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Where’s The Outrage Over Burgundy Prices?

2011 June 15
by Mike

The Bordeaux en primeur campaign has finally begun in earnest. Bordeaux watchers generally assumed that the châteaux would be unmoved by pleas for moderation, and so far, that’s proving to be the case. The 2010 Montrose came out today at $192 per bottle, 22 percent higher than the 2009 and twice the opening price of the 2005—and then Montrose released a second tranche a few hours later at $217 a bottle! Lynch-Bages pegged its 2010 at $146, up 39 percent on 2009 and 102 percent on 2005. The 2010 Smith Haut Lafitte rouge hit the market yesterday at $112, a 48 percent jump on 2009 and 95 percent above the 2005. I’m especially struck by the increases over 2005. Since 2005, we’ve seen the worst global economic turmoil since the Great Depression, and U.S. demand for Bordeaux has contracted sharply—and in the face of these developments, the likes of Montrose, Lynch-Bages, and Smith Haut Lafitte have doubled their release prices? Interesting times.

It is fair to say that quite a few oenophiles are hoping, even praying that this year’s futures campaign will turn out to be Bordeaux’s Waterloo, an epic bust that scars the region for generations. To say that there is hostility towards Bordeaux at the moment would be putting it gently. Many grape nuts no longer regard Bordeaux as the gold standard of wine; instead, they see it as the Goldman Sachs of wine, a great vampire squid relentlessly jamming its blood funnel into anything that smells like money (thank you, Matt Taibbi). Incensed by the greed, furious at being squeezed out of favorite wines, these ill-wishers would like nothing more than to see Bordeaux spend, oh, a decade or three choking on unsold inventory.

Although I wouldn’t be purchasing Bordeaux at any price—I’m on an extended break from wine buying, and if I weren’t sidelined, I would be spending my dosh on something other than clarets—I understand the frustration. However, one thing that I find intriguing is that amid all this rage over Bordeaux, there’s hardly a murmur about Burgundy prices. If you haven’t noticed, a lot of Burgundies have become pretty expensive, too. Prices for Mugnier, Dujac, Roumier, Roulot, Raveneau, and other superb producers have soared over the last decade or so (and let’s not even mention DRC and Leroy). Back in 2000, I was able to pick up the 1998 Mugnier Musigny for $80 a bottle in France; if I’m not mistaken, the 2005 version was trading for $1000 soon after release—and no, I wasn’t a buyer. That’s just one, particularly arresting example; I’ve been priced out of plenty of Burgundies in recent years, and I’m surely not alone. So why is it that only Bordeaux seems to kick up so much outrage?

I’ll take a stab at answering my own question. First, I think it is generally assumed that Burgundy pricing truly reflects supply and demand, whereas there is a lot of skepticism as to whether that’s the case with Bordeaux. To the extent that there is any gouging with Burgundy, I think people recognize that the domaines aren’t the culprits; instead, it is the middlemen—importers, distributors, retailers. If anything, the Burgundians tend to undercharge relative to demand. No one could ever accuse the Bordelais of that. I suspect, too, that this “indignation gap” is partly rooted in the cultural distinctions between Burgundy and Bordeaux. As I noted in a Slate piece last year, Burgundy is still a farming community, dominated by small, family-run estates. Bordeaux, by contrast, is an increasingly corporatized region, and it is a lot easier to feel animosity towards rich guys in suits than plucky artisans dressed in jeans and work boots.

But even if the Burgundians aren’t to blame for the fact that their wines have become so costly, that’s little consolation to fans of Mugnier, Roulot, etc. Yet, Burgundy buffs seem much more relaxed about price inflation than Bordeaux enthusiasts (and, no, it isn’t because all Burgundy drinkers are rich). Are we just a mellower tribe? What accounts for the difference in attitude? I’d love to get your take on this.

38 Responses leave one →
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  5. July 6, 2011

    I work in the Bordeaux trade and, frankly, I would say that your own take is largely accurate as to why the difference in sentiment between pricing at Bordeaux chateaux and Burgundy domaines.

    It may also be in part because Burgundy overall receives an awful lot more sympathy precisely because of the reasons cited above while Bordeaux pricing is literally stratospheric. In term of market pricing news Burgundy is being eclipsed by Bordeaux at present, it may be, therefore, that to an extent appreciation in Burgundy prices is simply being paid less attention at the moment.

