Derek Kilpin: What does the future hold for Burgundy?

April 5, 2017
by Derek Kilpin
in Opinion & Analysis
with 2 Comments

As the local fine wine importer that is Great Domaines, we have travelled to Burgundy every year since 1999 to taste the new vintages straight from barrel. Our most recent trip in December last year revealed some significant changes are afoot which we will have far-reaching consequences for Burgundy lovers.

Beaune

Hospices de Beaune.

Back in the early days, December was the perfect time to visit Beaune, Burgundy’s unofficial headquarters. A few decent comfort food restaurants, with some attractive low mark-up wine lists, sub-zero temperatures to keep the tourists away and a couple of authentic wine shops run by enthusiastic locals. The landscape has since changed. The town is now booming and there has been a proliferation of restaurants in Beaune: more Parisian in feel compared to the authentic, almost backwater wine town eateries of a decade or so ago. There has also been some spill-over of activity into neighbouring villages. Michelin stars now light up the RN74 – the 54-kilometre stretch of regional road which services the Côte d’Or. A consequence of this is that food choices have dramatically improved and quality overall is impressive – thankfully most still offering the traditional jambon persillé, escargots and boeuf bourguignon!

This success for Burgundy comes at a price for the wine lover. With a few exceptions such as Ma Cuisine and La Table Du Square, prices in restaurants and now numerous wine shops for the most highly regarded bottles are unaffordable. One of our favourite wine shops in Chassagne-Montrachet now has a Chinese store manager – a significant indication of which clientele they are looking to, and indeed do, attract. The Chinese wine market has been one of the main contributing factors to the massive increase in demand for the region’s wines since the mid-to-late 2000s.

Also driving prices up are the catastrophically low yields since 2011 while the presence of fraudulent bottles muddies the waters for consumers (we noticed ‘proof-tags’ on Roumier and Leflaive bottles for example).

Ever-increasing demand, low yields and undoubted improvements in quality have meant prices have been on a steeply upward curve. A particular consequence of this is that the value of land has become exorbitant and as a result, in many cases, this makes the handing over of the family vineyards from one generation to the next generation prohibitive, due to the inheritance tax payable.

This complex scenario affects the haves and the have-nots in different ways. The have-nots are those growers from appellations with less cachet, who haven’t had much wine to sell in the last five years and may now have to consider selling all or part of their vineyards as they may not be able to afford to continue running their domaines – their heritage. This will be tough as the Burgundians are a very proud bunch. This was amazingly portrayed by a recent initiative in the village of Volnay, which has been decimated by hail in the last few vintages. A relief fund was set up for farmers who needed assistance to stay in business after these repeated climatic occurrences and all they needed to do was state their case and apply for these no-strings-attached funds. Not one producer came forward to ask for help.

But, some will no doubt have to sell and this creates a gap for those with deep pockets to start acquiring slices of agricultural gold up and down the Côte d’Or. The likes of the big négociant houses are the logical players here. Land is also out of reach for even the most successful domaines thus sparking an interesting opportunity for dynamic wine operations to create mutually beneficial partnerships. For instance, the sister company of exclusive international wine club, Ficofi, has done just that by utilizing their wealthy customer base to acquire just less than 0.5 hectares of the Flagey grand cru, Echezeaux, for the princely sum of 6.5 million Euros! The arrangement is then such that this company can offer big name producers some of the grapes from these high-profile parcels with which to make their own wine, and in return they vinify wine from this parcel for the company and their thirsty billionaires.

Similar deals have been done by the respected Hong Kong outfit, Pearl of Burgundy, who have allowed the likes of the mercurial Jean-Marie Fourrier to work with parcels of land that he perhaps could never have dreamed of.

What does this all mean? I think that over time more and more Burgundy lovers will be unable to pay these increased prices. The 2015 vintage’s prices are now being released, which reveals the confused state of where Burgundy is and where producers feel they should position themselves. Some producers like Bouchard Père et Fils, a high class négociant which is also a significant land-owner, has admirably increased its prices by a mere 1%, but other in-demand labels have chosen to take a more Bordeaux-like stance increasing by 15%-20%. This increase comes off an already high base from the 2014 vintage and is attributed to the quality of the 2015 vintage, of which there is no debate although the classicism and purity of the 2014 vintage cannot be overlooked at all.

The landscape’s ownership may then also shift more into the hands of the négociants (perhaps a throwback to a version of the 1930s, when the négociant was so powerful) and select lucrative organisations. This encroachment has already started further south where many of the négociants and several domaines are now investing in the more affordable land of Beaujolais (currently going through a relatively under the radar fine-wine revolution), Côte Chalonnaise and the Mâconnais. Even white wine producer Number One, Domaine Leflaive, has recently expanded to a select part of the Mâcon.

Blinded by Euros, some vignerons will unfortunately ride this magic carpet of high prices for as long as possible, making the jobs of those ‘grounded’ Burgundians below them so much harder. The greatest domaines will continue to produce majestic wines at higher prices and fewer of the true wine lovers will be able to afford to drink or buy them – leaving the bottles in the hands of the super-rich.

Great Domaines is fortunate to buy everything directly from our twenty-nine producers on an exclusive basis, thus mitigating a large chunk of the over-inflated pricing one currently finds in the market.

In amongst this high-pricing haze, the Burgundy spirit is definitely alive and quality has quite simply never been better. Three hours in the cellar with vigneron-cum-comedian, Sylvain Pataille, and his boundary-pushing passion for Burgundy’s forgotten Aligoté grape, is quite simply inspirational.

Then there is the definition of the humble vigneron, namely Frederic Lafarge of Domaine Michel Lafarge, who welcomed our group for a tasting even though they have been ravaged by hail for consecutive vintages and quite simply have miniscule amounts of wine to sell, let alone make available for tasting.

Not to mention the uplifting thoughts from  stalwart Jean-Charles le Bault de la Morinière at Corton-Charlemagne’s Domaine Bonneau du Martray. His speech this year included emphasis on the importance of the preservation of the spirit of Burgundy. Co-incidentally Great Domaines owner Wayne Visser and I walked out of the domaine in December following our tasting and questioned what Jean-Charles’ succession plans were. Two weeks later the news broke that a majority stake in Domaine Bonneau du Martray had, after two centuries of family ownership, been bought by Screaming Eagle owner, Stan Kroenke. We trust and hope that he takes the domaine forward with all of Jean-Charles’ Burgundy ideals at heart.

  • Derek Kilpin is general manager of Great Domaines. He has worked at wine merchants in Dublin and London and has travelled widely through the wine regions of Europe.

 

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2 Comments

  1. Mark JohnsonApril 7, 2017 at 11:02 amReply

    enjoyed the read too thanks

  2. Brett WoodApril 7, 2017 at 9:17 amReply

    Thanks for the very informative read Derek!

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