Will Bordeaux pricing follow the exponential growth in Burgundy pricing?

WINE TALK
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I know case production is higher in Bordeaux than in Burgundy but is the pricing differential now too wide? Like the multiple for growth vs value stocks, has it expanded beyond sustainable corridors? Will Burgundy pullback and close the gap or will Bordeaux increase in price and catch up?! *2019 Bordeaux futures seem to indicate further decoupling

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As a Bordeaux lover, I certainly hope that Bordeaux pricing does not catch up with Burgundy pricing!

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For small production and 1st growth tier Bordeaux wines where demand exceeds supply the prices of Bordeaux are already well beyond what I would consider paying for a bottle of grape juice. For everything else from second growths and below I believe they exist in a more rational market where foolish prices will affect demand because there are alternative properties which are competing against them. I gave up on Burgundy several years ago apart from village level wines. I suppose it all depends really on where people find value. If there are enough millionaires out there who must have something regardless of whether it is actually worth the money the prices will inflate. Would anyone like to buy some tulips?

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I don’t think top burgs will ever pull back, but non-prestige domaines might level off.

Remember that Bordeaux spiked ridiculously into '09 and '10. Perhaps it’s due another bump. I don’t see the same increases as burgundy because of the much larger production, though perhaps the most prestigious properties will go crazy.

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Unlikely.

Let’s face it, as lot of the pricing in Burgundy is due to rarity, i.e. tiny production, above and beyond perceived quality.

There’s so much more of fine Bordeaux that the market tension is necessarilyi less.

Alex R.

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In the mid to long run, Bordeaux prices will further increase with the same drivers that worked in the past 30 years: growing middle class, growing numbers of millionaires (in the past 30 year, the world middle class increased by more than 500 million people and in addition, the number of millionaires increased threefold in the past 20 years).

As it is all about supply and demand, there will always be a gap between the best Bordeaux wines and the best Burgundies (Mouton produces 200-400k bottles a year, DRC RC stands at 4k bottles). But prices in both regions will increase (with some bumps here and there).

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A good summary. There may some interesting jockeying within the smaller top estates in Bordeaux, particularly Pomerol, but I expect the current gap to continue.

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As others have mentioned above, I think production volume in Bordeaux will keep prices from skyrocketing too much. With a number of top Burgundy producers, production is so small that it doesn’t take a whole lot of wealthy people to really push up the price. Bordeaux obviously is different and the fact that I can easily obtain most vintages of most Bordeaux wines outside some Pomerol producers proves that.

The other thing keeping prices in check in my view is that substitute products exist. If I want top tier Pinot Noir, there really isn’t any competition to Burgundy. Bordeaux has Napa, other CA (e.g. Monte Bello), and Super Tuscan producers. Obviously these aren’t perfect substitutes and if people want Bordeaux first growths they will buy Bordeaux first growths, but people can buy Sassicaia or Harlan if first growths gets too expensive, not so with Burgundy.

Note that this doesn’t apply to the top Pomerol estates, so totally possible we may see major price increases there in the future.

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As additional Vintages of the Century, Decade, and even Year come trotting down the ratings-pageant red carpet, I doubt so.

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For a while, Bordeaux price increases very much outstripped Burgundy price increases as a lot of newer and in many cases very wealthy wine buyers (for example but not solely in Asia) started to get into wine. Bordeaux was a lot easier to buy than Burgundy at that time because of publications like the Wine Advocate. The WA was less reliable for Burgundy at the time (different with William today) and I think this was reflected in less demand world over for Burgundy for a time.

Over time, as these buyers became more confident in their taste preferences and as Burgundy became easier to buy as the result of publications like Burghound, a lot of the emphasis shifted to Burgundy and Burgundy prices went up and Bordeaux prices seemed to flatten or even go down for some wines like Carruades de Lafite, which seemed to be the Gamestop of its time in that the price got totally out of whack in comparison to the quality of the wines. Burgundy is such a smaller region than Bordeaux that supply really could not keep up with demand, esp. with respect to the relatively few Burgundy producers who became the “names” - DRC, Leroy, Roumier, Rousseau, etc. There are still a lot of really good Burgundies out there that have remained under the radar, but the tariffs have really impacted the prices on these.