    Johnny Godhuis, of his eponymous London wine merchants with an extensive high-end Burgundy offer, was quoted in a drinks business (a trade publication) interview on the 2009s as saying ‘there is a genuine feeling that 2009 may be the last affordable vintage.

  6. mauss permalink
    June 21, 2011

    It is Vinexpo actually in Bordeaux. In fact, we found many top names inBordeaux which are fully aware about the crazy situation of the prices due to a high speculation linked to a possible shortage of supply for some big names.
    But everyone is also sure that this will probably cool down maybe with a bubble. But just imagine : if the prices of the top 50 names (the ones everyone is speaking about) go down,even at 60 %, they will still make substantial profits since the cost of a bottle has some difficulties to reach € 25.
    And if Lafite is going down from € 1500 to € 200, guess what : everyone one will jump on that. Now, you understand why they feel cool, relax, and happy in Bordeaux top names.
    In Burgundy, it is sensibly different since a substantial part of the regular buyers are real amateurs who drink the wines bought. Finally, very few quantities may be bought by investment or speculative funds.

  7. June 20, 2011

    Mike, thanks very much for taking the time if you do swing by my site.

    I agree, it is not very edifying watching the Bordelais swooning so much with their lastest squeeze before their separation with the previous one is even complete. It is a bit of a Rubicon. The question, and one that I hope to continue looking at, is whether the Bordelais will ever need to cross back over it.

  8. Bill Klapp permalink
    June 20, 2011

    Mike, when you think about it, if one has reservations about flippers of Cali Cabs, then the producer who jacked up prices to try and stop flipping is heinous. I am sure that there is some sort of great story about how the excess profits went to charity or something (impossibe to confirm, by the way), but the bottom line is that flipping is none of the producer’s business. I am not defending flipping (since I stopped doing it!), or saying that it is necessarily good for anybody other than the successful flipper (although it could well keep demand for places on those mailing lists sky-high, and give the end-buyers an opportunity to try wines that they could not absent flipping). I am suggesting only that, if making and selling wine is your business, you should do that, charge what the market will bear, and leave everything else to the philistines and fascists in the marketplace!

    I must say, however, that the high-water mark of the flipping mentality was Fred Schrader essentially flipping some of his Cabs pre-release, along with older vintages, by taking his personal stash to auction. Some of that was clearly wine that would have been sold to consumers under ordinary circumstances, and while I am not about to take the position that, in a democracy, Schrader’s mailing list denizens and wannabes have some sort of entitlement to the wine that Schrader auctioned (they are not, after all, likely to be struggling welfare mothers, eh?), surely he did himself no favors for the longer term (if Schrader and Thomas Rivers Brown’s style of winemaking HAVE a longer term). I believe that there is a “charity” story there, too, and if not linked directly to the auction proceeds, the notion is floated that Fred Schrader is a generous man. He may well be. But in that case, why does he not sell ALL of his wine at auction and maximize his possibilities for doing good? And does it not smack of a more transparent version of what everyone suspects the Bordelais of?

  9. June 20, 2011

    Jackson,

    Thanks for the kind words, and I will take a look at your site as soon as I get the chance. I like the way you’ve described the situation with Bordeaux–it is a very messy and very public divorce. That it is, and while it may just be wishful thinking on my part, I do believe the Bordelais will come to regret having alienated so many longtime and very loyal clients. Burgundy aficionados are every bit as passionate and loyal, but as I said in my post, I think they recognize that the producers are not to blame for the price inflation, and that’s a critical distinction.

  10. June 20, 2011

    Corey, you may be right. As flipping goes, I know that at least one of the so-called Napa cult cabernet producers tried to monitor secondary market sales to see if people on its mailing list were selling their allocations. This particular producer just kept raising prices in order to narrow the gap between primary and secondary market prices and to make flipping a less lucrative endeavor.

    Re the dollar and demand–a stronger dollar would help, but demand is clearly so strong now that I just don’t see prices returning to where they were five or ten years ago. And once Asia catches the Burgundy bug, which will inevitably happen, we’re truly screwed!

