang on to the bottles and not sell.
In response to the OP, I think you will be a lot happier just buying wines you want to drink. The whole “wine investment to get cool assets that you can always consume” thing has pretty much run it’s course. Yes some will appreciate with time, slowly. But the go-go days of the early 00’s and teens cannot go on forever. You could make a little money, or there are doubtless hustlers out there that could use this as a Ponzi scheme. Lots of people thought Bankman-Fried FTX investments were a good way to get rich too…
The bourbon market still seems very hot from my perspective. The prices realized at the most recent unicorn spirits auction were crazy. VW Reserve 12 $800-900, Old Rip 10 $700-800. Even the early Elijah Craig Barrel Proof bottles $500. Insane. Perhaps some other top tier and unicorn bottles (Willet barrels, etc.) have softened?
That temperature variation is very bad for storing wine. You need to keep the wine at a stable temperature, preferably 50-55 degrees Fahrenheit day in, day out, year in, year out. Stable means very little temperature variation. Perfect conditions would be no change in temperature, no bottle movement, no light. You want to keep it as close to perfect as you can reasonably achieve. The best bottles I have ever had were kept this way for many years.