Will Bordeaux follow the growth in Burgundy again? Hard to know. Will Bordeaux get in fashion again among the uber rich status seekers around the world? Does the greater quantity in which top Bordeaux wines are made make it less desirable as a status symbol than say Rousseau Chambertin or Screaming Eagle (let us not forget the huge price increases for California Cabernet)?

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I think Bordeaux will not see the same rate of increase - outside of the top tier wines which will be exposed to the monied crowd Howard talks about. At the end of the day it is a supply issue.

I find Bordeaux to have quite a bit of well-priced juice, and hopefully that will continue merrily on its way.

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Not happening. Where are the new consumers coming from? Millennials are living with parents or are struggling to pay off horrendous college debt. More place produce good Cabernet than Pinot…

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Not everybody has huge college debt (or let’s say hardly anybody in the developed world outside the US and UK has horrendous college debt). But the thing is , middle class growths further and further, wealth concentration increases further and further and hence more consumers for luxury goods (most of the new customers in Asia).

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China. However, the main problem there is the perceived prevalence of counterfeits.

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I perceive Bordeaux as less unique. Its a blend and easier to substitute, even at the top. I think spread between Bordeaux and Burgundy will continue to widen unless climate change dramatically changes the profile of top end Burgundy.

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Is wine really going to be a middle class thing in China? Prestige first growths are driven by the elite classes, but are regular consumers going to demand production cabernets from France? Australia thought they had a solid market there until recently, until they didn’t. Seems to me that China has not been a long term importer of most goods, they like to produce their own products. The Chinese had a spurt of buying Chateau in France for awhile, this appears to have cooled off. If wine does get really popular there, I wonder if the homegrown producers (and counterfeit opportunists) won’t simply ramp up their production.

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Aleks mentioned the existence of substitute products as a factor that may keep Bordeaux prices in check. There is another substitution dynamic that is worth mentioning:

As Bordeaux prices rise – and prices have been rising, especially for the fanciest wines – there is an influx of capital to the region, not just to the established appellations, but also to the vast surrounding appellations that are part of greater Bordeaux. Over the past two decades, there has been a huge increase in the quality and availability of less expensive wines from appellations like Castillon, Francs, Lalande-de-Pomerol, Montagne-St.-Emilion, and many others. This means that the Bordeaux lover can still be perfectly happy without having to spend huge amounts of money.

Twenty years, my value purchases in Bordeaux were wines like Poujeaux, Chasse-Spleen, Gloria. Those wines are all still excellent, but the prices have crept up and the wines, though they may still offer excellent value, are not exactly cheap. But, right now, I can buy outstanding Bordeaux for less than $30 per bottle – from Joanin-Becot, Tronquoy-Lalande, Capbern, for instance. Even if I don’t want to spend more than $20, I can find delicious authentic Bordeaux (e.g., Montpezat Cuvee Compostelle, de Francs Les Cerisiers).

There is a similar dynamic in Burgundy – it is worth looking for William Kelley’s recent WA article on under-the-radar producers in Burgundy (Richoux, Dubreuil and three others) – but the region is so much more constrained, the total production is so much lower than Bordeaux, that it requires much more effort to find the emerging producers of high-QPR burgundy. If I want the wines that Kelley cites, I have to scour the internet and make mail-order purchases from several different sources. On the other hand, I can walk into any number of decent wine stores near me and be confident than I can find bottles of red Bordeaux that will be completely satisfying to drink right away.

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Rafite-Rothschild. [wow.gif]

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Then what Chateaus are the laggards in Pomerol or elsewhere in Bordeaux that’s bound to have ‘Ark Innovation’-like pricing growth and be able to keep up or just slightly lag behind Burgundy pricing? Any guesses? Also, how much is future production really restricted or confined? For example, can the young vine juice from some Bordeaux second label materially increase the production of the first label as the young vines mature into old vines? Kind of like 1er Vogue C-M going into Musigny or Les Loup juice going into G-C Lambrays.

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For the Chinese market, any French product is in demand among elite class and middle class posers. Ideally, First Growths should establish official shops in the luxury malls to promote wine drinking and investment. Imagine a Lafite store next to LV, Chanel, etc.