  11. June 19, 2011

    Website by the way is http://www.wineyields, or just click on my profile. I’ve just kicked off the discussion over there, and would be grateful if anyone would care to have a look and email me if they have any thoughts.

    Many thanks

  12. June 19, 2011

    Fascinating discussion and one that I hope you don’t mind Mike if I say that my detailed thoughts on it are over on a website I just launched last night to discuss exactly these kinds of issues. Web address is below.

    I have to say after giving this a huge amount of thought over the last 2 years, I come out on Cory’s side here about growing demand.

    Simple data point question, which I’d love to know the answer to, and I’m actually trying to find out. What were the total number of enrolements for the Master of Wine course in 1980, 1995, and 2010? And the numbers in each of those years originating from Asia?

    I think we all probably have an instinctive feel for the answer. And it very much points in the direction of travel. No matter how much we can slice and dice the details – and believe me, I love details, it’s in my job description! – we all know that over the long run, this ship is heading out to sea. Have a look at the Haut Brion videos on youtube.com of their events in Moscow and Shanghai (among others last year) for a glimpse of the same view but from just one other perspective.

    The days of the most famous and sought after wines being an object of desire amongst a tiny elite of in the know connoisseurs is over, just as Paris and Rome themselves are no longer the decidedly foreign cities they once were for Hemmingway and Keats.

    Mike, to the specific question of why this is inducing such expressions of (frankly) anguish from Bordeaux lovers and not Burgundy lovers, I can only sense the answer lies in the different supply and therefore market size that the top GC/FGs from each region has enjoyed. I think there’s a very messy and very public divorce that’s being played out right now between top Bdx producers and their traditional customers. I’m not sure an equivalent marriage involving so many people (sorry, I’ve stretched this analogy to far now haven’t I) was at stake in Burgundy.

    Congrats finally on coming up with a very interesting take on this. There’s a lot of coverage out there on what’s happening, but I haven’t seen anyone else asking this question and it is a revealing one.

  13. Corey permalink
    June 18, 2011

    I just think that the idea that the wines would be cheaper without the middlemen is a fallacy. Ultimately the price is determined solely by supply and demand, not cost of production/importation or distribution tiers or whatever. Cutting out the middlemen is not going to change the number of people who want to buy Mugnier Musigny.

    All the presence of middlemen does is redistribute profits along the supply chain. If sales were only in person ex-domaine, you’d have lots of lucky French and Europeans going there and buying the wines to flip on the auction market, the same way people do with Sine Qua Non these days (I think Next of Kyn was trading for 3x the mailing list price on WineBid about 24 hours after its release). Ultimately the market clearing price would be the same. Now, the locals who don’t want to flip and just want to drink the wines would get a very cheap price, but that’s meaningless from an economics perspective because they’d be foregoing the opportunity cost of selling the wine for its real value.

    What direct sales would do is return more of the profits to the producers, if they chose to handle this directly as opposed to utilizing a third-party serivce provider (as Bill observed). People may prefer that outcome because they like the producers better than the merchants, but ultimately it makes little economic difference.

    Unfortunately the only ways to bring the prices down for U.S. consumers are a stronger dollar or decreased demand (supply is fixed as obviously the sizes of the vineyards are not going to change). Hard to see demand going down (unless all the burg newbies who bought 05 based on vintage hype rebel once they realize you have to wait 20 years to drink them). So let’s hope the dollar comes back strong.

  14. June 18, 2011

    Corey, some great points. Indeed, there is an argument to be made that Burgundy was undervalued in the past, for precisely the reasons you listed. When you consider the high quality and the tight supply, it makes sense. In my post, I mentioned that I picked up the 98 Mugnier Musigny for $80. That’s a perfect illustration of your point, I think. When that wine came out, the Wine Advocate still wielded some influence over Burgundy sales and prices, and because Pierre Rovani didn’t like the 98 vintage and didn’t seem to be much of a fan of Mugnier, I was able to purchase the Mugnier Musigny for a sweet price. Sure, I bought it in Burgundy, cutting out at least one and probably two middlemen, and the dollar was strong back then (those were the days!), but I think the point stands. Relative to quality and supply, it was a wine that was probably undervalued.

