Burgundy wine investment: Buyers showing patience in quiet year

Top-tier Burgundy prices have dipped in 2023, after rising strongly in recent years, shows data from UK merchant Bordeaux Index (see chart). At Liv-ex, the Burgundy 150 index fell 11% in eight months to 31 August, but rose 56% over five years. [subscriber-content]‘I don’t look at Burgundy and think this is a bubble bursting,’ said Matthew O’Connell, CEO of the LiveTrade trading platform at Bordeaux Index. ‘I think the global wine market is extremely quiet.’ He added: ‘Most owners of Burgundy are not selling at the moment. They either want the wines or see further investment merit.’ He said data points suggested softer prices, down 5%-10%, over the past year, but scarce supplies and rising luxury consumption still represent a long-term tailwind for prices. It’s a situation that may provide opportunities for collectors and investors with the financial means. In late August, Liv-ex highlighted several trades for blue-chip Burgundy wines on its global marketplace that were below market price. Charles Antin, head of wine auction sales at US-based Zachys, painted a nuanced picture. He noted price corrections on wines that had recently soared in price, but added: ‘We have been setting world record prices for certain Burgundies as recently as our June and July auctions.’ He highlighted strong pricing on older Domaine Ramonet and the rarest vintages of Domaine de la Romanée Conti (DRC) wines. ‘Burgundy is still at an all-time high, even if certain wines are down 5%-10% [from] their peak. Some are still up 50% in the last two years,’ said Antin, ahead of two key September auctions. In early September, Sotheby’s reported its second highest sales total for a wine auction in the US. The ‘Monumental Cellar’ auction achieved sales of $9.3m (£7.5m). Top lots included five magnums of DRC Romanée-Conti 1999, which fetched $275,000 (£220,000; pre-sale estimate: $260,000-$350,000). A rare lot of five bottles of DRC, Romanée-Conti 1966 sold for $93,750 (pre-sale estimate: $45,000-$65,000). The Bordeaux Index view Fine wine & spirits specialist Bordeaux Index kindly sponsors this section of Decanter , and provides its view on the market here every issue. It can be found at bordeauxindex.com Burgundy prices are always the topic of much discussion in the fine wine market – does anyone drink the top wines? Is the pricing a ‘bubble’? Is a crash due? The answers to these questions in our view as one of the most active traders in the market are, in simplest terms: Yes, No, No. But they do give rise to some key observations on this interesting market segment. The amount of top Burgundy consumed is far greater than people think, while availability dwindles. The basis supply-demand factors – tiny quantities and constantly increasing numbers of top collectors entering this exclusive segment – are the driver of prices, rather than Burgundy being the subject of investment speculation; the latter may have relevance, but its significance is easy to overstate. In 2017-2018 prices rocketed and many commentators spoke of a price bubble, yet in 2021-2022, prices jumped much further again. In reality, the likelihood of a substantial reversal in pricing is low given the underlying fundamentals expressed above. Prices are a little softer in 2023, but broadly we see this as entirely normal post large increases. Our expectation is that, as market activity increases, a trend to higher prices will return. [/subscriber-content] Related articles Build a Bordeaux cellar on a budget: Top tips for smarter buying Wine investment: Bordeaux 2022 update New Cask100 wine and whisky investment fund to launch

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