Burgundy's Grand Cru wine prices experience significant decline, data reveals

In a surprising turn of events for the wine market, the prices of Burgundy's top-tier wines, especially those labeled as grand cru, have witnessed a significant reduction this year. Detailed data from Liv-ex, a prominent global marketplace for wine trade, highlights these unexpected trends.

The first half of 2023 has seen the Burgundy 150 index, which serves as a key market performance indicator featuring primarily grand cru labels, declining in value by 8.3%. Some of the wines under this index have experienced an even steeper reduction, with prices falling by more than 20%. Liv-ex's chairman and CEO, James Miles, noted these sharp declines, describing them on social media as a 'correction long overdue'.

Historically, however, the Burgundy 150 index paints a different picture. Despite the recent downturn, over the past five years, the index's value has surged by almost 68%. This growth emphasizes the premium that blue-chip producers' wines have commanded in the not-so-distant past.

Comparative Market Analysis

Robbie Stevens, a senior broker at Liv-ex, provided further insights, revealing that the Burgundy 150 index dipped around 10% since reaching its peak in October 2022. Within this index, while some top-tier wines plummeted by a whopping 25-30%, others have seen a gentler decline, with drops of up to 5%.

Taking a specific example, Stevens drew attention to the Armand Rousseau, Chambertin 2020. Recent Liv-ex transactions for this wine revealed a 75cl bottle being traded at $3,535 (in bond). In stark contrast, a six-bottle case of the same wine fetched $30,857 in April, translating to an impressive $5,143 per bottle. Stevens remarked, "Although a 10% premium for case value over a loose bottle is expected, we're looking at a substantial 25% reduction in price."

This price shift isn't exclusive to one label. Other premium Burgundy grand cru wines, particularly from the 2019 and 2020 vintages, have also seen price reductions. Some of these vintages have even been priced higher than acclaimed vintages with over ten years of bottle aging. Stevens also emphasized the broader sentiment in the market, pointing towards the cooling off of the Burgundy sector after several heated years of activity.

Future Outlook Amidst Current Declines

While current market dynamics show a price reduction, some merchants maintain an optimistic outlook for Burgundy's top wines. The inherent nature of tight supplies and burgeoning global demand from affluent collectors is expected to push prices upward in the long run. Stevens said, "Historical trends suggest this optimism isn't unfounded, but current market realities indicate a downward pressure on prices."

The cyclical nature of the wine market leads to the pivotal question, as Stevens put it: "At what point do these wines become attractive for buyers again?"

Market Caution Amidst Macroeconomic Factors

2023 has witnessed a heightened sense of caution among fine wine buyers. Factors such as increased living costs and broader macroeconomic uncertainties may be contributing to this hesitance. Matthew O'Connell, CEO of the LiveTrade online trading platform at Bordeaux Index, shared a similar sentiment: "While prices haven't softened substantially, market activity is noticeably low."

However, it's essential to note that the broader market still has bright spots. In June, US-based auction house Zachys reported robust demand for select wines, especially rare Bordeaux, Burgundy, and Champagne.

As the wine market navigates the ebbs and flows of global economic factors, Burgundy's grand cru wines' recent price decline offers both challenges and opportunities for stakeholders. Whether this trend is a temporary correction or signifies a broader market shift remains to be seen. However, the dynamics at play emphasize the intricacies of the fine wine market and the myriad factors influencing it.