    Bill, direct sales might lower prices a bit, but I don’t think I’d be getting current vintages of the Mugnier Musigny for $80 a bottle. I think you are absolutely right–the wines would probably end up in the same hands (very affluent, well-connected buyers). That said, I’d rather see the producers maximizing their profits rather than the importers, distributors, and retailers.

  15. Bill Klapp permalink
    June 18, 2011

    Corey, your point about mailing lists and flipping is well-taken. It might not shake out that way. It may be that traveling to Burgundy with cash in hand, as some already do, might be how the wine gets distributed. That, of course, favors the French first, Europeans second and the wealthy around the globe who could afford an annual trek or two to Burgundy (an outcome that Keith disliked). And there is no real difference between the well-to-do going to Burgundy and snapping up the lion’s share of the allocations here, either through superior relationships with retailers or the ability to pay any price in the secondary market. And imagine the prospect of the most provincial of Burgundy’s producers maintaining mailing lists. That would no doubt be handled by a third-party service provider in many cases, and that service provider would be…a middleman! All of that said, it seems certain that direct sales would result in the lowest possible price to the consumer, and the greatest income potential for the producers, the most deserving people in the sales and distribution system…

  16. Corey permalink
    June 17, 2011

    I don’t see how direct-to-consumer is a solution to the price/scarcity issue in the long run. That would just turn Burgundy into California, with years-long waiting lists, limited allocations, and lots of flipping. The simple problem is that demand far exceeds supply. Cutting out the middlemen doesn’t change that economic truth, it just shifts the potential to profit from it to either the domaines or the consumers lucky/smart enough to get on the mailing list before it fills up.

    I’d venture to guess that the price hikes in the last 5 years were due to increased demand, as a result of demand for burgundy having been artificially low before that due to a number of factors (Burgundy is complicated, quality can be variable unless you know the right producers (and was significantly lower in the 70s and 80s), there’s significant vintage variation, the Wine Advocate never understood/reviewed the region very well at a time when it was the only voice in town, fewer marketing efforts, etc). The rise of the internet has reduced a lot of these barriers, so demand took off and prices went up. I don’t see that turning around.

  17. June 17, 2011

    Ryan Canlas, Thanks for the comment. Yes, the move by Barrieres Freres was very interesting, and encouraging. There was obviously a strong element of self-interest involved: they didn’t want to purchase a wine that they didn’t think they could turn around and sell. But nonetheless, this was a first crack in the wall, and it will be fascinating to see if other negociants follow suit. Tim Atkin posted a good item about this yesterday on his blog.

    Ryan Kilkenney, I agree with you that these producers are free to charge as they wish. But I do think the difference in attitude between the Burgundians and the Bordelais is quite striking, and it is just another reason why I prefer Burgundy to Bordeaux.

  18. June 17, 2011

    Keith, it would be interesting to see what effect cutting out the middlemen would have on prices. But while the middlemen have clearly had a negative impact on prices, they serve a useful function for producers. These domaines are so small, and I just don’t think they have the time or resources to take full control of sales, distribution, etc. So it’s a problem without an easy or obvious solution. But I think the critical distinction between Burgundy and Bordeaux is that while the Burgundians are generally appalled at this notion of wine as a luxury product, the Bordelais welcome the idea and encourage it, which I find kind of pathetic.

  19. June 17, 2011

    Thanks, Mike. I probably should have been clearer in my reference to direct-to-consumer sales. Of course many Burgundy domaines sell their wines at (jawdroppingly accessible) prices at the cellar door (usually to longtime customers), but this isn’t really much of a solution to the affordability problem since it’s an option only available to people who can afford to travel to Burgundy every year to pick them up. Moreover, with respect to all the producers whose secondary market prices have run out of control, these private-client lists are closed. What Maison Ilan is doing is letting American customers buy direct from the domaine for shipping to the U.S. just like a domestic mailing list, which is a pretty big deal.

    You are of course right that flipping is the inevitable result of wines being sold under their market value, just like ticket scalping. But I wouldn’t ignore the possibility that market value itself is distorted by the market manipulation of the middlemen, so cutting them out of the equation could have some beneficial effects.

  20. June 16, 2011

    Keith,

    Many thanks for the comment. I’m a big fan of your writing in general, but that last paragraph is really a gem. Needless to say, I completely agree with you–wine is about so much more than just what’s in the glass, and because of what it represents, it shouldn’t be regarded as just another luxury product.

