Psychology, Quality, and Scarcity
The Hospices De Beaune celebrated its 150th annual charity auction with record prices for its 2010 vintage. But how much of its success was due to the quality and scarcity of the wines, and how much to the greater involvement of Asian buyers and the stronger market for burgundy worldwide? Will Asian demand send burgundy prices soaring?
by Neil Beckett
Despite being under the gaze of the grand dukes of Burgundy whose portraits hang in the magnificent Hospices de Beaune, founded by Philip the Good's chancellor Nicolas Rolin and his wife Guigone de Salins in 1443, and despite being in the shadow of its high, brightly colored, steep-sloping roof, the authorities of the hospital and the town adopted a typically understated approach to the 150th anniversary of the annual wine auction, held on November 21, 2010.
They did, certainly, organize a small commemorative exhibition in Beaune's central square, Place Carnot. But even on the day of the sale, it was almost deserted, the crowds instead swarming around the famous French actor Fabrice Luchini, one of the two presidents of the sale, in the hope of an autograph or a photo.
And yet the anniversary almost certainly did play a part in pushing prices up, since it did seem to matter to the Beaune-based négociants who remain the biggest buyers every year, even though private purchasers have been more involved since Christie's was entrusted with the running of the sale in 2005. Speaking at a press conference before the sale, Louis- Fabrice Latour, president of the Union des Maisons de Vin de Bourgogne, representing most of the négociants, predicted that the "psychological" stimulus of the anniversary would be one of the reasons that prices would rise. And rise they did.
An all-time high price for any barrel sold at the Hospices de Beaune auction was paid for the Presidents' Barrel - a specially produced tonneau (500 liters) of Beaune Premier Cru Cuvée Nicolas Rolin - purchased by Monsieur Jacques Boisseaux of Maison Patriarche Père & Fils for €400,000. Every year since 1945, the Hospices de Beaune has donated the proceeds from a designated Presidents' Barrel to one or more other causes - this year to the anticancer charity AVEC and to Climats du Vignoble de Bourgogne, the association campaigning for UN ESCO recognition of the Côte d'Or as a World Heritage Site (which is passing on its share to a charity working in an existing World Heritage site). The previous record was for the Presidents' Barrel in 2006, when a normal-sized pièce (228 liters) fetched €255,000.
Several other of the 45 cuvées on offer (32 red and 13 white) also sold for record prices. Anthony Hanson MW, senior consultant to Christie's international wine department and a leading Burgundy specialist, said after the sale that "many wines set record prices for the past ten years, beating the 2005 and 2009 vintages. For instance, among the reds: Clos de la Roche Cyrot-Chaudron, Corton Charlotte Dumay, Volnay-Santenots Jehan de Massol, and Beaune Nicolas Rolin. Among the whites: Corton- Vergennes Paul Chanson and Meursault-Genevrières Philippe Le Bon. These cuvées are now some of the most admired of the Hospices de Beaune, alongside Mazis-Chambertin Madeleine Colignon and Bâtard- Montrachet Dames de Flandres."
All 543 barrels of red wine and 100 barrels of white wine were sold, for a total of €4,787,394 (including premiums); the Presidents' Barrel and eaux de vie took the overall total to €5,132,075 ($7,036,075 / £4,387,924, including premiums). This was close to the record total reached in 2009 - €5.4 million - and there were 156 fewer barrels for sale in 2010. The average barrel prices in 2010 were therefore considerably higher than in 2009, rising 12.55 percent for reds and 15.7 percent for whites. So, who was bidding it up?
Asians among the buyers
Among the more than 300 registered bidders, the largest single buyer at the sale was Beaune-based négociant Albert Bichot, which purchased 91 of the 643 barrels (14 percent of the total).
Overall, European buyers, private as well as trade, accounted for 85.5 percent of purchases (by value). But for the first time, Asia played a major part - and a more important role than the USA. Asian bidders outnumbered North American bidders and were responsible for 12.5 percent of sales (by value), as against 1.6 percent. The Asian contribution may be explained in part by the efforts of Christie's to market the sale in China. Since 2005, Christie's has organized tastings of Hospices de Beaune wines all over the world, but the focus last year was on Beijing, Shanghai, and Hong Kong, where a series of dinners and tastings was staged.
