Greg Sherwood MW: Are there lessons to be learnt from Burgundy for SA?

As the chill winter winds of discontent continue to blow across much of the world’s fine wine markets, many fine wine merchants are taking advantage of the more subdued trading conditions to travel to Burgundy to taste and assess the upcoming 2023 vintage red and white wines in barrel. I also recently returned after extensive domaine tastings in Burgundy, having accompanied another market-leading UK Burgundy merchant, and was fascinated to hear all the trials and tribulations the growers have been subjected to in the past year – some of them market related, but mostly weather related in 2024.

While the 2022s, tasted in Burgundy in November 2023 and proposed to the UK trade and private clients in London in January 2024, were mostly exceptional wines from an increasingly lauded vintage for reds as well as whites, the prospect of another plentiful, above average quantity vintage in 2023, presents its own set of unique challenges, coming at a time when many of the market’s leading merchants and importers are still holding sizable quantities of unsold stocks from both the low yielding 2021 harvest as well as stocks from the average to plentiful 2022 vintage.

But what can we expect from the 2023 Burgundy vintage? Well, for starters it’s a big harvest with some growers seeing yields up 10% to 30% on 2022’s quantities, which were considered “normal to good” in most appellations. So, the yields are abundant, but what about the quality? Chardonnay, overall, tends to perform better at higher yields than Pinot Noir, and this supports the growing school of thought that 2023 is perhaps more promising in white than in red. Nevertheless, 2023 is a more charming, elegant and accessible vintage across the board than the denser, more powerful 2022s, but also a finer, more ethereal, cerebral expression of Pinot Noir.

Many of the reds, whether petit Village wines, Premier Cru or Grand Cru wines, showed pretty, light-touch structures with sweet strawberry-tinged fruits, fresh juicy acids, and soft, silky, supple tannins that convey the overall higher yielding fruit feel of the vintage in general. In other words, mostly earlier drinking wines with great youthful fruit forward appeal. However, who would ever have thought that higher yields, loose knit structures and generous juicy fruit profiles could harbour problems for growers and merchants?

Don’t get me wrong. I am normally all over the bright fruits, the crystalline acids and soft, easy-drinking accessibility in some Burgundy reds, but perhaps a little less enthusiastically so when you are tasting a big name domaine Premier Cru Vosne Romanée, Gevrey Chambertin or a Grand Cru Echezeaux that tastes eminently ready to drink from barrel, yet lacking the essential tension of great Burgundy… and you also know it’s going to cost you €150, €250, or €400+ Euros per bottle ex-cellar! Ironically, the sheer accessibility and youthful drinkability of the 2023 vintage could be the biggest proverbial thorn in its side when it comes to offering the wines En-primeur, especially at a time when the market’s merchants and its fine wine consumers are looking seriously overstocked.

While not exactly a silver lining, the fact that most wine producers across Burgundy, and indeed the whole of France, experienced yields on average down by 70% in 2024 due to terrible flowering and incessant rain through the season causing endless disease pressures, will somewhat mitigate the large surge of stock that is about to be offered to the market. In Bordeaux, you can argue that their price escalator has been primed to drop down to the basement, and their prices should in all likelihood see significant reductions come En-primeur time in April / May 2025 if quality is anything to go by.

However, in Burgundy, with the prices of grapes so closely tied to the value of the land, whether rented on a fermage basis, or whether owned and fruit is merely sold off as grapes or juice to other growers and negociants, there is less headroom to drop prices, not to mention much less inclination on behalf of growers after a decade of boom times where demand consistently outstripped supply globally. Add to this the complete and utter collapse of the Asian, and Chinese wine market in particular, and you start to see the growing causes of anxiety among many producers.

But perhaps with more philosophical relevance for South African producers, after listening to all the market challenges Burgundian producers are now facing or are about to encounter, it bares considering some of the many clear miscalculations numerous Burgundian domaines committed during the plentiful times of the past decade, so that other producers might be less inclined to let history repeat itself by falling into the same traps.

Here are my top five takeaways after analysing Burgundies coming woes:

1 Always remember who your core clients are.

This is probably the number one schoolboy error producers make when times are buoyant, demand is high, money is loose and plentiful, and incoming requests from newly established markets like Asia or China specifically, cause producers to become a bit greedy, forgetting their long-established clientele and their market needs. It’s a mistake. Loyalty should always be considered and rewarded.

2 Price your wines for slow long-term growth not quick short-term gain.

Quite clearly, this is a wide ranging and complicated economic scenario, nevertheless, most Burgundian producers have become victim of their own success, looking to avoid secondary market speculation by incessantly increasing the price at source to directly benefit from strong global demand, thereby reducing the wines drinkability and further increasing global speculation.

If we cast our minds back to Bordeaux in the noughties, their colossal price increases were largely driven by the chateaux getting sick and tired of seeing brokers and traders making all the money on the highly speculative secondary market, and so they raised their price at source and ‘sucked all the life out the market’, ultimately leading to several mini-price crashes at the worse, or stagnation and plentiful product available on the market 24-36 months after En-primeur at -15% to -20% below release prices at best.

3 Always allocate stock to your oldest and most loyal markets first.

When it comes to managing finite stocks of high-demand wines, always make sure that your older, more established markets receive enough stock to satisfy demand. Preferably, this should be done through an established agent or merchant network rather than through more cloudy broking channels. If you persist in giving a market, like for example, Spain or Portugal, unrealistically high allocations, don’t be surprised when you find all this stock being flipped and ending up in the UK via the grey market, there the real private client wealth and demand normally lies.

4 Don’t follow foolish fashions or trends, follow what works for your own brands long-term future.

I will refrain from naming specific brands or producers, but the past couple of years have seen far too many Burgundy wines suffering from the “emperor’s new clothes” syndrome. €300 negociant Aligote with pretty labels is never going to be a long-term market proposition. It’s a bubble looking to pop before the label glue is dry on the bottle. And of course, pop it did.

5 Don’t put all your eggs in one basket.

Lastly, it’s economics 101. Don’t commit all your allocations, resources and marketing expenditure to any one single market like so many producers have done with China at the expense of more traditional markets like the USA, the UK, and Canada. When the wind turns and business dries up, like it has now, the old traditional markets will be far less forgiving than they perhaps would have once been years ago. Spread your allocations and spread your love, then tweak as and where is required to achieve a good, broad, balanced regional distribution coverage.

In the same way that wine consumers often revert to the safety and comfort of more traditional, classical wine brands in tougher economic times at the expense of new-wave, Johnny-come-lately labels, so producers should perhaps act now with a little more caution, circumspection and restraint when deciding their wider global business, pricing and distribution strategies. Customer loyalty is hard to earn but very easily lost in this new global era of fine wine.

• Greg Sherwood was born in Pretoria, South Africa, and as the son of a career diplomat, spent his first 21 years traveling the globe with his parents. With a Business Management and Marketing degree from Webster University, St. Louis, Missouri, USA, Sherwood began his working career as a commodity trader. In 2000, he decided to make more of a long-held interest in wine taking a position at Handford Wines in South Kensington, London, working his way up to the position of Senior Wine Buyer over 22 years. Sherwood currently consults to a number of top fine wine merchants in London while always keeping one eye firmly on the South African wine industry. He qualified as the 303rd Master of Wine in 2007.