    Many Burgundy producers are not thrilled about the prices that their wines command in the United States. They are flattered that people think so highly of their work, but they do not want their wines treated as trophies, or speculative vehicles. Is direct-to-consumer the solution? I’m not sure. As both Francois and Thomas indicated earlier in this discussion, many domaines already do direct-to-consumer sales. Some years ago, Dominique Lafon told me that 20 percent of his annual output was sold at the cellar door, to longtime clients. I suppose he and other top producers could move to 100 percent direct-to-consumer, but then you’d probably have a lot of flipping, etc. I just don’t see how they could completely regulate who gets their wines and how those wines are used. At any rate, it will be interesting to see if they try to take steps to address this issue.

    Mike

  21. Ryan Canlas permalink
    June 16, 2011

    It seems almost auspicious that this topic should come up today, given the news, which broke a few hours ago, that negociant Barrieres Freres has refused to sell the 2010 Rauzan-Segla because of the chateau’s +40% inflation of its per bottle prices. According to Decanter, the negociant deems the price hike “out of the line,” with “no justification whatsoever,” calling the prices (84.00 Euros/bottle) “ludicrous.” I’m not aware of Barrieres Freres’ business practices or whose other wines they carry, nor am I aware of whether or not their decision is completely unprecedented, but in light of the many recent discussions of the apparent glut of Bordeaux “vintages of the century” and the enormous prices they command on the mainstream market and at auction––not to mention the rise of China as the new all-powerful consumer of First Growths––Barrieres Freres’ decision at the very least is a stand against the current pricing of Bordeaux that highlights two things: 1) that the declaration of a vintage of the century (whether simply a marketing tool or not) is not enough to commandeer prices to acceptable levels, and 2) that it’s possible for a negociant, as the middleman, to function (however briefly) as a consumer advocate. The latter is an admittedly idealistic and rather romantic sentiment, but if the negociant, who could potentially stand to make a great profit from Rauzan-Segla’s inflated prices, refuses their allocation, then they’ve managed (again, however briefly) to throw a wrench into the system.

    Admittedly, perhaps Barrieres Freres have refused to sell Rauzan-Segla because, rather shrewdly, they’re assuming that at these prices the wines will simply not sell that well and that they’d be better off throwing their energies and capital at other, more profitable chateau. I’m not sure. Nonetheless, it still manages to confer upon the negociants a certain amount of power to preempt the consumer market by functioning, again, as a momentary advocate: at least they, more than the average consumer, have a direct line to the ears and pocketbooks of the chateaus. Vintage of the century or not, the exorbitant prices are just not enough to convince people that shelling out ~$140 – $150 US for a wine that sold for almost half that the previous vintage is a good idea––and, right now, it seems that the consumer and the negociant are in marginal agreement.

  22. Ryan Kilkenney permalink
    June 16, 2011

    My attitude is somewhere between Keith’s and Steve’s. I expect Burgundy and Bordeaux producers to do what makes financial sense to them. It’s a business like any other. On the other hand, the prices sting a bit because if you care about wine these producers matter. They are historically significant, and if their wines were merely expensive I’d own a few, even though my tastes run more towards the new world.

  23. steve permalink
    June 16, 2011

    It ain’t insulin! It a consumer good, you wont die without it. It’s wine people! Move on drink something else, their are great wines made all over the world by great winemakers from great vineyards, What are you one trick ponies? Do you also lament Beverly Hills real estate prices or the cost of paintings by the Old Masters? If you cant afford it , move on.
    There is a lot a wonderful wine to be had.

  24. June 16, 2011

    Of course, you are right: in Burgundy, it is the middlemen and not the estates who are getting rich off of the stunning price hikes of the last five years. Under those circumstances, many are unwilling to hold a grudge against the domaines or the region in general. But I think you pose an important question. What responsibility should producers in Burgundy take for ensuring that their wines end up in the hands of people who will appreciate them, and not only the super-wealthy?