Roland Masse, manager and winemaker of the Domaine des Hospices de Beaune, who is rightly pleased with the quality, if not the quantity, of its 2010 wines
This initiative has ushered in a far larger campaign, sponsored at a regional level, to promote Burgundy in Asia, where it still has a far lower profile than that of Bordeaux. At the presale press conference, Pierre- Henry Gagey, co-president of the Bureau Interprofessionnel des Vins de Bourgogne, announced that it would be investing ¤400 million a year for three years to strengthen Burgundy's presence in Asia. Exports to China and Hong Kong are expected to surpass 2008's record levels in 2010, those to China rising 74 percent by volume and 87 percent by value in the first eight months of the year by comparison with the same period in 2009. So, might Asian demand send Burgundy prices soaring, as it has those of Bordeaux?
Gagey admitted that half of him was envious of Bordeaux's high prices in Asia, while the other half was glad that Burgundy's had not followed: "The wines become almost undrinkable at very high prices, which are artificial and not good in the long term. We don't want to follow Bordeaux in terms of extreme price rises." He said that Bordeaux works well in Asia for very expensive and very inexpensive wines but has little in the middle. Burgundy, he suggested, needs to take the middle market -- and some of the top -- but should not try to compete among lowpriced wines. "The future is for bottles in the ¤7-10 range, for wines that offer precision and purity." He also expressed his conviction that red Burgundy would prove to be at least as much to the taste of the Chinese as red Bordeaux, and that they would increasingly take to white Burgundy as well.
US and UK markets strengthen
The higher prices at the Hospices de Beaune auction reflected stronger sales not only in Asia but in the USA and the UK, which remain the two most important export markets, together accounting for roughly half the value of Burgundy wines sold outside France. Both markets slumped badly between 2007 and 2009, the USA falling 50 percent by value, the UK 40 percent, but in 2010 both regained roughly half of what they had lost.
Louis-Fabrice Latour cautioned, however, that the US market was still sluggish at grand and premier cru level (at more than $50 a bottle) and that there was little appetite for price rises for the 2010s. Even so, the gradual economic recovery and the quality and scarcity of the wines will probably mean that most prices will follow those of the Hospices auction upward when the wines are offered next year.
The 2010 vintage and wines
The Hospices de Beaune auction may no longer be as accurate a reflection of the vintage as it once was, the general market situation now being more important. But the quality and quantity of the wines do still have an influence on the prices realized.
While the 2009 crop was exceptionally large, in 2010 it was unusually small. A long flowering period in June resulted in abnormal fruit-set (millerandage), with a high proportion of small, thick-skinned grapes. This drastically reduced the yields - to an average across the Hospices de Beaune domaine of around 30 hectoliters per hectare, for whites as well as for reds. But low yields and thick skins may often be beneficial for quality, and after a slow start to the growing season, the weather was broadly favorable, too.
As summarized by Hanson, "The months of June and July were sunnier than usual. In August, there were alternating periods of sunshine and rainfall, then fortunately September was dry and often sunny, with mild temperatures during the day, and cool nights. This allowed natural sugars to climb impressively, while sufficient, precious acidity was retained. As is often the case in Burgundy, beautiful autumn weather allowed the grapes to reach maturity while still in a state of good health, presaging a high-quality vintage."
The presale tasting of all the 2010 Hospices de Beaune wines was generally promising. As always, this barrel-sample tasting could give only a partial glimpse, since the wines were still at a very early stage of their élevage, many still not having completed their malolactic fermentation. But higher standards of viticulture (mostly organic since 2008), as well as of winemaking (less extraction and less strident new wood), have resulted in better definition and purer fruit expression. The best 2010s seemed to possess an attractive combination of concentration, freshness, ripeness, and vigor. On this showing, it would be a shame if the seductive 2009 Burgundies overshadowed not only the generally underrated 2008s but the still-to-be-released 2010s.
Securing the future
Speaking at the presale press conference, Aubert de Villaine, co-owner of Domaine de la Romanée- Conti and president of Climats du Vignoble de Bourgogne, explained that it was seeking World Heritage status for the Côte d'Or in order to preserve it in its integrity, by recognizing "the essential value of terroir and viticulture." He hoped that the application, already three years in preparation, could be presented to the French committee later this year and to UN ESCO in 2012, with recognition by 2013. Gagey affirmed that all Burgundy was behind the project and that all Burgundy would benefit.