    If they are indifferent, that’s OK, it’s their business. But based on the Burgundians I have met and talked to, I would be genuinely surprised if that were so. I think most of them want their wines to be available to as many people who would appreciate them as possible, and they tend to be somewhat sheepish (and sometimes even disbelieving) when the topic comes up of how much their wines sell for in the United States. If producers aren’t happy with the way things are, I think we have reached a point where they need to consider a paradigm shift in how their wines are sold. I don’t know the solution, but perhaps the direct-to-consumer model that Ray Walker’s Maison Ilan is pioneering in Burgundy has a future.

    I understand that Burgundy collectors are not exactly a downtrodden people in need of charitable assistance. Still, I do think there is a social-responsibility angle to this because wine isn’t a luxury product in the same way a Louis Vuitton handbag is a luxury product; it happens to be a luxury product because of its scarcity, but it is also a cultural and artistic product and an inherited piece of Western Civilization in its highest form like a Shakespeare play or a Mozart symphony. Imagine if only the rich could afford to read Shakespeare or hear Mozart! The arts and literary communities would not stand for it. They would do something. I think the Burgundians who are lucky enough to have inherited a piece of some of the most important vineyards in the world should feel some responsibility to do something, too.

  25. gdfo permalink
    June 16, 2011

    All French wines are overpriced.

  26. June 16, 2011

    Bill, that pimp quote is priceless, and Dan, the scorched-earth comment makes a lot of sense. It is true that a lot of people here were more than happy to speculate on Bordeaux when the prices were such that that was still possible. There was that old strategy of buying two cases with the intent of later selling one at a much higher price and being able to drink the remaining case for “free.” So there is a bit of hypocrisy going on here. But I also think a lot of people were loyal Bordeaux drinkers, didn’t buy and flip, and are indeed feeling jilted these days, and I can’t say that I blame them. There is a different attitude in Burgundy–in Burgundy, loyalty is a two-way street, and old, steadfast customers are valued in a way that is clearly not the case in Bordeaux. And as Thomas and Francois point out, prices at the cellar door in Burgundy tend to be quite reasonable, even for the biggest names.

  27. June 16, 2011

    I’ll tackle the topic from the behavioral standpoint, contending that most of the venting by displaced/disillusioned Bordeaux en primeur buyers is a variant of “scorched earth” retreat. Many if not most of these have had a nice ride for a decade or two, as speculator-flipper consumers. The keep one- flip one formula has accounted for most of the USA en primeur trade for at least the past 7 years. But the eggs laid by the en primeur goose are looking less and less golden, so the buyers flee. But are inclined towards “let’s burn the crop and poison the wells” on their way out. The buyers have that jilted feeling, and react accordingly.

    And these Statesman-like abdication letters from merchants telling their customers and the world that 2010 en primeur is “sadly” not worth it? A more insidious form of the same urges. In plain language these letters are saying “we cannot find a way to profit in these circumstances, but on the off-chance that somebody else can, we’d like to diminish their results”.

    Burgundy markets have no real equivalent. Merchants cannot just go out and buy umpteen cases of some hallowed wine. Procuring any significant amount of any wine for which the demand exceeds the supply involves also tackling multiple times more of indifferent wines. The wineries darlings pave a path for their dogs. The importers bolt on an extra layer of unwanted parts, often not even Burgundy.

    The Bordeaux en primeur market is ruthless- and efficient. The Burgundy new release market more warm and fuzzy- and inefficient.

  28. mauss permalink
    June 16, 2011

    As explained by Thomas, we are really lucky here in Europe to have access directly to the properties and to get really first class QPR wines.
    I just found for example in Remigny a domaine called Domaine Borgeot who is doing wines in the style I love : finesse, elegance, balance. Of course, it is not Mugnier or DRC, but then, who in Bordeaux is giving you such a pleasure at those prices ?

  29. Bill Klapp permalink
    June 16, 2011

    Mike, It was not your intention, of course, but I think that Burgundy cannot be successfully tarred with the Bordeaux brush. The notion that Burgundy is made by farmers still carries great truth. Aubert de Villaine could hang with the chateaux royalty in Bordeaux, of course, but I am betting that even he might seem somewhat wallflowerish and fish-out-of-water there. Lalou at a black-tie event with Christian Moueix? Nah! Claude Dugat jet-setting? Nah! The points above are well-taken. Short supply, terroir rather than Bordeaux’s sanitary landfill, Parker tarred, feathered and ridden out of town on a rail rather than being worshipped and dictating wine styles all stand in stark contrast to Bordeaux. Yes, there are middlemen taking a few slices of every Burgundy pie, but as the great French playwright Jean Giraudoux observed of wartime Paris almost 70 years ago, through his character the Ragpicker in his masterwork, The Madwoman of Chaillot, “These days, every cabbage has its pimp. The pimps are taking over the world. They don’t do anything. They don’t make anything. They just stand there and take their cut.” (Use this quote when you write a Slate article on the wine world’s middlemen, pimps and shills! Giraudoux’s character the Sewerman has another quote that I love (but it would take hours to explain the context here): “Down in the sewers, you will find nothing but good Republicans.” )

    Thomas makes a good point that many Europeans are able to duck the middlemen. Toby points to another healthy (relatively speaking) phenomenon, which is that many cannot afford grand cru Burgundy, so its limited quantities are split among two or more audiences: those for whom cost is no object take the DRCs and the Leroys, and true Burgundy lovers beat the bushes at the other end of the cost spectrum for the best bang for the buck. I daresay that pleasant surprises are far more likely at the low end of the Burgundy market than at the low end of the Bordeaux market, since wine in the latter market is mainly dumped on the ground in producer protests or distilled into ethanol to fuel Bordelais tractors to allow wasteful overproduction of unwanted and undesirable Bordeaux to continue!

  30. Thomas permalink
    June 16, 2011

    I live in Europe and am therefore lucky enough to get good allocations of burgundy at 5% mark-ups to domain prices. You’d be surprised how reasonable those still are… You can still pick up a bottle of Roumier’s bonnes mares for $120.

    The secondary market prices are much less reasonable, but it is hard to blame the Christophe Roumier for this.

    With Bordeaux, you do get the sense that the system is out to get you and won’t shy from using a dirty trick or two to part you from your money (artificially low first tranches,…). And they don’t even do much in return. Visit burgundy and you’ll be greeted by vigneron who’ll taste through the range with you and may even open a grand bottle or two. Visit Bordeaux and you’ll be met by the Chateau’s sales rep who may open the latest vintage of the second wine.

    All wine producers constantly have to keep a balance between being “producers of romance” and corporate entities. In my mind Bordeaux is now very firmly on the corporate side, which just makes it difficult to feel passionate about (just like it’s hard to feel passionate about Coca-Cola, even if you like the stuff). Burgundy still hasn’t (fully) gotten there yet…

  31. June 16, 2011

    Ah yes, remember the good old days when we would only get vintages of the decade? Usually every two or three years or so.

    Yes, I had noticed the opportunities for other regions, which is why I admit that I haven’t personally been all that upset about it.

    Are the owners of the overperforming (price-wise) chateaux really going to pay for it? There is good money to be made now, and so long as the sock it away for a rainy day I think they’ll sleep soundly enough between their silk sheets. It’s the wine merchants who will be pressured into taking on stock to hold on to their allocations who will be hung out to dry when the bubble finally bursts (I wouldn’t like my retirement nestegg to be in a fund that is overexposed to that risk either).

  32. June 15, 2011

    That’s a great point, Toby, about marketing and the Parker factor. And, yes, the production in Burgundy is dramatically smaller. I think DRC turns out a combined total of 80K bottles per year; Mouton does 300K of just the grand vin. So, yes, there are a lot more people to tick off, and the Bordelais are doing an excellent job of it! These prices are insane. I am reasonably confident that the Bordelais are going to pay for their avarice at some point–if not this year, then perhaps the next time another “vintage of the century” rolls around, which should be any day now :) But the good news is that they are creating a huge opportunity for other regions.

  33. June 15, 2011

    If I were to guess, I would say you were right about supply and demand. Usually with a Burgundy producer you’re talking about the market homing in on only a few hundred – maybe a few thousand – cases. Yet even a First Growth Bordeaux may be producing, say, 15,000 cases. The likes of DRC have always seemed out of reach to the likes of me, so I was always splashing around in the shallower end of Burgundy.

    But in the case of Bordeaux, a huge proportion of the classed growths are fast becoming unaffordable. And because of the scale of its production and superior marketing, Bordeaux has had a greater fan base (also, Parker fans are more likely to be focused on Bordeaux, for obvious reasons). So there are a lot more (former?) customers to piss off…

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